Nasdaq Markets Outlook

A mostly graphical daily curated roundup of the markets and the economy from Nasdaq's IR team.

#marketseverywhere | CPI hotter than expected

| August core inflation, excluding food and energy, rose 0.3%, hotter than expected | Headline CPI +0.6% MoM / +3.7% YoY

| oil/gas prices climbing - fed much of the gain

| Peak Disinflation? = mild sticky inflation + yields higher for longer? = dampening equity sentiment

* source: CNBC

| "continued weakness in the NFIB report (small business sentiment) supports our “stay big” preference to market-cap positioning.

Although larger caps have massively outpaced smaller caps YTD, we believe continued fundamental weakness among smaller caps (and macro trends in general) will allow this trend to persist." -Michael Kantrowitz

| NFIB (Small Biz) Optimism & Russell Micro-Cap Stocks Moving Lower Together

| #QualityMatters | Not All Large Caps Are Created Equally: Stick W/ EPS Growth; Avoid Negative Earnings and Higher Beta

* source: Piper Sandler

1) KEY TAKEAWAYS

1) Equities  MIXED + TYields HIGHER | PPI (Thurs) + UMich consumer expectation survey (Fri) + ECB decision (Thurs)

| IPO market being tested: Arm = Thursday in the year’s biggest listing. Instacart + Klaviyo are expected to list as soon as next week.

| THEMES: geopolitical scrutiny on some tech names + yield back-up + energy prices rising + peak disinflation? + UAW strike + hedging costs climb + market breadth poor

| Tax Cuts Are Here to Stay—and So Are Exploding Budget Deficits. In recent decades, Republicans and Democrats alike have been reluctant to raise taxes on the overwhelming majority of Americans, or to curb spending -WSJ

DJ +0.1% S&P500 +0.2% Nasdaq +0.2% R2K +0.1% Cdn TSX -0.1%

Stoxx Europe 600 -0.5% APAC stocks LOWER, 10YR TYield = 4.278%

Dollar LOWER, Gold $1,913, WTI +0%, $89; Brent +0%, $92, Bitcoin $26,196

2)  oil + yields rising = adding pressure to stocks + valuation | peak disinflation = mild persistent inflation + sticky rates

* source: CNBC

3) Where are we?

* source: Goldman Sachs Global Investment Research

* source: Piper Sandler

4) Hard landing or soft landing?  No one seems to know...

* source: Piper Sandler

5) With rates normalized (end of easy money policy) stocks have competition with other asset classes...

investor targeting becomes even more crucial!

* source: Goldman Sachs Global Investment Research

6) will rates fall on economic weakness - the markets seem to think so but that can also reaccelerate inflation

* source: Goldman Sachs Global Investment Research

7) This week: US CPI (Wed) + PPI (Thurs) + UMich consumer expectation survey (Fri) + ECB decision (Thurs) + labour market / GDP data in the UK. G20 summit kicks off this Saturday.

* source: Grindstone Intelligence

8) Investors = conservative bias | sentiment moderating | equity inflows have stalled | "Less than half of S&P 500 stocks are in uptrends, whether you look at 20, 50, 100, or 200-day average prices" -Grindstone Intelligence

* source: Grindstone Intelligence

2) ESG, COMPILED BY NATHAN GREENE

EU's von der Leyen pledges more support for wind industry - Reuters

-The European Union will put forward a package of measures to support Europe's wind power industry as renewable energy companies struggle with challenges including inflation. The commission has said power grid investments of 584 billion euros ($627 billion) are needed from 2020 to 2030 to meet green goals.

UK Wind-Energy Capacity Overtakes Gas Generation for First Time - BNN

-According to an analysis from Imperial College London, the UK’s installed wind capacity reached 27.9 gigawatts in June, compared to 27.7 gigawatts of gas generation.

-The report also found that carbon emissions from electricity production fell to less than 10 million tons in the second quarter of 2023 for only the second time on record — the first being during the Covid lockdown.

3) MARKETS, MACRO, CORPORATE NEWS

• China has not banned purchase, use of foreign phone brands-RTRS
• China flags ‘Security Incidents’ with Apple’s iPhones-BBG
• Arm to fetch at least $54.5 billion valuation in IPO, a source says-RTRS
• US chips giant Lamb Weston scoops up Aussie potato cake maker-AFR
• Origin takeover price needs boost towards $10 per share: Macquarie
• BP CEO Looney quits over past relationships with colleagues-BBG
• Deutsche Bank push risky derivatives years after probe found mis-selling-FT
• Australia’s biggest bank says fierce mortgage fight isn’t over-BBG
• Oil/Energy Headlines: 1) Libyan oil ports reopen after storm forced closure-RTRS2) IEA confirms oil demand growth forecasts; sees volatility threat as market tightens-PLATTS 3) Saudi Arabia’s production cuts threaten a surge in oil price volatility, IEA warns-BBG 4) OPEC+ cuts to tighten oil market sharply in fourth quarter, IEA says-RTRS