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:
Last week the S&P500 followed its ‘usual’ price pattern that’s been in place for a number of weeks: After consolidating recent gains for a handful of days, the index broke out to the upside to make a new high. Price action was similar in the NASDAQ100, with both indices closing higher in 15 out of the last 17 weeks.
With that, the rally has continued to broaden to other areas of the market. The equal weighted S&P500, for example, is now close to all time highs (see chart below), while other global indices made new highs last week, including the DAX40, CAC40, and Nikkei 225.
The key question, therefore, remains unchanged: Having once again broken out to the upside, how much more strength is likely over coming weeks?
Events and data releases this week will be watched closely in that respect. In particular, key US data points include ISM services (Tuesday); ADP employment and job openings (Wednesday); and nonfarm payrolls (Friday). There’s also lots of central bank commentary. Powell is giving his semi-annual testimony to Congress (on Wednesday & Thursday) and there’s an ECB policy decision (and press conference) on Thursday. Please see below for a full list of next week’s key data/events.
Fig A: Equal weighted S&P500 index, with its 50 & 200 day moving averages
(All in London time BST)
Events: N/A
Data: N/A
Earnings: China Tower.
Events: N/A
Data: Chinese Caixin service sector PMI (Feb, 1:45am); US ISM services (Feb, 3pm).
Earnings: Target, JD.
Events: Bank of Canada policy decision (2:45pm); Fed’s Powell gives semi-annual testimony to Congress (3pm).
Data: US ADP employment change (Feb, 1:15pm); US JOLTS job openings (Jan, 3pm).
Earnings: Deutsche Post.
Events: ECB policy decision (1:15pm) followed by Lagarde press conference (1:45pm); Fed’s Powell gives semi-annual testimony to Congress (3pm).
Data: US Challenger job cuts (Feb, 12:30pm); US consumer credit (Jan, 8pm).
Earnings: Broadcom, Costco.
Events: N/A
Data: US nonfarm payrolls, hourly earnings & unemployment data (Feb, 1:30pm).
Earnings: N/A
Longview Letter No. 142, 28th February 2024:
“How Strong is Russia’s War Economy? a.k.a. An analysis of Russian oil and gas flow (and overall fiscal position/economic strength”
US support for the war in Ukraine is under pressure, as the Republican-controlled House blocks the latest funding round (approx. $60 billion). As a result, Ukrainian forces are short of ammunition and “struggling to hold defensive positions” in key cities. Elsewhere support from other Western powers, whilst increasing, remains modest compared to US support (with relatively small defence budget increases, from low levels).
Russia’s war economy, in contrast, appears solid. That is, despite some pain from sanctions at the start of the war, officials are talking up Russia’s ability to keep financing the war. They highlight, for example, low unemployment (currently 2.5%); low public debt to GDP (of just 20%); and 5.5% annualised real GDP growth last quarter.
Events: Speech by the Fed’s Harker on economic impact of higher education (4pm).
Data: N/A
Earnings: N/A
Events: Speech by the Fed’s Barr on CRA modernisation (5pm).
Data: Canadian S&P service sector PMI (Feb, 2:30pm); US S&P service sector PMI (February final estimate, 2:45pm); US ISM services (Feb, 3pm).
Earnings: CrowdStrike holdings, Target, Ross Stores, Ferguson.
Events: Bank of Canada policy decision (2:45pm); speeches by the Fed’s Daly to give keynote address (5pm), Kashkari at WSJ event (9:15pm); Fed releases Beige Book (7pm); Fed’s Powell gives semi-annual testimony to Congress (3pm).
Data: US ADP employment change (Feb, 1:15pm); Canadian labour productivity (Q4, 1:30pm); US wholesale inventories (January final estimate, 3pm); US JOLTS job openings (Jan, 3pm).
Earnings: Constellation Software.
Events: Speech by the Fed’s Mester on economic outlook (4:30pm); Fed’s Powell gives semi-annual testimony to Congress (3pm).
Data: US Challenger job cuts (Feb, 12:30pm); US nonfarm productivity & unit labour costs (Q4 final estimate, 1:30pm); US consumer credit (Jan, 8pm).
Earnings: Broadcom, Costco, Oracle.
Events: Speech by the Fed’s Williams in a moderated discussion (12pm).
Data: Canadian employment data (change in employment, unemployment rate & participation rate) (Feb, 1:30pm); US nonfarm payrolls, hourly earnings & unemployment data (Feb, 1:30pm).
Earnings: N/A
Events: Speech by the ECB’s Holzmann in Vienna (11:30am).
Data: Eurozone Sentix investor confidence (Mar, 9:30am).
Earnings: N/A
Events: N/A
Data: French industrial & manufacturing production (Jan, 7:45am); HCOB service sector PMIs for Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all February final estimates apart from Italy; Italian GDP (Q4 final estimate, 9am); Eurozone PPI (Jan, 10am).
Earnings: N/A
Events: N/A
Data: Eurozone retail sales (Jan, 10am).
Earnings: Deutsche Post.
Events: ECB policy decision (1:15pm) followed by Lagarde press conference (1:45pm).
Data: German factory orders (Jan, 7am).
Earnings: Petrobras, Merck.
Events: Speech by the ECB’s Holzmann in Vienna (9am).
Data: German industrial production & PPI (Jan, 7am); Italian PPI (Jan, 9am); Eurozone GDP & employment (Q4 final estimate, 10am).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: BRC retail sales (Feb, 12:01am); new car sales (Feb, 9am); S&P service sector PMI (February final estimate, 9:30am).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Australian headline CPI (Feb, 12am); Australian inventories (Q4, 12:30am); Australian building approvals (Jan, 12:30am); Australian Judo Bank service sector PMI (February final estimate, 10pm); South Korean GDP (Q4 first estimate, 11pm); Japanese headline CPI (Feb, 11:30pm).
Earnings: China Tower.
Events: Speech by the BOJ’s Ueda at FIN/SUM 2024 (4am).
Data: Japanese Jibun Bank service sector PMI (February final estimate, 12:30am); Chinese Caixin service sector PMI (Feb, 1:45am).
Earnings: JD.
Events: N/A
Data: Australian GDP (Q4, 12:30am).
Earnings: N/A
Events: Speech by the BOJ’s Nakagawa in Shimane (1:30am).
Data: Australian imports & exports, & home loans value (Jan, 12:30am); Chinese imports & exports (Feb, 3am).
Earnings: China Unicom Hong Kong.
Events: N/A
Data: Japanese ESRI leading index (January first estimate, 5am).
Earnings: AIA Group.
Tactical Equity Asset Allocation No. 242, 1st March 2024:
“Further (near term) Equity Upside Expected a.k.a. ‘Stay OW – Squeezing the Pips’”
Monthly Global AA No. 34, 29th February 2024:
“Increase Gold Exposure in Strategic Portfolios”
Longview Letter No. 142, 28th February 2024:
“How Strong is Russia’s War Economy? a.k.a. An analysis of Russian oil and gas flow (and overall fiscal position/economic strength”
Monthly Global AA No. 33, 27th February 2024:
“Chinese Equities: Switch from UW to OW A.k.a. Medium term (6 – 9 month) Rally Expected”
(Long)View from London, 23rd February 2024:
“Equities – Bulletproof?”
The SHORT VIEW (& market positioning), 22nd February 2024:
“Bonds: BUY Case Brewing”
Monthly Global AA No. 32, 20th February 2024:
“Japan: Four Reasons to Stay OW”