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 S&P500 was buffeted by a number of major events, earnings reports and data releases last week. In particular, following Powell’s hawkish commentary on Wednesday, the index gave back all of its gains from the prior seven trading days, and closed around 4,874 (its highs from 19th January, see key chart below). It then rallied sharply on Thursday on strong earnings from Meta and Amazon, with further intra-day volatility on yesterday’s nonfarm payrolls (before rallying sharply). Despite relatively large daily swings, though, the index has held above its 19th Jan highs (i.e. when it broke out of its December-January consolidation range).
The key question, therefore, is: Will the S&P500, having held that key technical level, continue to squeeze higher in the near term? Similar questions can also be asked of other indices. The Russell 2000, for example, has been testing its 50 day moving average this past week, while the Philly SOX has been testing/rallying from its December highs.
Our short term models, as laid out in our Daily RAG publication, are the principal lens through which we think about and answer those questions on a ‘1 – 2’ week timeframe. We also forecast equity markets on a ‘1 – 4’ month timeframe (in the ‘Tactical’ publication) as well as a ‘6 month to 2 year’ outlook (in the ‘Global Asset Allocation’ product). Email info@longvieweconomics.com if you would like a sample of any of the above.
Added to that, several key events/data releases this coming week also bear watching closely. In the US they include speeches by key Fed members (Bostic, Mester, Kashkari, Barkin and others) as well as the ISM services and senior loan officers survey data (both on Monday). Elsewhere there’s an RBC policy decision (Tuesday), Chinese services PMI for January (Monday) and an update on Chinese credit and money supply (expected on Friday). Please see below for a full list of key events, earnings, and data releases.
Key Chart: S&P500 futures candlestick shown with key technical levels
(All in London time BST)
Events: N/A
Data: Chinese Caixin services sector PMI (Jan, 1:45am); US ISM services index (Jan, 3pm); US Senior Loan Officer Opinion survey (7pm).
Earnings: McDonald’s, Caterpillar, Mitsubishi UFJ Financial.
Events: RBA policy decision (3:30am).
Data: UK BRC retail sales (Jan, 12:01am); German factory orders (Dec, 7am); Eurozone retail sales (Dec, 10am).
Earnings: Eli Lilly, BP.
Events: N/A
Data: US consumer credit (Dec, 8pm).
Earnings: Walt Disney, Uber Tech, Alibaba.
Events: N/A
Data: UK RICS house price balance (Jan, 12:01am); Chinese headline CPI & PPI (Jan, 1:30am).
Earnings: S&P Global, Philip Morris, L'Oreal, AstraZeneca.
Events: N/A
Data: Chinese Total Social Financing, New Yuan loans, M1 and M2 money supply (Jan - TBA).
Earnings: PepsiCo, Hermes International.
The SHORT VIEW (& market positioning), 30th January 2024:
“EURUSD, USDJPY & EURJPY”
From both a fundamental and a technical perspective, there are three key observations worth making about major FX pairs (on a 1 – 4 month time horizon).
They are:
(i) the Euro is vulnerable to the downside against the US Dollar (point 1);
(ii) the Dollar is likely to weaken against the JPY (point 2); and
(iii) therefore, the Euro should weaken against the Yen (point 3).
Events: Fed’s Bostic gives welcoming remarks on the economic returns of education and training (7pm).
Data: Canada S&P services sector PMI (Jan, 2:30pm); US S&P services sector PMI (January final estimate, 2:45pm); US ISM services index (Jan, 3pm); US Senior Loan Officer Opinion survey (Mon, 7pm).
Earnings: McDonald’s, Caterpillar, Vertex, Air Products, NXP, Simon Property, Estee Lauder, IDEXX Labs, ON Semiconductor.
Events: Speeches by the Fed’s Mester on economic outlook (5pm), Kashkari in moderated discussion (6pm) & Collins at Labour Market conference (7pm).
Data: Canadian building permits (Dec, 1:30pm); Canadian Ivey overall economy PMI (Jan, 3pm).
Earnings: Eli Lilly, Linde PLC, Amgen, Gilead, Fiserv, Chipotle Mexican Grill, Fortinet, Carrier Global, Ford Motor, Edwards Lifesciences, Centene, Cognizant, Ametek, Prudential Financial, Gartner, Cummins.
Events: Speeches by the Harker on Fed’s role in the economy (12am), Kugler at Brookings Event (4pm), Collins at Boston Economic Club (4:30pm), Barkin on regional economy (5:30pm) & Bowman on supporting small businesses (7pm).
Data: US weekly MBA mortgage applications (12pm); US trade balance (Dec, 1:30pm); US consumer credit (Dec, 8pm).
Earnings: Walt Disney, Uber Tech, CVS Health Corp, PayPal, McKesson, O’Reilly Automotive, Emerson, Hilton Worldwide, Allstate, Sun Life Financial, Yum! Brands, Equifax, CDW Corp.
