The State of Markets
A brief review of all key upcoming events across the major regions of the globe & an overview of key recent market trends.
The State of Markets:
After a series of positive weekly gains, the S&P500 lost momentum and closed lower last week (-0.4%). That broke a 5-week winning streak (with 14 of the last 16 weeks, since early November, generating positive returns). The key underperforming area of the market was tech/growth stocks and the NASDAQ 100, with the index down 1.6%. Higher than expected inflation data (both CPI on Tuesday and PPI on Friday) served to push up rates, price out rate cuts and push equity markets lower. Apple closed the week below its 200-day moving average; Amazon struggled at its 50-day moving average, while even Nvidia’s momentum stalled. That likely reflects the extent that Nvidia is overextended relative to its trend line (see chart below, as featured in Friday morning’s ‘RAG Trader’ publication – trial available here: https://www.longvieweconomics.com/the-rag-trader/subscription-trial). Stalling momentum, a SELL signal on the NDX100 put to call ratio, as well as a notably overbought index, all add to the case that sector/style leadership in the global equity market is likely changing.
Next week’s earnings and macro data, in that respect, will be key. Nvidia’s earnings are released on Wednesday. Other key earnings releases are shown below. The market will also be focussed on Tuesday’s Conference Board leading economic indicators (which started improving last month); flash/first estimate PMIs on Thursday & Germany’s IFO data on Friday. Elsewhere the price action in gold will be watched closely (after pulling back last week, and failing at another key resistance level), while US 2 and 10-year bond yields are also likely to be in focus.
Fig A: Nvidia overextended ratio (current price rel. to its 50-day moving average) vs. Nvidia share price (USD/share)
(All in London time BST)
Events: N/A
Data: N/A
Earnings: N/A
Events: PBoC policy decision (1:15am).
Data: US Conference Board leading index (Jan, 3pm).
Earnings: Walmart, Home Depot, Barclays.
Events: FOMC January meeting minutes (7pm).
Data: Eurozone European Commission consumer confidence (February first estimate, 3pm).
Earnings: Nvidia, Glencore, HSBC.
Events: ECB publishes account of January policy meeting (12:30pm).
Data: HCOB manufacturing & services sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all February first estimates; S&P manufacturing & services sector PMI (February first estimate, 9:30am); Japanese Jibun Bank manufacturing & services sector PMI (February first estimate, 12:30am).
Earnings: Nestle, Mercedes Benz.
Events: N/A
Data: UK GfK consumer confidence (Feb, 12:01am); Chinese new home prices (Jan, 1:30am); German IFO business expectations (Feb, 9am).
Earnings: N/A
The SHORT VIEW (& market positioning), 13th February 2024:
“USDJPY SELL Case Brewing”
The dollar has rallied sharply in recent weeks against most major currencies. In particular, against the Yen, it’s retraced almost all of its losses from November and December (i.e. after holding/rallying from the bottom of its uptrend line in early January – see FIG A).
As technicians would point out, 152 is the next key target for USDJPY, which is the high from last November, as well as the intra-day high from October 2022. Prior to that, the dollar hasn’t traded above 150 since 1990.
The key question, therefore, is: How much higher will USDJPY go? Will it rally to, and then break above, that level? Or is a ‘topping out’ process underway in USDJPY, with 152 likely to be a strong resistance level?
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: US Conference Board leading index (Jan, 3pm).
Earnings: Walmart, Home Depot.
Events: Speech by the Fed’s Bostic (welcoming remarks, 1pm); FOMC January meeting minutes (7pm).
Data: N/A
Earnings: Nvidia.
Events: Speeches by the Fed’s Jefferson Q&A (3pm), Bowman in Washington (6pm), Harker on economic outlook (7pm), Cook at Macrofinance conference (10pm) & Kashkari in Panel Discussion on outlook (10pm).
Data: US S&P manufacturing & services sector PMIs (February first estimate, 2:45pm); US existing home sales (Jan, 3pm).
Earnings: Pioneer Natural Resources.
Events: Speech by the Fed’s Waller on economic outlook (12:35am).
Data: N/A
Earnings: Warner Brothers.
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Eurozone new car sales (Jan, 7am).
Earnings: Medtronic, Air Liquide.
Events: N/A
Data: Eurozone European Commission consumer confidence (February first estimate, 3pm).
Earnings: Glencore, Wolters Kluwer, Garmin.
Events: ECB publishes account of January policy meeting (12:30pm).
Data: French business & manufacturing confidence (Feb, 7:45am); HCOB manufacturing & services sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all February first estimates; Eurozone headline & core CPI (January final estimate, 10am).
Earnings: Nestle, Mercedes Benz, Axa, Zurich, Iberdrola, Danone, ENGIE.
Events: Speeches by the ECB’s Schnabel in Milan (9:20am), Nagel at presentation of 2023 results (10am) & Schnabel in Milan (1pm).
Data: German GDP (Q4 final estimate, 7am); German IFO business expectations (Feb, 9am); ECB 1 & 3 year inflation expectations (Jan, 9am).
Earnings: Deutsche Telekom, Allianz, BASF.
Events: N/A
Data: Rightmove house prices (Feb, 12:01am).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: Barclays, Antofagasta.
Events: Speech by the Bank of England’s Dhingra at event hosted by Market New International (2pm).
Data: Public sector finances (Jan, 7am); CBI industrial trends orders (Feb, 11am).
Earnings: HSBC, BAE Systems.
Events: Speeches by the Bank of England’s Greene at the Kroll South Africa Networking breakfast (6:30am).
Data: S&P manufacturing & services sector PMIs (February first estimate, 9:30am).
Earnings: Lloyds, Anglo American, Hargreaves Lansdown, Rolls-Royce.
Events: Speeches by the Bank of England’s Greene at the Kroll South Africa Networking breakfast (7:30am).
Data: GfK consumer confidence (Feb, 12:01am).
Earnings: Standard Chartered.
Events: N/A
Data: N/A
Earnings: N/A
Events: RBA February policy minutes (12:30am); PBoC policy decision (1:15am).
Data: Australian Westpac leading index (Jan, 11:30pm).
Earnings: N/A
Events: N/A
Data: Australian wages (Q4, 12:30am); Japanese machine tool orders (January final estimate, 6am); Australian Judo Bank manufacturing & services sector PMI (February first estimate, 10pm).
Earnings: N/A
Events: N/A
Data: Japanese Jibun Bank manufacturing & services sector PMIs (February first estimate, 12:30am).
Earnings: United Overseas Bank.
Events: Market holiday in Japan on account of Emperor’s Birthday.
Data: Chinese new home prices (Jan, 1:30am).
Earnings: China Steel.
(Long)View from London, 16th February 2024:
“Is (US) Inflation Really Sticky?”
Commodity Fundamentals Report No. 177, 15th February 2024:
“Aluminium: New Bull Market Likely”
The SHORT VIEW (& market positioning), 13th February 2024:
“USDJPY SELL Case Brewing”
(Long)View from London, 9th February 2024:
“UK Inflation and the (Brewing) BUY Case For Gilts”
Monthly Global Asset Allocation No. 31, 8th February 2024:
“Look to Add Risk in Strategic Portfolios This Year”
Monthly Commodity Update, 7th February 2024:
“OIL: Why Are Prices Weak? a.k.a. Key Oil Market Developments (February 2024)”
Tactical Equity Asset Allocation No. 241, 6th February 2024:
“Stay Tactically OW Equities (for now), a.k.a. Albeit Risks Are Rising”