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Nasdaq Markets Outlook

Retail Sales Weak, Rate Hike Odds Collapse

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

#marketseverywhere

| 1792: the NYSE is established and the Bank of New York becomes the first company listed

| Weakening consumer? | “Retail sales were not quite as weak as expected in October, but the report showed a fairly broad-based slowdown in spending” -Oxford Economics

| DISINFLATION (but still inflation) | Wholesale prices (PPI) fell 0.5% in October for biggest monthly drop since April 2020 -CNBC

chart 1

* source: Oxford Economics

| rate hikes are over and market is now looking at rate cuts...will the economy weaken to force the Fed to cut? will inflation keep falling?

odds of 25bps

* source: CME Fed Watch Tool; Created by Gavin Zaentz, Nasdaq

"With rate hike odds melting away shorts squeezed the most since last November’s (Oct) CPI print 

Small-Cap Russell 2000 Soars 5.4%, Best Day Since November 2022 "

-Piper Sandler

index

* source: Piper Sandler

global rate cuts next? (except Japan)

exhibit 2

* source: Goldman Sachs Global Investment Research

Fed is pretty much done hiking!

chart 10

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

markets cheering falling yields | yields falling as Fed expected to cut rates due to weakening economy + political pressure

figure 2
we believe

* source: JPMorgan

| JPMorgan investor survey - lots of oscillations with sentiment = tricky markets to navigate...

figure 3
figure 2

* source: JPMorgan

| Difficult market to navigate... #UncertainTimes | "Despite all the debate, it has not paid off this year to position for EITHER a hard landing (i.e. defense) or a soft landing (i.e. recovery)." -Piper Sandler, Michael Kantrowitz

neither soft landing

#QualityMatters !!

quality themes
there is a long

* source: Piper Sandler, Michael Kantrowitz

| As per BofA's Global Fund Manager survey yesterday, investors have been deploying cash as yields are expected to fall (good for bond prices) and equities sentiment has been not very positive for some time (contrarian trade)

chart 3

Disappointment or great timing?

Institutional investors starting to deploy capital!

chart 6

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

1) KEY TAKEAWAYS

1) Equities + Dollar + TYields HIGHER | Oil LOWER

China = economic stimulus

CPI/PPI cooler than expected/Core CPI slowest increase in two years = markets rallying | Yields backing off | S&P 500 above key technical levels | VIX lower = market feels less risk ahead? | Retail sales weak = weaker consumer? | Market now pricing in two rate cuts by next July

DJ +0.3% S&P500 +0.3% Nasdaq +0.4% R2K +0.6% Cdn TSX +0.2%

Stoxx Europe 600 +0.4% APAC stocks HIGHER, 10YR TYield = 4.516%

Dollar HIGHER, Gold $1,962, WTI -1%, $77; Brent -1%, $82, Bitcoin $36,038

2) Utilities (a bond proxy) have been crushed this year due to rising bond yields | will the economy deteriorate next year?

one of the key
further, lead indicators

* source: JP Morgan

3) THIS WEEK:

US = CPI + retail sales reports .

UK = inflation and labour market indicators.
growth data in Japan and China.

"Apart from economic data, a potential US government shutdown and US-China relations at the APEC economic leaders' week will be in focus. Notable corporate
earnings include Walmart, Cisco and Alibaba." -Deutsche Bank

figure 35

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

OFF TODAY

3) MARKETS, MACRO, CORPORATE NEWS

  • China October industrial output, retail sales beat expectations-RTRS
  • China mulls $137 billion of new funds to aid housing market-BBG
  • Japan’s economy contracts as weak consumption undercuts recovery-FT
  • UK inflation slows sharply to 4.6%-FT
  • Euro zone industry output slips, trade surplus continues in Sept-RTRS
  • Australia wages see record rise in Q3, unlikely to be repeated-RTRS
  • Goldilocks hopes return to Wall St after benign inflation report-RTRS
  • Rate-cut euphoria puts global bonds on course to erase 2023 loss-BBG
  • Dollar tumbles most in a year as traders bet on end of US hikes-BBG
  • BOJ's hawkish rhetoric signals chance negative rates may end soon-RTRS
  • China c.bank boost liquidity injection through policy loan rate unchanged-RTRS
  • ECB is confident it will get inflation toward 2% by 2025, Villeroy says-BBG
  • Biden, Xi meet as US-China military, economic tensions grind on-RTRS
  • China receives US equipment to make advanced chips despite new rules-RTRS
  • Israeli military enters Gaza’s al-Shifa hospital-FT
  • US frustration with Israel grows as Gaza civilian deaths mount-BBG
  • US House passes spending bill to avert government shutdown-RTRS
  • Conservatives hold back on Johnson ouster threat but plot other payback-POL 
  • Chevron reviewing options for East Texas assets after shale acquisitions-RTRS
  • Spanish government in talks with banks to support Siemens Gabmesa-RTRS
  • As Exxon eyes lithium, crucial decision looms on filtration technology-RTRS
  • Karoon Energy to launch raising for US acquisition; Macq on the ticket-AFR
  • Southern Cross set to rebuff Catalano-AFR
  • Japan’s Tsuruha mulls sale after proxy battle with Oasis, sources say-BBG

Oil/Energy Headlines: 1) OPEC says oil market remains strong despite negative sentiment-RTRS 2) Denmark could block Russian oil tankers from reaching markets-FT 3) China Oct oil refinery runs slow from previous month as margins narrow-RTRS4) Trans Mountain resumes work on pipeline in British Columbia-RTRS 5) Biden ordered to sell Gulf of Mexico oil leases next month-BBG 6) EU strikes deal to curb methane emissions in oil, gas supply-BBG

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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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