Events: Speech by the Fed’s Barkin at Economic Club of NY (5:05pm).
Data: US weekly jobless claims (1:30pm); US wholesale sales & inventories (Dec, 3pm).
Earnings: S&P Global, Philip Morris, ConocoPhillips, Duke Energy, ICE, Transdigm, Motorola, DexCom, Hershey Co, Kenvue.
Events: N/A
Data: Canadian employment data (change in employment, unemployment rate & participation rate) (Jan, 1:30pm).
Earnings: PepsiCo, TELUS, Global Payments.
Events: N/A
Data: German trade balance, imports & exports (Dec, 7am); HCOB services sector PMIs for Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all January final estimates apart from Italy; Eurozone Sentix investor confidence (Feb, 9:30am); Eurozone PPI (Dec, 10am).
Earnings: Nordea Bank.
Events: N/A
Data: German factory orders (Dec, 7am); ECB 1 & 3 year inflation expectations (Dec, 9am); Italian ISTAT consumer & manufacturing confidence (Jan, 9am); Eurozone retail sales (Dec, 10am).
Earnings: Intesa Sanpaolo.
Events: N/A
Data: German industrial production (Dec, 7am); French private sector payrolls (Q4 first estimate, 7:45am); Italian retail sales (Dec, 9am).
Earnings: Equinor, ASSA ABLOY, Svenska Handelsbanken A, Vestas Wind, Oersted AS, Telenor, TotalEnergies, Carlsberg.
Events: Speeches by the ECB’s Wunsch at Bruegel event (11:30am) & Lane at Brookings Institution (3:30pm); ECB publishes Economic Bulletin (9am).
Data: N/A
Earnings: L'Oreal, Moller Maersk, Unilever.
Events: Speeches by the ECB’s Nagel at award event in Paris (10:30am) & Cipollone on ‘The Future is our Present’ (2:15pm).
Data: German headline CPI (January final estimate, 7am); French wages (Q4 first estimate, 7:45am); Italian industrial production (Dec, 9am).
Earnings: Hermes International.
Events: N/A
Data: New car sales (Jan, 9am); official reserve changes (Jan, 9:30am); S&P Global services sector PMI (January final estimate, 9:30am).
Earnings: N/A
Events: Bank of England’s quarterly report on APF (12pm).
Data: BRC retail sales (Jan, 12:01am).
Earnings: BP.
Events: Speech by the Bank of England’s Breeden at annual networking event (8:40am).
Data: N/A
Earnings: N/A
Events: Speech by the Bank of England’s Catherine Mann on inflation dynamics and drivers (3pm).
Data: RICS house price balance (Jan, 12:01am).
Earnings: AstraZeneca, Unilever, British American Tobacco, Compass.
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Australian headline CPI (Jan, 12am); Australian exports & imports (Dec, 12:30am); Japanese Jibun Bank services sector PMI (January final estimate, 12:30am); Australian ANZ-Indeed job advertisements (Jan, 12:30am); Chinese Caixin services sector PMI (Jan, 1:45am); Japanese household spending (Dec, 11:30pm).
Earnings: Mitsubishi UFJ Financial, Itochu Corp., Mitsubishi Electric.
Events: RBA policy decision (3:30am) & press conference hosted by Governor Bullock (4:30am); market holiday in New Zealand on account of National Day.
Data: Australian real retail sales (Q4, 12:30am).
Earnings: Mitsubishi Corp., Daikin Industries.
Events: N/A
Data: Japanese ESRI leading index (December first estimate, 5am); Chinese foreign reserves (Jan, 8am).
Earnings: Alibaba.
Events: Governor Bullock testimony (11:30pm).
Data: Chinese headline CPI & PPI (Jan, 1:30am); Japanese M2 & M3 money supply (Jan, 11:50pm).
Earnings: Nippon Telegraph & Telephone Corp, SoftBank Group Corp., Honda Motor.
Events: Market holiday in various Asian countries (e.g. China, Hong Kong, Taiwan) on account of Chinese New Year.
Data: Chinese Total Social Financing, New Yuan loans, M1 and M2 money supply (Jan - TBA).
Earnings: Tokyo Electron, Recruit Holdings.
(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”
(Long)View from London, 26th January 2024:
“Bonds, Energy & What’s Contrarian?”
Monthly Global Asset Allocation No. 30, 25th January 2024:
“Bonds: Has the ‘Easy Money’ Been Made? A.k.a. Treasuries in the Short, Medium, & Long Term”
The SHORT VIEW (& market positioning), 24th January 2024:
“Copper: LONG Trade Brewing”
Commodity Fundamentals Report No. 175, 23rd January 2024:
“Iron Ore vs. Copper: What’s Next?”