Nasdaq Markets Outlook

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

Hawkish Fed meets a Dovish Market

"Risk assets saw their worst performance in months yesterday"

"Fed Chair Powell clearly signaled that a March rate cut was unlikely"

-DB's Jim Reid

Market Was Also Surprised by Powell’s Comment That a March Cut Is Not the Base Case (rate cut odds rose to 75% then collapsed to 36%)

Fed needs "greater confidence that inflation is moving sustainably toward 2 percent.”

* source: Oxford Economics

The Fed removed any reference to "tighter financial conditions"

* source: Goldman Sachs Global Investment Research

The Fed removed the following sentence from the statement:

"The U.S. banking system is sound and resilient."

KRE fell 6% on Wednesday

* source: CNBC

| "Fresh reminders about the risk of a market accident...fears that the full consequences from higher interest rates are still yet to materialise, particularly given the amount of debt that needs refinancing over 2024 and 2025"

"Risk of a funding accident is much higher than usual, since we’ve experienced the most rapid series of rate hikes since the early 1980s"

-DB's Jim Reid

| New York Community Bancorp (-37.7%) reported a loss as they raised their expected loan losses on commercial real estate

Japanese Aozora Bank (-21.5%) = reported losses as a result of US commercial property

* source: CNBC

Will commercial real estate prices continue to fall?

"CRE will likely continue to create a lot of headlines. For macro watchers, will it be enough to derail the soft-landing thesis"

* source: DB

1) KEY TAKEAWAYS

1) Equities + Dollar + Oil + Gold HIGHER / TYields LOWER

-Apple, Amazon, and Meta reporting tonight

-AAII Weekly (Retail) Sentiment: Bullish jumped, bearish + neutral fell

-Activist Elliott builds roughly 13% stake in Etsy, secures board seat -CNBC

-January hiring was the lowest for the month on record as layoffs surged -CNBC

DJ +0.1% S&P500 +0.4% Nasdaq +0.5% R2K +0.9% Cdn TSX +0.3%

Stoxx Europe 600 -0.1% APAC stocks LOWER, 10YR TYield = 3.884%

Dollar HIGHER, Gold $2,048, WTI +1%, $77; Brent +1%, $81, Bitcoin $42,485

2) "The easing cycle has started. In Q4 2023, the number of global cuts went above global hikes for the first time since January 2021."

* source: Deutsche Bank

3) "The S&P’s performance after rate cuts is very dependent on whether there’s a recession or not."

* source: Deutsche Bank

4) Corporate buybacks should provide support in several weeks...

"Buybacks are a function of EPS growth and if earnings improves as expected, it augurs well for equity repurchases this year."

* source: Barclays' Emmanuel Cau

5) THIS WEEK:

US: Fed's policy decision Wednesday | Friday, US jobs report for January.

Europe: BoE meeting | CPI and GDP reports across the Eurozone.

Earnings: Apple, Amazon, Microsoft and Meta.

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

Joe Biden appoints John Podesta as US’s top climate diplomat - FT

-The White House said Podesta, who is currently in charge of rolling out clean energy subsidies and other parts of the Biden administration’s flagship Inflation Reduction Act, would continue in his current role alongside the additional duties of advising the president on international climate policy.

-Podesta has been an aggressive advocate of the IRA, the landmark climate law passed by Congress in 2022, as a tool to reindustrialize parts of the US’s rust-belt that suffered during globalization in recent decades.

Hedge Funds Ramp Up Copper Bets as Supply Shocks Reverberate - BBG

Copper’s longer-term supply dynamics underpin its appeal, given its role in feeding the technology needed for the green transition.

Funds including Tribeca Investment Partners, Terra Capital and Anaconda Invest all say the supply dynamics support price increases in 2024.

3) MARKETS, MACRO, CORPORATE NEWS

• Jay Powell pushes back on investor bets on imminent rate cuts-FT
• When will BOJ end negative rates? Policymakers eye March or April-NIKKEI
• Bank of England may signal when rates can be cut-BBG
• Sweden’s Riksbank takes first step toward interest rate cuts-BBG
• ECB needs more confidence inflation is headed to 2%, Lane says-BBG
• Euro zone inflation dips but core figures may disappoint-INV
• China vows to keep up spending in 2024 to support economy-BBG
• Factories deliver mixed performance globally in January-RTRS
• Decline in China's property sector may be slowing, no recovery yet-RTRS
• Euro zone factory downturn eased for third month in January-RTRS
• Red Sea disruption hits UK manufacturing at start of 2024 – PMI-RTRS
• S.Korea exports rise for 4th month on surge in chip sales, China rebound-RTRS
• China stocks suffer 'strongest' outflow of foreign investment since 2014-NIKKEI
• Kataib Hezbollah: Why Iran ally in Iraq stood down after US attacks-RTRS
• State Department review options possible recognition Palestinian state-AXIOS
• Ukraine tells allies troops are outgunned three-to-one by Russia-BBG
• US accuses Chinese memory chipmaker, ai firms of aiding PLA-BBG
• House passes $78B tax bill in rare bipartisan vote-POL
• Republican senators weigh Israel, Ukraine aid without border demands-BBG
• US energy data agency to track crypto mining power use-RTRS
• FTX plans to repay customers in full, drop exchange relaunch-BBG

• Paramount board takes steps sale as Byron Allen submits $14B buyout bid-NYP
• Ancora-led group takes $1 bln stake in Norfolk Southern bid to oust CEO-RTRS
• Tesla to open US battery plant with equipment from China’s CATL-BBG
• Disney reaches pact to sell 60% of its India business to Viacom18-CNBC
• Julius Baer chief executive and board member to leave over Signa exposure-FT
• Reliance, Bodhi Tree set for 60% stake in Disney India merger-RTRS
• Temasek-backed UST seeks to raise at least $500 million in IPO-BBG
• Stellantis CEO says rush to affordable EVs will end in disaster-BBG
• Tesla shareholders will vote on moving incorporation to Texas-Elon Musk-FT
• Qualcomm expects modest recovery in 2024 after industry glut-BBG
• US bank stocks sink after New York Community Bancorp cuts dividend-RTRS
• US office building losses hit Japanese lender Aozora-FT
• Walmart opening 150 new stores-AXIOS
• Deutsche Bank warns of potential US property losses-BBG
• Adidas slumps as weak profit forecast follows currency hit-BBG
• Cigna sells Medicare business to Health Care Service for $3.3 bln-RTRS
• Nvidia's new China-focused AI chip set to be sold at similar price to Huawei product-RTRS

Oil/Energy Headlines: 1) Oil posts first monthly gain since September on Red Sea unrest-BBG 2) German manufacturing downturn eases in January – PMI-RTRS 3) OPEC+ committee meeting expected to keep output policy unchanged-RTRS 4) Asia crude oil imports start 2024 strongly as India leads-RTRS 5) India's oil imports from Russia hit 12-month low in Jan as sanctions bite-RTRS 6) India's oil imports from Russia hit 12-month low in Jan as sanctions bite-BBG 7) Russian oil flows through Red Sea still face lower risks-RTRS 8) Qatar plans more drilling to expand oil production at its largest field-PLATTS