Nasdaq Markets Outlook

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

"Equities have been rising almost without a break since late October. Speculative bets like Bitcoin are back in vogue. Gold prices spiked until a recent correction. And junk bond spreads over Treasurys are signaling that risk is back on, baby.

Yet as recently as last week, Mr. Powell made clear that he expects to cut interest rates more than once in 2024. The question is whether that guidance looks wise amid these hardly stringent financial conditions.

In this kind of market run in the 1990s, former Fed Chair Alan Greenspan counseled against “irrational exuberance.” There’s no such caution at the central bank now, as the Fed is eager to declare that inflation victory is at hand. Maybe wait until prices aren’t re-accelerating."

-The Wall Street Journal Editorial Board

| rate cuts getting pared back, from 175bps cut to 85bps, market was pricing in ~3 cuts by June as of mid-January:

* source: Nasdaq Economic Research, Michael Normyle

* source: CNBC

| inflation yesterday surprised to the upside and above Fed's 2% level

"Inflation Is Sticky. Markets Disagree, Or Don’t Care."

-Piper Sandler, Nancy Lazar

* source: MUFG, Tom Joyce

| STICKY/STUBBORN INFLATION - inflation breakevens are showing rising inflation

* source: JP Morgan

| NFIB Small Business Optimism Index decreased in February to 89.4, marking the 26th consecutive month below the 50-year average of 98: Inflation Looms as Top Challenge

“While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates"

-NFIB Chief Economist Bill Dunkelberg.

| JP Morgan Investor Survey: equity sentiment is slightly positive

retail sentiment is strong

* source: JP Morgan

| Frothy U.S. Stock Market Just Isn’t Crazy Enough to Be a Bubble - Artificial intelligence and other areas are inflated for sure, but to this eye speculative mania isn’t evident -WSJ

US stocks may not be in a bubble, but a pullback could be near -RTRS

| markets getting frothy...JPM investor poll:

* source: JP Morgan

* source: CNBC

| Concentration Risk in Europe also...

GRANOLAS = GlaxoSmithKline, Roche, ASML, Nestle, Novartis, Novo Nordisk, L'Oreal, LVMH, AstraZeneca, SAP, Sanofi

* source: Piper Sandler

| "Even though we accept that in absolute terms the Mag-7 valuations are elevated, as is the performance in both absolute and relative terms, Mag-7 stocks have generally derated vs their 5-year averages."

* source: JP Morgan

| passive/indexers market share continues to grow...

* source: BofA

| recessionary concerns fade | "lowest number of S&P 500 companies citing “recession” on earnings calls since Q4 2021"

* source: Factset Insight

| broad based earnings growth needed for sustained unconcentrated rally:

* source: JP Morgan

1) KEY TAKEAWAYS

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

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

Stoxx Europe 600 +0.3% APAC stocks MIXED, 10YR TYield = 4.178%

Dollar LOWER, Gold $2,166, WTI +3%, $80; Brent +2%, $84, Bitcoin $72,164

2) "Risky assets rallied over the past month, as equities pushed to new record highs, and commodities and bonds rebounded" -JPMorgan

* source: JP Morgan

3) Supply chains are functioning well:

* source: Goldman Sachs Global Investment Research

4) THIS WEEK:

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

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

* source: Barclays' Emmanuel Cau

2) MARKETS, MACRO, CORPORATE NEWS

• Fed seen on hold until June, with rate-cut pace in focus-RTRS
• BOJ to debate ending negative rates in March if wage survey strong-RTRS
• ECB should 'make a bet' on rates before long, says Wunsch-RTRS
• BoE's Bailey: central banks must work out how long to keep rates high-RTRS
• We still don’t believe how much things cost-WSJ
• Toyota agrees to biggest wage hike in 25 years, paves way for BOJ shift-RTRS
• China’s exports are surging. Get ready for the global backlash.-NYT
• UK economy returns to modest growth at start of 2024-RTRS
• TikTok plans legal fight if US divestment bill becomes law-BBG
• US to send new weapons package worth $300 million for Ukraine-RTRS
• EU nears deal on 5 bln euro military aid package for Ukraine, FT reports-RTRS
• Biden, Trump clinch nominations, kicking off bruising presidential rematch-RTRS
• Putin warns again that Russia is ready to use nuclear weapons if its sovereignty is threatened-AP

• Pentagon scraps plan to spend $2.5 billion on Intel grant-BBG
• T-shirt giant Gildan’s new CEO rocked by allegations of affair w/ underling-NYP
• Transurban investors tell NSW to ‘honour’ toll road contracts-AFR
• Nissan and Honda to cut China production as EV race heats up-NIKKEI
• Japan's Shionogi eyes early 2025 for U.S. release of COVID pill-NIKKEI
• Geely-backed Meizu taps banks for IPO at $2 billion value-BBG
• Country Garden misses yuan bond payment for first time-BBG
• Liontrust approaches Artemis for potential tie-up-FT
• Spain greenlights merger of Orange and MasMovil, minister says-RTRS
• Singtel in advanced talks to offload Optus to Brookfield for $16b-AFR
• Boeing crisis derails airline growth plans as output stalls-BBG
• Boeing’s calamities push stock to its widest gap with Airbus ever-BBG

Oil/Energy Headlines: 1) US raises domestic crude production growth forecast for 2024-RTRS 2) Putin voices support for OPEC+ oil cuts yet warns of risks-BBG 3) FUJAIRAH DATA: Oil product stocks fall to three-week low as exports to China pick up-PLATTS 4) OPEC says IEA commentary on oil security encouraging-RTRS 5) Shell to cut about 20% of jobs in deals team, Bloomberg News reports-RTRS