ECT - Stocks investing Wall Street - Adobe

Nasdaq Markets Outlook

Job Market Still Strong, But Stocks Are Feeling Bubbly

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

markets continue to advance "with investors growing more hopeful about the prospect of rate cuts this year, particularly after the ECB’s decision leant in a dovish direction" -Deutsche Bank, Jim Reid

Powell: Fed is ‘Not Far’ From Gaining Confidence Needed to Cut Rates -WSJ

“When we do get that confidence, and we’re not far from it, it will be appropriate to dial back”

Fed March rate cut odds: 5% | May: 22% | June: 75%

IR insight chart

* source: Barcalys' Emmanuel Cau

| with global central banks moving to easing mode, inflation risk back on the horizon?

IR insight chart

* source: CNBC

| Zeitgeist: “$6tn to $7tn in money market funds and all of it getting 5% in interest…maybe that’s what giving everyone the confidence to go speculate.”

feeling bubbly? | "March 10th 2000: Nasdaq bubble peaked; note that semiconductors relative to S&P500 hit the highest level since Mar’00 (Chart 4) over the past few days."

-BofA's Michael Hartnett, The Flow Show

IR insight chart
IR insight chart
IR insight chart

* source: Michael Hartnett, The Flow Show, BofA

| "Concentration within the US equity market has surged to a multi-decade high. The 10 largest US stocks now account for 33% of S&P 500 market cap and 25% of S&P 500 earnings."

-Goldman Sachs Global Investment Research

IR insight chart
IR insight chart

* source: Goldman Sachs Global Investment Research

| feeling bubbly? | markets rallying on Fed/ECB rate cuts / will inflation make a come back?

IR insight chart
IR insight chart

* source: Yardeni Research

| cryptos anyone? | "more ETFs are coming, which is increasingly institutionalising the crypto asset class." -Deutsche Bank

IR insight chart

* source: Deutsche Bank, Jim Reid

IR insight chart

* source: Michael Hartnett, The Flow Show, BofA

| "Solid earnings growth will be the primary tailwind to buybacks while elevated valuations and policy uncertainty will be headwinds. We expect buyback growth in 2024 will be driven largely by the mega-cap tech stocks."

-Goldman Sachs Global Investment Research

IR insight chart

* source: Goldman Sachs Global Investment Research

| "Investors have rewarded companies for engaging in share buybacks more than other uses of cash in recent months.

However, if economic growth momentum instead continues to build, investors may begin to increasingly reward companies that are investing for growth."

-Goldman Sachs Global Investment Research

IR insight chart

* source: Goldmans Sachs Global Investment Research

1) KEY TAKEAWAYS

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

DJ +0.2% S&P500 +0.5% Nasdaq +0.6% R2K +1.2% Cdn TSX +0.2%

Stoxx Europe 600 +0.1% APAC stocks HIGHER, 10YR TYield = 4.085%

Dollar LOWER, Gold $2,174, WTI -1%, $78; Brent -1%, $82, Bitcoin $68,345

2) job market still strong | U.S. job growth totaled +275K in Feb, unemployment rate rose to 3.9%, Jan/Dec figures revised sharply lower

IR insight chart
IR insight chart

* source: CNBC

3) equities continue to see inflows but tech sector saw outflow...

IR insight chart
IR insight chart

* source: Michael Hartnett, The Flow Show, BofA

4) Food for thought 1:

Short history of bubbles

* source: Michael Hartnett, The Flow Show, BofA

5) Food for thought 2:

IR insight chart

* source: Goldman Sachs Global Investment Research

6) NEXT WEEK:

"The US CPI and retail sales reports will be the key data releases next week.

In Europe, the focus will be on the monthly GDP and labour market indicators in the UK.

Over in Asia, investors will also pay attention to the 1-yr MLF rate announcement
in China as well as signals from wage talks in Japan."

-Deutsche Bank

IR insight chart

* source: Barclays' Emmanuel Cau

2) ESG by Nathan Greene

SEC Adopts Rules to Enhance and Standardize Climate-Related Disclosures for Investors - SEC

Required disclosures include:

-For large accelerated filers and accelerated filers, material Scope 1 and Scope 2 GHG emissions, subject to assurance requirements that will be phased-in.

-Governance and oversight of material climate-related risks.

-The material impact of climate risks on the company’s strategy, business model, and outlook.

-Risk management processes for material climate-related risks.

-Material climate targets and goals.

Republican-led states sue US SEC over climate risk disclosure rules - Reuters

-Ten Republican-led states have sued to challenge new federal rules that require U.S.-listed companies to report climate-related risks.

