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 equities remained strong last week. Of note, both the S&P500 and NASDAQ100, held onto/consolidated their gains (since breaking out of their trading ranges on Jan 19th), see key chart below. In other words, with little/minimal giveback during the week, the ‘buy the dip’ psychology remains alive and well, at least for now – and while newsflow remains supportive.
Indeed, there was plenty of positive newsflow this past week. US GDP surprised to the upside; yesterday’s PCE inflation print was better than expected (with robust consumer spending); earnings have surprised to the upside; while, elsewhere, China has started to loosen monetary policy (i.e. with an RRR cut).
In the near term, therefore, the key question is: How much more upside is there? How long can ‘buy the dip’ psychology last?
It’s clearly plausible that equities rally into/ahead of next week’s earnings reports (with Microsoft, Alphabet, Apple, Meta, and Amazon all due to report earnings either on Tuesday or Thursday). Wednesday’s Fed’s policy decision, and the tone of Powell’s press conference, will also be key for market direction. Often markets rally into these meetings, before then selling off (i.e. the classic “buy the rumour, sell the fact” price pattern).
Elsewhere, other key events/data releases include US ADP (Wednesday), ISM manufacturing (Thursday), and nonfarm payrolls (Friday). In Europe, the first estimates for Q4 GDP are due (on Tuesday), with Eurozone CPI out on Thursday. There’s also a Bank of England policy decision on Thursday. Please see below for a full list of upcoming data and events.
Key Chart: S&P500 futures shown with 50 & 200 day moving averages
(All in London time BST)
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: US Conference Board consumer confidence (Jan, 3pm); US JOLTS job openings (Dec, 3pm); GDP for France (6:30am), Italy (9am), Germany (9am) & EZ (10am) – all Q4 first estimates; UK net consumer credit, mortgage approvals & M4 money supply (Dec, 9:30am).
Earnings: Microsoft, Alphabet, AMD.
Events: Fed policy decision (7pm) followed by press conference by Powell (7:30pm).
Data: US ADP employment change (Jan, 1:15pm); Chinese manufacturing & services sector PMI (Jan, 1:30am).
Earnings: Mastercard, Qualcomm, Deutsche Bank.
Events: Bank of England policy decision (12pm).
Data: EZ headline CPI (January first estimate, 10am); US ISM manufacturing (Jan, 3pm); Chinese Caixin manufacturing sector PMI (Jan, 1:45am).
Earnings: Apple, Amazon, Sony.
Events: N/A
Data: US nonfarm payrolls, hourly earnings & unemployment data (Jan, 1:30pm).
Earnings: Exxon Mobil, Chevron.
The SHORT VIEW (& market positioning), 24th January 2024:
“Copper: LONG Trade Brewing”
“…There’s still sufficient room for China’s monetary policy…”
Source: PBoC Governor Pan, 24th Jan 2024
Over the next year or so, copper prices face multiple headwinds. In particular, the key drivers of Chinese copper demand should deteriorate further (in both the power and property sectors), while copper supply growth is likely to reaccelerate.
Markets, though, don’t move in straight lines. Indeed, on a 1 - 6 month time frame, there's room for a copper rally (potentially counter trend) given our technical, positioning, and sentiment models. In particular, price action has been bullish in recent weeks and months, with copper (i) holding above/rallying from its key support level ($3.51/lb); (ii) breaking above its downtrend line (which has now become a key support level); and (iii) following China’s 50 bps RRR cut overnight*, rallying from its 200-day moving average.
Events: N/A
Data: US Dallas Fed manufacturing activity (Jan, 2:30pm).
Earnings: Nucor.
Events: N/A
Data: US FHFA house price index (Nov, 2pm); US S&P/Case-Shiller 20-city & national house prices (Nov, 2pm); US Conference Board consumer confidence (Jan, 3pm); US JOLTS job openings (Dec, 3pm); US Dallas Fed services activity (Jan, 3:30pm).
Earnings: Microsoft, Alphabet, AMD, Danaher, Pfizer, UPS, Stryker, Starbucks, Mondelez, HCA Healthcare, General Motors, Chubb, MSCI, Sysco, Johnson Controls, MPLX LP, EA.
Events: Fed policy decision (7pm) followed by press conference by Powell (7:30pm).
Data: US weekly MBA mortgage applications (12pm); US ADP employment change (Jan, 1:15pm); Canadian monthly GDP (Nov, 1:30pm); US employment cost index (Q4, 1:30pm); US Chicago PMI (Jan, 2:45pm).
Earnings: Mastercard, Thermo Fisher, Qualcomm, Boeing, ADP, Boston Scientific, Phillips 66, Roper Technologies, MetLife, Aflac, Banco Santander Brasil, Cencora, IDEXX Labs, Hess, Old Dominion Freight, Otis, Rockwell, CGI Inc, Nasdaq, Corteva.
Events: N/A
Data: US Challenger job cuts (Jan, 12:30pm); US nonfarm productivity (Q4 first estimate, 1:30pm); US weekly jobless claims (1:30pm); Canadian S&P Global manufacturing sector PMI (Jan, 2:30pm); US S&P Global manufacturing sector PMI (January final estimate, 2:45pm); US construction spending (3pm); US ISM manufacturing (Jan, 3pm); US total vehicle sales (Jan, 3pm).
Earnings: Apple, Amazon, Honeywell, Eaton, Illinois Tools, Altria, Becton Dickinson, Southern Copper, Atlassian, Parker Hannifin, Enterprise Products, Trane, Microchip Technologies.
