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 has been impressive in the past few weeks. In particular, after generating strong returns in November and December, the S&P500 has (so far) successfully held onto/consolidated those gains (see key chart below). Equally impressively, the market has remained resilient despite: i) last Thursday’s worse than expected US inflation report for December; ii) recent stronger than expected labour market data; and iii) linked to that, a move higher in US 10-year Treasury yields (both real and nominal, i.e. since late December).
The key question is, therefore: Are US equity markets, having consolidated their gains, preparing to move higher (and, in the case of the S&P500, break out to new all-time highs)? Or are they about to fail at recent highs, and roll over?
Our thinking on that is laid out in our latest tactical equity asset allocation research (which is primarily based on the message of our medium-term models). Please email info@longvieweconomics.com if you would like a copy.
Other potential drivers of market direction, which bear watching closely this week, include commentary by key Fed speakers. Waller, for example, is speaking on the economic outlook (Tuesday) while Williams (Wednesday), Bostic (Thursday), and Daly (Friday) are all due to make comments/give speeches. Elsewhere there are several key macro data releases (including US housing data on Wednesday, Thursday & Friday) as well as multiple Q4 earnings reports (see below for a full list of key data and events).
Other events being watched closely by market participants include this weekend’s Taiwanese presidential and parliamentary elections (with the DPP’s ‘China skeptic’ Lai Ching-te winning the election). China has essentially described the vote as a choice between war and peace (amongst other things, see HERE). As such China’s ongoing response, with potentially increased economic and military pressure, will be watched closely.
(All in London time BST)
Events: Market holiday in the US on account of Martin Luther King Jr. Day.
Data: N/A
Earnings: N/A
Events: N/A
Data: UK Employment change, jobless claims & average weekly earnings (Dec, 7am).
Earnings: Morgan Stanley, Goldman Sachs.
Events: Fed releases Beige Book (7pm); ECB’s Lagarde at WEF event in Davos (3:15pm).
Data: Chinese data (Dec, 2am) & GDP (Q4, 2am); UK headline & core CPI (Dec, 7am); US retail sales (Dec, 1:30pm); US NAHB homebuilders index (Jan, 3pm).
Earnings: Charles Schwab, U.S. Bancorp.
Events: ECB’s Lagarde at WEF event in Davos (3:15pm); ECB publishes account of December meeting (12:30pm).
Data: US building permits & housing starts (Dec, 1:30pm); US Philadelphia Fed business outlook (Jan, 1:30pm).
Earnings: Truist Financial Corp, Taiwan Semiconductors.
Events: ECB’s Lagarde at WEF event in Davos (10am).
Data: Michigan consumer sentiment (January first estimate, 3pm).
Earnings: Investor.
The SHORT VIEW (& market positioning), 10th January 2024:
“Has Gold Lost its Shine?”
In recent weeks, gold has been revisiting multi-year/record highs once again. Those highs have been reached on three prior occasions: In August 2020 (initial peak); March 2022 (first test) and then again in May 2023 (FIG C). Since November last year, gold has been trading at/around that level (latest $2,035).
The key question for gold traders is whether it’s going to break above those levels in coming weeks; Or is it going to fail once again?
Not surprisingly, since bonds and rate futures started rallying in Q4 last year, gold has been aggressively bid (rallying by $300 from local lows of $1,809 in early October through to the late December highs).
Events: Market holiday in the US on account of Martin Luther King Jr. Day.
Data: Canadian wholesale & manufacturing sales (Nov, 1:30pm); Canadian existing home sales (Dec, 2pm).
Earnings: N/A
Events: Speeches by the Fed’s Waller on economic outlook and monetary policy (4pm).
Data: Canadian housing starts (Dec, 1:15pm); US Empire manufacturing (Jan, 1:30pm); Canadian headline & core CPI (Dec, 1:30pm).
Earnings: Morgan Stanley, Goldman Sachs, PNC Financial.
Events: Fed releases Beige Book (7pm); speeches by the Fed’s Barr at conference on cyber risk (2pm), Bowman on the future of bank capital reform (2pm) & Williams at NY Fed event (8pm).
Data: US weekly MBA mortgage applications (12pm); US New York Fed services business activity (Jan, 1:30pm); US retail sales (Dec, 1:30pm); US import & export price index (Dec, 1:30pm); US industrial production, manufacturing production & capacity utilisation (Dec, 2:15pm); US business inventories (Nov, 3pm); US NAHB homebuilders index (Jan, 3pm).
Earnings: Prologis, Charles Schwab, U.S. Bancorp, Kinder Morgan, Discover.
