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:
The uptrend in US equity markets was ongoing last week, helped by plentiful liquidity*, and more strong earnings reports. Of the 334 S&P500 companies that have now reported earnings, a large portion (80%) have surprised to the upside, with an aggregate surprise of +7.6% (vs. the average upside surprise of between 3 – 4%). With that both the S&P500 and NASDAQ100 made new all-time highs this week.
Of note, that price action is impressive, given several key/emerging headwinds, including (i) recent US dollar strength; (ii) higher Treasury yields (e.g. with the 10 year up 14bps last week); as well as (iii) last week’s sharp oil price rally (i.e. on rising tensions in the Middle East). As the chart below shows, oil has been trending up since mid-December and is now testing its 200 day moving average.
The key question, therefore, is: Will US equities continue to add to their recent gains in the next 1 – 2 weeks? Or, will the rally fade, given those headwinds noted above
All eyes, in that respect, will be on next week’s US CPI inflation report (due on Tuesday), as well as speeches by various FOMC members through the week, including Barkin, Kashkari, Goolsbee, and Daly. There’s also an inflation report in the UK, as well as a speech by BoE Governor Bailey (both on Wednesday), followed by the first estimate of Q4 UK GDP (Thursday). Please see below for a full list of upcoming data and events.
Fig A: WTI oil price (US$/barrel), with 50 & 200 day moving averages
(All in London time BST)
Events: Speech by the Bank of England’s Bailey at Loughborough University (6pm); market holidays in China on account of Chinese New Year (Mon – Fri).
Data: N/A
Earnings: ANZ Holdings.
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: US headline & core CPI (Jan, 1:30pm); UK employment, jobless claims & average weekly earnings (Dec, 7am).
Earnings: Coca-Cola, Shopify.
Events: Bank of England’s Bailey testifies to the House of Lords Economic Affairs Committee (Wed, 3pm); market holidays in China on account of Chinese New Year (Mon – Fri).
Data: UK headline & core CPI & PPI (Jan, 7am); Land Registry house prices (Dec, 9:30am); Japanese GDP (Q4 first estimate, 11:50pm).
Earnings: Cisco, Tokio Marine Holdings.
Events: N/A
Data: US Empire manufacturing (Feb, 1:30pm); US retail sales (Jan, 1:30pm); US NAHB homebuilders index (Feb, 3pm); UK GDP (Q4 first estimate, 7am).
Earnings: Applied Materials, Deere&Company, Airbus Group.
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: US building permits & housing starts (Jan, 1:30pm); US headline & core PPI (Jan, 1:30pm); US Michigan sentiment (February first estimate, 3pm).
Earnings: N/A
Monthly Global Asset Allocation No. 31, 8th February 2024:
“Look to Add Risk in Strategic Portfolios This Year”
In December, following the switch in Fed policy*, we reduced our estimate of US recession risk in 2024 (from over 50%, down to 35%).
In particular, in our ‘three factor framework’, the combination of (i) that monetary policy pivot; (ii) relatively robust US corporate sector health; and (iii) the absence of macro shocks, sets the stage for an ongoing US/global economic and earnings expansion (and a cyclical bull market in equities).
Events: Speeches by the Fed’s Barkin at Atlanta Economics Club event (5pm) & Kashkari at Economic Club of Minnesota discussion (6pm).
Data: New York Fed 1 year inflation expectations (Jan, 4pm).
Earnings: Arista Networks, Cadence Design, Waste Management.
Events: N/A
Data: US NFIB small business optimism (Jan, 11am); US headline & core CPI (Jan, 1:30pm).
Earnings: Coca-Cola, Shopify, Airbnb, Zoetis, Marriott Int, Moody’s, Ecolab, Waste Connections, Welltower, AIG, Datadog, Biogen.
Events: Speeches by the Fed’s Goolsbee in Q&A (2:30pm) & Barr at NABE conference (9pm).
Data: US weekly MBA mortgage applications (12pm); Canadian existing home sales (Jan, 2pm).
Earnings: Cisco, Essilor International, Equinix, EMCE Group, Occidental, Energy Transfer, Manulife Financial.
Events: N/A
Data: Canadian housing starts (Jan, 1:15pm); Canadian manufacturing sales (Dec, 1:30pm); US Empire manufacturing (Feb, 1:30pm); US retail sales (Jan, 1:30pm); US Philadelphia Fed business outlook (Feb, 1:30pm); US weekly jobless claims (1:30pm); US industrial & manufacturing production & capacity utilisation (Jan, 2:15pm); US business inventories (Dec, 3pm); US NAHB homebuilders index (Feb, 3pm); US total net TIC flows (Dec, 9pm).