Events: N/A
Data: US nonfarm payrolls, hourly earnings & unemployment data (Jan, 1:30pm); Michigan sentiment (January final estimate, 3pm); US factory orders (Dec, 3pm).
Earnings: Exxon Mobil, AbbVie, Chevron, Bristol-Myers Squibb, Regeneron, Cigna, Charter Communications, Aon, WW Grainger, Imperial Oil.
Events: Speech by the ECB’s Guindos on Spain’s Radio Nacional & at Investment Outlook conference (12pm & 1:10pm).
Data: N/A
Earnings: Ryanair, Philips.
Events: Speeches by the ECB’s Vujcic & Lane on Croatia’s euro adoption (9am), Vasle at IMF Slovenia mission press conference (12:30pm) & Nagel at New Economy Form (12:30pm).
Data: GDP for France (6:30am), Italy (9am), Germany (9am) & EZ (10am) – all Q4 first estimates; European Commission consumer confidence (January final estimate, 10am).
Earnings: BBVA.
Events: N/A
Data: French headline CPI & PPI (January & December first estimates, 7:45am); German unemployment (Jan, 8:55am); Italian unemployment rate (Dec, 9am); German headline CPI (January first estimate, 1pm).
Earnings: Novartis, DnB, Santander.
Events: Speeches by the ECB’s Centeno in Lisbon (9:15am) & Lane in Rome (11:30am); Riksbank policy decision (8:30am).
Data: HCOB manufacturing sector PMIs for Italy (8:45am), France (8:50am), Germany (8:55am) & EZ (9am) - all January final estimates apart from Italy; EZ headline CPI (January first estimate, 10am); EZ unemployment rate (Dec, 10am); Italian headline CPI (January first estimate, 10am).
Earnings: Merck, Roche, Sanofi, BNP Paribas, ABB, Dassault, Siemens, Ferrari, ING, DSV, DuPont de Nemours, Naturgy Energy, Deutsche Bank, Hexagon, Evolution Gaming, Banco de Sabadell, DWS Group, Julius Baer.
Events: Speech by the ECB’s Centeno on monetary policy & the European labour market (8:30am).
Data: French industrial & manufacturing production (Dec, 7:45am).
Earnings: Danske Bank, UniCredit, Caixabank, Industrivarden.
Events: N/A
Data: N/A
Earnings: N/A
Events: N/A
Data: BRC shop price index (Jan, 12:01am); net consumer credit, mortgage approvals & M4 money supply (Dec, 9:30am).
Earnings: Diageo.
Events: N/A
Data: Lloyds business barometer (Jan, 12:01am); Nationwide house prices (Jan, 7am).
Earnings: GSK.
Events: Bank of England policy rate decision (12pm).
Data: S&P Global manufacturing sector PMI (January final estimate, 9:30am).
Earnings: Shell.
Events: Speech by the Bank of England’s Pill on the Monetary Policy Report (12:15pm).
Data: N/A
Earnings: N/A
Events: N/A
Data: Japanese jobless rate (Dec, 11:30pm).
Earnings: Japan Exchange Group, ITC.
Events: N/A
Data: Australian retail sales (Dec, 12:30am); Japanese retail sales & industrial production (Dec, 11:50pm).
Earnings: Bank Mandiri, Oriental Land, Chunghwa Telecom, Canon, Komatsu, NEC, Central Japan Railway, CHT, Bajaj Finance, NTPC, Adani Green Energy.
Events: N/A
Data: Australian private sector credit (Dec, 12:30am); Australian headline CPI (Q4, 12:30am); Chinese manufacturing & services sector PMI (Jan, 1:30am); Japanese ESRI consumer confidence (Jan, 5am); Japanese housing starts (Dec, 5am); Australian CoreLogic house prices (Jan, 1:01pm); Australian Judo Bank manufacturing sector PMI (January final estimate, 10pm).
Earnings: Samsung Electronics, Alibaba, Hitachi, Fujitsu, Daiichi Sankyo, Advantest, Lasertec, Nomura, Nomura Research, East Japan Railway, MediaTek, Sun Pharma.
Events: N/A
Data: South Korean imports & exports (Jan, 12am); Australian NAB business confidence (Q4, 12:30am); Japanese Jibun Bank manufacturing sector PMI (January final estimate, 12:30am); Australian building approvals & private sector houses (Dec, 12:30am); Chinese Caixin manufacturing sector PMI (Jan, 1:45am); Japanese monetary base (Jan, 11:50pm).
Earnings: Konami, Sony, Sumitomo Mitsui Financial, Chugai Pharma, Takeda Pharma, Hoya, Kyocera, News Corp, Titan, Adani Enterprises.
Events: N/A
Data: Australian PPI & home loans value (Q4, 12:30am).
Earnings: Keyence, Panasonic, KDDI, Denso, Mitsui & Co, Mizuho Financial, Marubeni, Murata, Toyota Industries, Tata Motors.
(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?”
(Long)View from London, 19th January 2024:
“Equity Market: Where Next? PLUS Q2 Challenges/Risks”
Quant Monthly Appendix 1 & 2, 18th January 2024:
“Country & Sector Valuation”
The SHORT VIEW (& market positioning), 17th January 2024:
“OIL: Breakout Ahead”
Commodity Fundamentals Report No. 174, 16th January 2024:
“Copper Prices: Downtrend to Continue (For Now)”