Nasdaq Markets Outlook

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

#marketseverywhere 

"...New York Fed’s latest Survey of Consumer Expectations...showed another decline in inflation expectations across several horizons, and 1yr expectations were down to 3.0%, which is the lowest since January 2021. In addition, 3yr expectations were down to 2.6%, which was the lowest since June 2020, and 5yr expectations came down to 2.5%, which is the lowest since March 2023. So plenty of good news from the Fed’s perspective ahead of US CPI on Thursday." -Deutsche Bank

| Earnings + Buybacks key drivers for market performance in 2024 | Investors Are Looking to Share Buybacks to Keep US Stock Market Afloat -BBG

| Fastest easing of financial conditions in history - a strong tailwind for the Q4 rally...what's next for the markets?

* source: BofA

1) KEY TAKEAWAYS

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

-"Activist investors are expected to launch more and bolder campaigns for change among European companies in the year ahead, advisers told Reuters, after a record number in 2023." -The Globe and Mail

-Match shares surge on report activist investor Elliott takes $1 billion stake -CNBC

-Fed Speak this week

DJ -0.6% S&P500 -0.5% Nasdaq -0.6% R2K -1.5% Cdn TSX -0.3%

Stoxx Europe 600 -0.5% APAC stocks MIXED, 10YR TYield = 4.021%

Dollar HIGHER, Gold $2,036, WTI +2%, $72; Brent +1%, $77, Bitcoin $46,672

2) how much more room does the market have to run? | BofA Bull & bear Indicator ticked up to 5.3 from 5.0, the highest since November 2021

* source: BofA

S&P 500 valuation starting to look rich...

but big disparity between Top 10's valuation and the remaining stocks...

* source: JP Morgan Asset Management

* source: Goldman Sachs Global Investment Research

3) “Small business owners remain very pessimistic about economic prospects this year. Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.”

-NFIB Chief Economist Bill Dunkelberg. “

Small Business Optimism Index +1.3 points in Dec to 91.9, marking the 24th consecutive month below the 50-year average of 98

Small Business: Inflation + Labor Quality are top problems

4) rate cut assumptions too aggressive? | As per Deutsche Bank, the 150bps rate cuts priced in by the market "leans heavily towards the sort of rate cutting environment currently priced in being more associated with a recession than a soft landing. If you don't get a recession, history suggests the hurdle to 150bps over 12 months is high."

* source: Deutsche Bank

5) will this persist? | "Thanks to a big, broad rally from the October lows, nearly every stock is in a short-term uptrend. Ninety percent of the index is above its 200-day moving average"

* source: Grindstone Intelligence

6) Will geopolitical tensions roil markets in 2024?

* source: BofA

7) Fragile Economy? | Manufacturing continues to be in contraction territory while the much larger survey of Services declined and barely in expansion territory...

* source: John Stoltzfus, Oppenheimer Asset Management

8) Nasdaq Investor Flows by Mashaal Tahir

Starting the new year, retail traders continued to heavily sell in the Technology sector: AAPL downgrades and the Magnificent seven (MSFT, AMZN, etc.) getting pressured

Long only investors reversed their selling from last week as they bought in the Financials, Health and Real Estate sectors

Hedge funds were also buyers of equities as they took advantage of the selloff in Technology

Passive/Indexers had mixed activity as they rotated out of Technology and moved into the Real Estate sector

* source: Nasdaq

9) THIS WEEK: US CPI / PPI key highlight (Thursday) | Taiwan Prez election

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

Hedge Funds Target ‘Catastrophic’ ESG Lapses for Huge Returns - BNN

-Regularly bankrolled by hedge funds and other alternative investors, the lawsuits target supposed corporate misdeeds such as broken environmental pledges, exploited workers or corporate governance failings. A successful case can leave a litigation funder with returns well in excess of 25%.

-More regulation in Europe “will bring more litigation,” Ana Carolina Salomão, chief investment officer and partner at Pogust Goodhead, said in an interview. Increasingly, investors are also drawn to the “feel-good factor” of such cases, she also said.

Canadian banks' 'sustainable finance' label misleading, OSC complaint alleges - YahooF

-Banks are using the term “sustainable finance” too broadly and not backing up the claims with data, Investors for Paris Compliance said in its submission Jan. 9 to the Ontario Securities Commission and the Autorite des marches financiers of Quebec.

-Canadian banks including Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of Nova Scotia have all made pledges on sustainable finance that together total $2 trillion by 2030.

3) MARKETS, MACRO, CORPORATE NEWS

• Investors warn governments about high levels of public debt-FT
• Lael Brainard says ‘work is not done’ on lowering prices for consumers-BBG
• Yellen says extending Trump tax cuts would worsen deficit-BBG
• German industrial output drops unexpectedly in November-RTRS
• Tokyo inflation slows as thrifty consumers curb some outlays-BBG
• Inflation is on path to reaching Fed’s 2% target, Bostic says-BBG
• China hints at more easing with possible reserve ratio cut-BBG
• China’s weight in emerging-market index drops to record low-BBG
• Blinken to discuss 'way forward' in Gaza as he meets Israeli leaders-RTRS
• Israeli strike kills a Hezbollah commander in Lebanon-RTRS
• Taiwan presidential candidate accuses China of election interference-FT
• Scholz badgers EU countries to boost military aid for Ukraine-Politico
• Mario Draghi floated as potential European Council president-FT
• Pentagon under pressure over Defense Secretary Austin’s absence-BBG
• Bitcoin rally cools in countdown to US spot ETF decision by SEC-BBG

• HPE nears $13 billion deal to buy Juniper Networks-RTRS
• Activist investor Elliott builds $1 bln stake in Tinder-owner Match-WSJ-RTRS
• MLB rejects Amazon’s $150M bid to bail out Diamond Sports-NYP
• Biden admin to unveil contractor rule that could upend gig economy-RTRS
• Ryanair boss calls on Boeing to improve quality control after accident-FT
• Airbus nearing significant widebody order from Delta -sources-RTRS
• KKR lobs bid for Melbourne toll road EastLink, bankers up-AFR
• Rumble is part of an ‘active and ongoing’ SEC investigation-WIRED
• As Pfizer’s star power fades, CEO pledges comeback on cancer drugs-BBG
• Sony to abandon $10bn Zee deal that will create Indian media powerhouse-FT
• Microchip Technology forecasts further drop in third-quarter revenue-RTRS
• Samsung flags worse than expected drop in quarterly profit-RTRS
• United, Alaska find loose parts on 737 MAX planes, pressure on Boeing-RTRS
• Nvidia rallies to record high as announces AI-related components-RTRS
• J&J, Merck and Boston Scientific go on $6.4 billion buying spree-BBG

Oil/Energy Headlines: 1) Economic worries and new supplies temper outlook for crude oil price-FT 2) Russia’s Crude exports start 2024 in line with pledged OPEC+ cut-BBG 3) Oil tankers continue Red Sea movements despite Houthi attacks-RTRS 4) Indian refiners set to ask for extra Saudi oil after sharp price cut
 -RTRS 5) China's exports grow for first time in 7 months in relief for factories-RTRS