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:
Price action in US equity markets remained strong last week. In particular, with Nvidia beating earnings estimates (across the board), the stock closed up 16% on Thursday (and +0.4% yesterday). With that, the S&P500 made a new high (with the tech sector, unsurprisingly, delivering strong gains). Of interest, though, other sectors also participated in the rally, with strength, for example, in materials (+1.9%), industrials (+1.8%), & financials (+1.6%).
Other key global equity indices also broke out to the upside, with the DAX40, CAC40, and Nikkei 225 all making new record highs. Of interest that breakout in US/global equities was accompanied by some dollar weakness last week (from technically overbought levels). Usually, as the chart below shows, a weaker dollar is a tailwind for equities (and indeed other risk assets).
The key near term question, therefore, is: Will the upside breakout in US/global markets be followed by ongoing strength? Or, will the recent rally fade and reverse in coming days and weeks?
We posed these questions in Friday’s ‘(Long)View from London’ weekly publication (trial available HERE).
Key events and data releases this coming week will also be watched closely. In particular, in the US, PCE inflation (and income & spending) data is due on Thursday, followed by ISM manufacturing on Friday (as well as other key data releases through the week). There will also be speeches by a number of FOMC members, and earnings reports from a number of key companies. Please see below for a list of key data/events.
Fig A: US dollar index (scale INVERTED) vs. S&P500
(All in London time BST)
Events: Speech by the ECB’s Lagarde (4pm).
Data: US new home sales (Jan, 3pm).
Earnings: Berkshire Hathaway.
Events: N/A
Data: US Conference Board consumer confidence (Feb, 3pm); EZ M3 money supply (Jan, 9am).
Earnings: Lowe’s.
Events: N/A
Data: N/A
Earnings: Salesforce, NetEase.
Events: N/A
Data: US headline & core PCE inflation (Jan, 1:30pm); US Chicago PMI (Feb, 2:45pm).
Earnings: N/A
Events: N/A
Data: US ISM manufacturing (Feb, 3pm); Eurozone headline & core CPI (February first estimate, 10am); Chinese manufacturing & services sector PMIs (Feb, 1:30am & 1:45am).
Earnings: N/A
The SHORT VIEW (& market positioning), 22nd February 2024:
“Bonds: BUY Case Brewing”
US Treasury yields are poised at a key level, in the near term. That is, having backed up by 48bps since their December low, they closed at 4.32% yesterday. That is close to the local yield high from October 2022 (4.25%, see FIG J), which was also a key level in 2007, 2008, and in 2001 (see FIG A).
That yield is also interesting from an ‘order flow’ perspective. This approach looks at the key levels at which most of the volume has occurred in an individual asset (which, in turn, provides key points of reference/key support and resistance levels). In that respect, bond yields are trading just above their ‘point of control’, which is the level at which volumes have been at their highest in the past 9 months. That level is shown as the red line in FIG F, and is a key yield that has attracted interest/orders.
Events: N/A
Data: US new home sales (Jan, 3pm); US Dallas Fed manufacturing activity (Feb, 3:30pm).
Earnings: Berkshire Hathaway, Workday.
Events: Speeches by the Fed’s Schmid on monetary policy (12:40am) & Barr on counterparty credit risk (2:05pm).
Data: US durable goods orders (January first estimate, 1:30pm); US FHFA house price index (Dec, 2pm); US S&P/Case-Shiller 20-city & national house prices (Dec, 2pm); US Richmond Fed manufacturing & business conditions (Feb, 3pm); US Conference Board consumer confidence (Feb, 3pm); US Dallas Fed services activity (Feb, 3:30pm).
Earnings: Lowe’s, Bank of Montreal, American Tower, Bank of Nova Scotia.
Events: Speeches by the Fed’s Bostic in Fireside Chat (5pm), Collins in Fireside Chat (5:15pm) & Williams at Long Island Association Regional Economic briefing (5:45pm).
Data: US GDP (Q4 second estimate, 1:30pm); US retail & wholesale inventories (January first estimate, 1:30pm).
Earnings: Salesforce, RBC, TJX, Monster Beverage.
Events: Speeches by the Fed’s Bostic in Fireside Chat (3pm), Goolsbee on monetary policy (4pm) & Mester on financial stability and regulation (6:15pm).
