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Nasdaq Markets Outlook

Peak Rates and Disinflation Push Equities and Bonds Higher in November

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

| Zeitgeist: "everyone emotionally bullish, but still intellectually bearish and likely to stay that way until leadership changes." -BofA's The Flow Show

| Peak Rates & Disinflation = helping boost sentiment | if the Fed can get away with it, why not keep interest rates low? ... ultimately creates boom and bust cycles.

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* source: Michael Hartnett, BofA, The Flow Show

| yesterday's PCE (Fed's favorite inflation gauge) continued to show signs of disinflation but more work left... is 3 the new 2?

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* source: Oxford Economics

| Higher P/Es (valuation multiples drove returns) as yields fell... | "No Meaningful Improvement In EPS Estimates In November Despite The Rally" | "We Are Not Seeing A Rise In EPS Expectations From Companies Or Wall Street" -Piper Sandler

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* source: Piper Sandler

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* source: CNBC

| "It was the best month for the Bloomberg US Bond Ag Index (+4.53%) since May 1985. This includes all IG-rated fixed debt, including Treasuries and spread products" -Deutsche Bank

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* source: Deutsche Bank

| "Strong equity and bond performance in November due to sharp decline in rates helped deliver best 60:40 performance in three years. Shorts were covered and duration sensitive assets rallied as vol and geopolitical risk premium retraced. US/Cyclicals/Growth were the winners while USD/China/commodities lagged." -Emmanuel Cau, Barclays

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* source: Barclays' Emmanuel Cau

|BofA's indicator...

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* source: BofA's Savita

1) KEY TAKEAWAYS

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

Themes: Elevated cash remains on the sidelines ($5.7 trillion parked in cash-like money-market funds ) | Volatility (VIX) continues to fall | has rally peaked after short covering in recent week? = major averages hitting resistance levels | Signs point to the beginning of consumer weakness | Investors are getting back in the market - Invesco’s QQQ ETF, which tracks the tech-heavy Nasdaq-100 Index, reported its largest weekly inflow in history the week of Nov. 13. | Small-cap stocks have trailed Large caps this year by a historic margin | Upcoming catalysts: November employment data on 8-Dec, CPI on 12-Dec, and the FOMC decision (and updated dot plot) on 13-Dec.

-By Shon Wilk

DJ -0.0% S&P500 -0.2% Nasdaq -0.4% R2K -0.1% Cdn TSX -0.4%

Stoxx Europe 600 +0.3% APAC stocks LOWER, 10YR TYield = 4.334%

Dollar HIGHER, Gold $2,040, WTI +0%, $76; Brent +0%, $81, Bitcoin $38,337

2) Jobless claims

job market still tight...

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* source: Oxford Economics

3) Recent flows: money-markets continue to see inflows...

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* source: Barclays' Emmanuel Cau

4) NEXT WEEK:

"The US jobs report next Friday will be the highlight of the week, with the University of Michigan data also in focus.

Other notable releases include economic activity indicators in Germany, wages in Japan, and trade in China.

From central banks, there will be the ECB's consumer expectations survey and
the BoE's inflation attitudes survey. Monetary policy decisions are also due from
the central banks of Canada and Australia."

-Deutsche Bank

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* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

Bank Capital Markets Desks Face New Era of CO2 Reporting BNN

-After months of stalled negotiations, banks are about to get their first ever industry standard for calculating the carbon footprint of their capital markets units.

-The PCAF guidelines, which will underpin net zero plans, mean banks will be expected to disclose 33% of greenhouse gas emissions associated with bond and equity underwriting. The figure was settled on as a compromise between earlier proposals of 100% and 17%, according to people familiar with the process. PCAF said in the statement banks also have the option to publish 100% of their facilitated emissions.

Exclusive: Google pushes for antitrust action against Microsoft in UK cloud market -RTRS

Google has called on Britain’s antitrust regulator to take action against Microsoft, claiming its business practices had left rivals at a significant disadvantage, according to a letter seen by Reuters.

3) MARKETS, MACRO, CORPORATE NEWS

  • Fed officials shift tone but remain wary markets’ aggressive rate cut bets-BBG
  • Goldman Sachs now expects ECB's first rate cut in Q2 2024-RTRS
  • BOE’s Greene says UK rates may be less restrictive than thought-BBG
  • RBNZ can’t afford to ignore immigration surge, Hawkesby says-BBG
  • Global stocks record best month in three years on interest rate cut hopes-FT
  • Market pushback on central banks' rates view just got louder-RTRS
  • Chinese stocks stage late recovery after state buying report-BBG
  • Mortgage rates in US decline to 7.22%, falling for fifth week-BBG
  • Yellen says soft landing looks good, unemployment may level off-BBG
  • Contrasting China November factory surveys - need stronger stimulus-RTRS
  • Asian factories still under pressure on mixed demand rebound-BBG
  • Euro zone factory downturn eased a touch in November -PMI-RTRS
  • (2nd LD) S. Korea's exports rise for 2nd month in Nov. chip sales recovery-YNA
  • Japan capex spending rise may help temper economy’s contraction-BBG
  • UN warns of humanitarian ‘tsunami’ as Israel-Hamas hostilities resume-FT
  • Xi takes flurry of small steps to open China after US trip-BBG
  • EU weighs concession in US steel feud, fearing Trump return-BBG
  • Xbox talking to partners for mobile store, CEO Spencer says-BBG
  • Mesoblast taps Bell Potter for $98m equity raising-AFR
  • GM asks LG Energy to share huge portion of US EV tax benefits-KED
  • Bendigo says it can make ‘compelling’ offer for Suncorp Bank-AFR
  • Allkem-Livent’s $9b lithium merger wins proxy support-AFR
  • Evergrande creditors demand controlling stakes in new proposal-BBG
  • Elon Musk hypes Tesla Cybertruck at deliveries event in Austin-CNBC
  • Disney clashes with Nelson Peltz as activist launches new proxy battle-FT
  • Dell sales miss estimates with corporate PCs still lagging-BBG
  • JAB’s Panera Brands files confidential IPO paperwork-FT

Oil/Energy Headlines: 1) Opec+ production cuts leave oil market sceptical-FT 2) US crude production in September rose to monthly record – EIA-RTRS 3) Brazil set to join OPEC+ from January, delegate says-RTRS 4) Angola rejects OPEC quota and vows to break it-BBG 5) Saudi Arabia may cut Jan Arab Light price to Asia for first time in 7 months-RTRS 6) Brazil to join OPEC+ but won't cap oil output, Petrobras CEO says-RTRS 7) Asian refiners shrug off OPEC+ cut as Middle East suppliers respect Far East contracts-PLATTS 8) Russia assumes Western sanctions will last for many years – Kremlin-RTRS 9) Trans Mountain expansion shippers concerned about pipeline variance request-RTRS 10) Venezuela to hold referendum on seizing part of Guyana — and its oil-FT

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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.

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