Earnings: Applied Materials, Deere&Company, Southern, DoorDash, Digital.
Events: Speeches by the Fed’s Bostic on policy outlook (12am) & Daly at NABE conference (5:10pm).
Data: Canadian wholesale sales (Dec, 1:30pm); US building permits & housing starts (Jan, 1:30pm); US New York Fed services business activity (Feb, 1:30pm); US headline & core PPI (Jan, 1:30pm); US Michigan sentiment (February first estimate, 3pm).
Earnings: TC Energy, Vulcan Materials.
Events: Speeches by the ECB’s Hernandez De Cos in Madrid (8am), Lane in Madrid (9:45am & 1:15pm) & Cipollone on what’s next for the EMU (3:50pm).
Data: N/A
Earnings: N/A
Events: N/A
Data: French ILO unemployment rate (Q4, 6:30am); German & Eurozone ZEW survey - expectations & current situation (Feb, 10am).
Earnings: N/A
Events: Speeches by the ECB’s Vujcic in Croatia (8am), Guindos in Croatia (8:30am), Cipollone on the digital euro (2pm), Nagel on how will financing work in the future (5pm) & Lagarde on economic and monetary affairs of the European parliament (8am).
Data: Eurozone GDP & employment (Q4 second estimate, 10am) & industrial production (Dec, 10am).
Earnings: EssilorLuxottica, Capgemini.
Events: Speeches by the ECB’s Lane at online seminar (12pm) & Nagel on stability and prosperity in Europe (6pm).
Data: Eurozone trade balance (Dec, 10am).
Earnings: Airbus Group, Safran, Stellantis, Schneider Electric, Pernod Ricard.
Events: Speech by the ECB’s Schnabel in Italy (8:45am).
Data: German wholesale prices (Jan, 7am); French headline & core CPI (January final estimate, 7:45am).
Earnings: Eni SpA.
Events: Speech by the Bank of England’s Bailey at Loughborough University (6pm).
Data: N/A
Earnings: N/A
Events: N/A
Data: Employment, jobless claims & average weekly earnings (Dec, 7am).
Earnings: N/A
Events: Bank of England’s Bailey testifies to the House of Lords Economic Affairs Committee (3pm).
Data: Headline & core CPI & PPI (Jan, 7am); Land Registry house prices (Dec, 9:30am).
Earnings: N/A
Events: Speeches by the Bank of England’s Greene at fireside chat with Brian Coulton (1pm) & Mann on labour, investment & technology (1:50pm).
Data: GDP (Q4 first estimate, 7am), monthly GDP estimate, industrial & manufacturing production, goods trade balance & construction output (Dec, 7am).
Earnings: Relx.
Events: Speech by the Bank of England’s Pill on perspectives on global monetary policy (7:40pm).
Data: Retail sales (Jan, 7am).
Earnings: N/A
Events: Speech by the RBA’s Kohler in Sydney (9:55pm); market holidays in China on account of Chinese New Year (Mon – Fri).
Data: Australian Westpac consumer confidence (Feb, 11:30pm); Japanese PPI (Jan, 11:50pm).
Earnings: ANZ Holdings.
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: Australian NAB business confidence (Jan, 12:30am); Japanese machine tool orders (January first estimate, 6am).
Earnings: Japan Tobacco, Commonwealth Bank.
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: Japanese GDP (Q4 first estimate, 11:50pm).
Earnings: Tokio Marine Holdings, Japan Post Holdings.
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: Australian consumer inflation expectations (Feb, 12am); Australian employment (Jan, 12:30am); Australian CBA household spending (Jan, 3:30am); Japanese industrial production & capacity utilisation (December final estimate, 4:30am); South Korean unemployment rate (Jan, 11pm).
Earnings: N/A
Events: Market holidays in China on account of Chinese New Year (Mon – Fri).
Data: Japanese tertiary industry output (Dec, 4:30am).
Earnings: Bridgestone Corp.
(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”
(Long)View from London, 2nd February 2024:
“Q2 Vulnerability in Equity Markets”
Recommended Global Macro Trade, 2nd February 2024:
“Start BUILDing SHORT Gold Positions”
Commodity Fundamentals Report No. 176, 1st February 2024:
“Gold Prices Drivers: All Change”
The SHORT VIEW (& market positioning), 30th January 2024:
“EURUSD, USDJPY & EURJPY”