Nasdaq Markets Outlook

The Markets Outlook is a mostly graphical daily curated roundup of the markets and the economy from Nasdaq's IR team.

| BofA's Global Fund Manager Survey | investors least bearish since Feb 2022 | cash drops from 5.3% to 4.8% (21-month low) | 3 out of 4 expect soft/no landing | smallest equity UW since Apr'22 | largest tech OW since Dec'21 | bear positioning strong tailwind for risk assets in H1…not the case in H2.

REITS in trouble?

"out of cash & REITs (capitulation to GFC/Lehman levels - Chart 1)"

commercial real estate next shoe to drop?

Wall Street ready to scoop up Commercial RE on the Cheap -WSJ

Sentiment Improving - had been very poor

Retail Sentiment (FOMO) > Institutional Sentiment (Reluctant Bulls)

Markets + Investors are expecting rate cuts in 2024

(sources of) risks: hawkish CBs, geopolitics, credit events, tech bubble

reluctant bulls moving back to equities...

MoM change in allocation...

* source: BofA's Global Fund Manager Survey, Michael Hartnett

| Earnings | "S&P 500 2Q EPS fell 4% year/year, better than the 9% decline expected at the start of earnings season. Revenues grew 1% but were offset by 92 bp of margin contraction. Consumer Discretionary posted the strongest earnings growth (+31%) while Energy profits fell the most (-51%). Excluding Energy, S&P 500 EPS growth and margins have sequentially improved since 4Q 2022." -David Kostin, Goldman Sachs Global Investment Research

* source: Goldman Sachs Global Investment Research

"Getting The Most Out Of A Moody Market"

"everything continues to be up for debate this year"

"there is a lot on investors’ minds"

"every week brings a new stock theme du jour to markets"

"hard to keep up at times" 

-Michael Kantrowitz, Piper Sandler

* Michael Kantrowitz, Piper Sandler

| despite overall positive sentiment, not easy time to put capital to work

* JP Morgan

| Top headlines:

-Retail sales +0.7% in July, >expected -CNBC

-UK10YR gilt yield up = UK basic wage growth hits record, adding to Bank of England's worries -RTRS

-Chinese yuan continues to weaken: China Cuts Rate by Most Since 2020 as Economic Woes Deepen -BBG| slew of economic data weaker than expected

-Hot & Cold Economy | weak manufacturing | NY Fed's August Empire manufacturing falls back into negative territory -MW

| Debt downgrade + high levels of spending | "…concerns about government debt/fiscal deficits putting upward pressure on bond yields." -Michael Hartnett, BofA

10YR yield = fresh YTD highs, is ~10bps away from last year’s peak

* source: CNBC

| Flows: Passive > Active

* source: Goldman Sachs Global Investment Research

1) KEY TAKEAWAYS

1) Equities LOWER + TYields MIXED

| China property market + economic concerns?: China Finance Giant’s Missed Payments Alarm Regulators, Markets -BBG | Shanghai Composite lowest level since January | Yuan continues to weaken against the Dollar | this week: retail earnings

DJ -0.7% S&P500 -0.6% Nasdaq -0.5% R2K -0.9% Cdn TSX -1.1%

Stoxx Europe 600 -0.8% APAC stocks MIXED, 10YR TYield = 4.184%

Dollar LOWER, Gold $1,903, WTI -2%, $81; Brent -1%, $85, Bitcoin $29,338

2) Nasdaq Investor Flows by Bill Bailey

institutional investors were notably de-risking across the entire equity market

-At large, there weren’t really any exceptions to this worth calling out as all company sizes and sectors were vulnerable to this selling pressure- which put pressure on all of the major indices

Hedge Funds and Prime Brokers were mostly taking the other side of this bet

-Interestingly, Real-Estate saw heavy inflows from the institutional community. The timing of this is interesting as just yesterday we see that Warren Buffett’s Berkshire Hathaway picked up positions in a small handful of homebuilder stocks

* source: Nasdaq Investor Flows

3) Performance

* source: Goldman Sachs Global Investment Research

source: JP Morgan

4) US equity markets cheering DISINFLATION + better than expected growth prospects

* source: JP Morgan

5) The Week Ahead | retail sales + FOMC minutes = highlights

2) ESG, COMPILED BY NATHAN GREENE

OFF TODAY

3) MARKETS, MACRO, CORPORATE NEWS

• China cuts key rates, weak batch of July data darkens economic outlook-RTRS
• China stops reporting youth unemployment as economic pressures mount-FT
• China’s $138 billion Shadow Bank spirals at terrible time for Xi-BBG
• Investors least bearish since February 2022 – BofA-RTRS
• Biggest treasury ETF sees largest exodus since 2020 meltdown-BBG
• Zero-day options cement presence in reversal-ridden stock market-BBG
• US hedge funds stampede out of China in Q2-RTRS
• The US consumer is stronger than investors think, BofA says-YAHOO
• Record UK wage growth fuels inflation concerns-FT
• German investor morale brightens unexpectedly in August – ZEW-RTRS
• Japan growth surges as weak yen boosts exports-FT
• The Fed’s interest-rate debate is shifting-BBG
• RBA sees a ‘credible path’ to inflation target at 4.1% rate-BBG
• Russia’s emergency rate hike fails to lift ruble after crash-BBG
• Argentina devalues its currency, jacks up interest rates -BBG
• Trump charged in Georgia 2020 election probe, his fourth indictment-WP
• Hollywood Studios offer writers a new deal with push from Netflix-BBG
• Tokio Marine Southeast Asia asset sale draws Japan rivals, sources say-BBG
• Industrial wind power company One Energy to go public via SPAC-BBG
• Adnoc weighs boosting Covestro bid again to €11.6 billion-BBG
• Fineos raises $40m to fortify balance sheet; MacCap, Moelis on ticket-AFR
• China mulls stamp duty cut to revive slumping stock market-BBG
• Syrah Resources pins hopes of mine restart on end of China supply glut-BBG
• Saudi Arabia and UAE race to buy Nvidia chips to power AI ambitions-FT
• Warren Buffett’s Berkshire builds $814mn stake in housebuilders-FT
• Tesla rolls out new base Model S and X for $10,000 less-BBG

Oil/Energy Headlines: 1) US shale oil and gas output to extend fall in September -EIA-RTRS 2) Montana youth climate activists get historic win in state case-BBG 3) Shrinking Shale output sets in as explorers dial back drilling-BBG