Data: Canadian monthly GDP (Dec, 1:30pm); US personal income & spending including headline & core PCE inflation (Jan, 1:30pm); US Chicago PMI (Feb, 2:45pm); US pending home sales (Jan, 3pm); US Kansas City Fed manufacturing activity (Feb, 4pm).
Earnings: Toronto Dominion Bank, Canadian Natural, Dell Tech.
Events: Speeches by the Fed’s Williams in New York (1:10am), Waller at US Monetary Policy Forum (3:15pm), Bostic on economic outlook and real estate (5:15pm), Daly in panel discussion with Schmid (6:30pm) & Kugler on the Dual Mandate (8:30pm).
Data: Canadian S&P manufacturing sector PMI (Feb, 2:30pm); US S&P manufacturing sector PMI (February final estimate, 2:45pm); US construction spending (Jan, 3pm); US Michigan sentiment (February final estimate, 3pm); US ISM manufacturing (Feb, 3pm); US Kansas City Fed services activity (Feb, 4pm).
Earnings: N/A
Events: Speeches by the ECB’s Vujcic on Bulgaria’s euro adoption (8am), Stournaras on the impact of interest rates in uncertain economic times (11:30am) & Lagarde (4pm).
Data: N/A
Earnings: N/A
Events: N/A
Data: German GfK consumer confidence (Mar, 7am); French INSEE consumer confidence (Feb, 7:45am); Eurozone M3 money supply (Jan, 9am).
Earnings: Munich Re Group, Jyske Bank.
Events: Speech by the ECB’s Muller on Estonian banking sector (9am).
Data: Eurozone European Commission consumer, industrial & services confidence (Feb, 10am).
Earnings: N/A
Events: N/A
Data: German retail sales (Jan, 7am); French headline CPI (February first estimate), GDP (Q4 final estimate), PPI (Jan) & consumer spending (Jan) – all at 7:45am; German unemployment (Feb, 8:55am); German headline CPI (February first estimate, 1pm).
Earnings: N/A
Events: Speech by the ECB’s Holzmann at Austria’s Art. IV consultation (10am).
Data: HCOB manufacturing & service sector PMIs for Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all February final estimates apart from Italy; Italian unemployment rate (Jan, 9am); Eurozone headline & core CPI (February first estimate, 10am); Eurozone unemployment rate (Jan, 10am); Italian headline CPI (February first estimate, 10am).
Earnings: N/A
Events: Speeches by the Bank of England’s Breeden & Pill at Annual Bank of England Agenda for Research conference (9am & 11am).
Data: CBI distributive trade survey (Feb, 11am).
Earnings: N/A
Events: Speech by the Bank of England’s Ramsden at Association for Financial Markets in Europe’s Bond Trading, Innovation and Evolution forum (1:40pm)
Data: BRC shop price index (Feb, 12:01am).
Earnings: N/A
Events: Speech by the Bank of England’s Mann at Financial Times event (3:30pm).
Data: N/A
Earnings: Reckitt Benckiser, National Grid.
Events: N/A
Data: Lloyds business barometer (Feb, 12:01am); net consumer credit, mortgage approvals & M4 money supply (Jan, 9:30am).
Earnings: London Stock Exchange.
Events: Speech by the Bank of England’s Pill at Cardiff University Business School (2pm).
Data: Nationwide house prices (Feb, 7am); S&P manufacturing sector PMI (February final estimate, 9:30am).
Earnings: N/A
Events: N/A
Data: Japanese headline & core CPI (Jan, 11:30pm).
Earnings: Li Auto.
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Australian headline CPI (Jan, 12:30am); Japanese ESRI leading indicator (December final estimate, 5am); Japanese retail sales & industrial production (January first estimate, 11:50pm).
Earnings: NetEase, Baidu.
Events: Speech by the BOJ’s Takata in Shiga (1:30am).
Data: Australian retail sales & private sector credit (Jan, 12:30am); Japanese housing starts (Jan, 5am); Taiwanese GDP (Q4 first estimate, 8am); Australian Judon Bank manufacturing sector PMI (February final estimate, 10pm); Japanese jobless rate (Jan, 11:30pm).
Earnings: HKEX.
Events: N/A
Data: Japanese Jibun Bank manufacturing sector PMI (February final estimate, 12:30am); Chinese manufacturing & service sector PMIs (Feb, 1:30am); Chinese Caixin manufacturing sector PMI (Feb, 1:45am); Japanese ESRI consumer confidence (Feb, 5am).
Earnings: N/A
(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”
(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”