-Many had been signaling their intent to challenge the rules for years, arguing in public comments in 2022 that they amount to back-door environmental regulations that go beyond the SEC’s legal authority.

UBS Ditches Credit Suisse Plan to Phase Out Coal Financing – BNN

-UBS executives intend to stick with their own policy on coal funding, meaning the bank will have no end date for financing coal.

-A spokesperson for UBS declined to comment on the details of its planned update on coal. In general, however, the bank’s “ambition remains unchanged; to be a global leader in sustainability.”

-UBS’s existing policy allows the bank to finance coal-fired power companies and miners, as long as production isn’t being expanded and no more than a fifth of revenue comes from coal.

Britain says it will regulate ESG ratings later in 2024 - Reuters

-Britain's finance ministry said on Wednesday it will introduce regulation for providers of ESG ratings on companies to improve "clarity and trust" in benchmarks widely used to steer investments.

-Consultants KPMG said raters expect rules that require them to formalize governance structures and publish methodologies to increase transparency and comparability of ratings.

Europe’s Biggest Pension Fund Tightens ESG Investing Guardrails - BNN

-ABP, which is based in the Netherlands, said it will apply tougher screening when it reviews holdings for climate and biodiversity risk.

-The Dutch pension is currently “re-evaluating” its selection of companies for investment as part of a strategy to guard against future losses. Once it completes the exercise, ABP estimates that the total number of invested companies in its portfolio will decline by about half.

3) MARKETS, MACRO, CORPORATE NEWS

  • BOJ leaning toward exiting negative rates in March – sources-RTRS
  • Lagarde says ECB likely to reveal new policy framework next week-BBG
  • Layoffs rise to the highest for any February since 2009, Challenger says-CNBC
  • Mortgage rates in US drop for first time since early February-BBG
  • US CPI email to ‘super users’ was a mistake, BLS official says-BBG
  • Japan household spending logs biggest drop in 35 months in January-RTRS
  • German industry production rises for first time since April-BBG
  • Rich countries set for record $15.8tn of debt sales, says OECD-FT
  • Biden focused on defending democracy, the economy and the border-NYT
  • US House Republicans try to beat Biden to punch 2025 budget proposal-RTRS
  • Hike tariffs on Chinese EVs, Senate Democrats urge Biden administration-RTRS
  • China readies $27 billion chip fund to counter growing US curbs-BBG
  • US lawmakers tune out TikTok lobbying to advance bill to ban app-FT
  • Biden orders military to build port to ease Gaza’s hunger crisis-BBG
  • Hamas vows to continue talks to release Israeli hostages and halt war-FT
  • France signs defence deal with Moldova amid Russian threats-FT
  • Huawei chip breakthrough used tech from two US gear suppliers-BBG
  • Major Bayer shareholder Harris backs CEO's focus internal restructuring-RTRS
  • United plane loses tire after takeoff San Francisco International Airport-CNBC
  • Apple could be the first target of Europe's tough new tech law-WIRED
  • China readies $27 billion chip fund to counter growing US curbs-BBG
  • Goldman Sachs exits Japan transaction banking in sudden reversal-BBG
  • Ashley's Frasers Group pulls plug on Matchesfashion-SKY
  • Hong Kong stock exchange poised to name Carlson Tong as new chair-RTRS
  • Top Asia poultry firm Japfa owners said to mull go private deal-BBG
  • Powell: US banking system can withstand commercial real estate threats-BBG
  • U.S. bank profits drop 44% in Q4 as big firms cover failed bank costs-RTRS
  • Novo valuation surpasses Tesla on experimental obesity drug data-RTRS
  • TSMC’s sales gain 9.4% in first two months after AI boost-BBG

Oil/Energy Headlines: 1) Chinese oil demand is entering era of low growth, CNPC says-BBG 2) Oil demand is looking healthy and market balanced, Kuwait says-BBG3) OPEC+ Feb crude output flat, as group struggles to implement cuts: Platts survey-PLATTS 4) TC Energy's Keystone oil pipeline restarts after going offline-RTRS

Subscribe to Nasdaq+ for full access.

Exclusive content, detailed data sets, and best-in-class trade insights to rewrite your portfolio for tomorrow.

Try Now ->
Massud Ghaussy, CFA

About the author

Massud Ghaussy, CFA, is part of Nasdaq's IR Insights team and delivers daily insights that empowers readers to get a sense of the important issues impacting the day's trading.

Text