Events: Speech by the Fed’s Bostic on economic outlook (12:30pm & 4:30pm).
Data: US building permits & housing starts (Dec, 1:30pm); US Philadelphia Fed business outlook (Jan, 1:30pm); US weekly jobless claims (1:30pm).
Earnings: Truist Financial Corp, Fastenal, PPG Industries.
Events: Speeches by the Fed’s Barr about bank regulation (6pm) & Daly in Fireside Chat (9:15pm).
Data: Canadian retail sales (Nov, 1:30pm); Michigan consumer sentiment (January first estimate, 3pm); US existing home sales (Dec, 3pm); US total net TIC flows (Nov, 9pm).
Earnings: Travelers.
Events: Speech by the ECB’s Holzmann in Davos (2:15pm).
Data: German wholesale prices (Dec, 7am); EZ industrial production (Nov, 10am); EZ trade balance (Nov, 10am).
Earnings: N/A
Events: Speech by the ECB’s Villeroy at WEF in Davos panel (7:15am).
Data: German headline CPI (December final estimate, 7am); ECB 1 & 3 year expectations (Nov, 9am); Italian headline & core CPI (December final estimate, 9am); German & EZ ZEW survey - expectations & current situation (Jan, 10am).
Earnings: N/A
Events: Speeches by the ECB’s Vasle & Virag in Vienna (8:35am), Simkus in Vienna (9:15am), Villeroy at French Senate’s financial affairs committee (9:30am), Vujcic at WEF in Davos (11:30am), Knot at WEF in Davos (12:15pm), Lagarde at WEF in Davos (3:15pm) & Nagel at WEF in Davos (6:30pm).
Data: EZ headline & core CPI (December final estimate, 10am).
Earnings: N/A
Events: ECB publishes account of December meeting (12:30pm); speech by the ECB’s Lagarde at WEF panel in Davos (3:15pm).
Data: EZ new car sales (Dec, 7am); ECB current account (Nov, 9am); EZ construction output (Nov, 10am).
Earnings: EQT.
Events: Speech by the ECB’s Lagarde at WEF panel in Davos (10am).
Data: German PPI (Dec, 7am).
Earnings: Investor.
Events: N/A
Data: Rightmove house prices (Jan, 12:01am).
Earnings: N/A
Events: Bank of England’s Bailey testifies to the House of the Lords (3pm).
Data: Employment change, jobless claims & average weekly earnings (Dec, 7am).
Earnings: N/A
Events: N/A
Data: Headline & core CPI, RPI & PPI (Dec, 7am); Land Registry house prices (Nov, 9:30am).
Earnings: N/A
Events: N/A
Data: RICS house price balance (Dec, 12:01am).
Earnings: N/A
Events: N/A
Data: Retail sales (Dec, 7am).
Earnings: N/A
Events: N/A
Data: Australian headline CPI (Dec, 12am); Australian ANZ-Indeed job advertisements (Dec, 12:30am); Australian CBA household spending (Dec, 3:30am); Japanese machine tool orders (December first estimate, 6am); Australian Westpac consumer confidence (Jan, 11:30pm); Japanese PPI (Dec, 11:50pm).
Earnings: N/A
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: Chinese new home prices (Dec, 1:30am); Chinese data (IP, retail sales, FAI & unemployment rate – all for Dec, 2am) & GDP (Q4, 2am); Japanese machinery orders (Nov, 11:50pm).
Earnings: N/A
Events: N/A
Data: Australian consumer inflation expectations (Jan, 12am); Australian labour market data (Dec, 12:30am); Japanese industrial production & capacity utilisation (November final estimate, 4:30am); Japanese headline & core CPI (Dec, 11:30pm).
Earnings: Taiwan Semiconductors.
Events: N/A
Data: Japanese tertiary industry (Nov, 4:30am).
Earnings: N/A
(Long)View from London, 12th January 2024:
“[x]”
Monthly Global Asset Allocation No. 29, 12th January 2024:
“UK: Cheap & Under-Owned a.k.a. Stay OW in Strategic Portfolios”
The SHORT VIEW (& market positioning), 10th January 2024:
“Has Gold Lost its Shine?”
Monthly Global Asset Allocation No. 28, 8th January 2024:
“UK – Nearing a Trough a.k.a. Household Cashflow to Reaccelerate”
(Long)View from London, 5th January 2024:
“Sector Rotation & the Winner's Curse”
Commodity Fundamentals Report No. 173, 4th January 2024:
“Oil: Uptrend to Resume in 2024”
Tactical Equity Asset Allocation No. 240, 3rd January 2024:
“Stay Tactically OW Equities (albeit risks rising)”