Nasdaq Markets Outlook

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

#marketseverywhere | “Fortunately, societies have progressed despite almost universal ignorance of economic principles.” -Armen Alchian, American Economist

“The Federal Register, the daily depository of rules and regulations, wrapped up 2023 with 90,402 pages. That happens to be the second-highest tally of all time.” -Wayne Crews, Forbes

"U.S. federal government regulations cost an estimated $3.079 trillion in 2022 (in 2023 dollars), an amount equal to 12% of U.S. GDP. These costs fall unevenly on the major sectors of the economy and on firms of different sizes; the findings indicate that compliance costs fall disproportionately on small businesses..." -Nicole Crain and Mark Crain, National Association of Manufacturers

* source: BofA, Michael Hartnett, The Flow Show

1) KEY TAKEAWAYS

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

-March rate cut odds fall from 96%+ to 66%ish

-Eurozone inflation accelerated in Dec for first time in 6 months

DJ +0.1% S&P500 +0.3% Nasdaq +0.3% R2K -0.5% Cdn TSX -0.2%

Stoxx Europe 600 -0.7% APAC stocks MIXED, 10YR TYield = 4.046%

Dollar HIGHER, Gold $2,044, WTI +2%, $74; Brent +1%, $79, Bitcoin $43,657

* source: CNBC

2) U.S. payrolls +216K in December, much better than expected

Average hourly earnings rose 0.4% on the month and were up 4.1% from a year ago, both higher than the respective estimates for 0.3% and 3.9%.

-CNBC

* source: CNBC

3) historically speaking, post Fed pivot is a good time for markets | #thePivotRally

* source: Piper Sandler, Michael Kantrowitz

4) Is this sustainable?

* source: BofA, Michael Hartnett, The Flow Show

5) 2023 in a nutshell:

"Equities and bonds strongly rebounded in 2023, recovering most of their '22 losses. Disinflation, resilient US growth and AI/GLP1 craze boosted risk assets even as SVB collapse, Middle East tensions and China weakness kept markets on edge. Tech, US, Cyclicals, Growth outperformed. Defensives, China and Commodities lagged."

-Barclays' Emmanuel Cau

we are back to where we were in 2022

* source: Barclays' Emmanuel Cau

6) does the rally have legs? well the market is NOT like a coiled spring currently = falling CPI + peak in rates have lifted markets & led to significant P/E expansion + EPS expectations are already lofty...

* source: Piper Sandler, Michael Kantrowitz

7) By historical standards, interest rates are not elevated and has recently been falling...

* source: BofA, Michael Hartnett, The Flow Show

8) Global market P/E starting to rise and above the median...

* source: Barclays' Emmanuel Cau

S&P 500 LargeCaps are screening expensive...

9) money markets continue to see inflows...!

* source: BofA, Michael Hartnett, The Flow Show

10) NEXT WEEK: US CPI / PPI key highlight next week | Taiwan Prez election

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

ESG-Linked Bond Sales Drop Most on Record on Investor Skepticism - BNN

-Global sales of sustainability-linked bonds plunged 22% in 2023, a record drop, as investors remain critical of the label, and more issuers risk missing their pre-determined environmental, social or governance targets.

-Investors have been skeptical of SLBs in recent years, with asset managers including T. Rowe Price Group Inc. and Nuveen criticizing companies for issuing bonds with weak and flexible targets.

Trudeau's climate plan faces setback in Saskatchewan over carbon tax - Reuters

On Monday, the western Canadian province stopped collecting the tax applied to homes heated by natural gas and electricity, after Trudeau's Liberal government exempted home heating oil from the tax in a move that favored Atlantic Canada residents.

3) MARKETS, MACRO, CORPORATE NEWS

• US jobs market weakened in December, economists predict-FT
• Eurozone inflation rises to 2.9% in December-FT
• US mortgage rates rise for first time since late October-BBG
• The hidden force pushing mortgage rates down-WSJ
• Global chip demand to rise by 2nd quarter of 2024, experts say-NIKKEI
• Cheap costs push use of Fed term funding tool to fresh record-BBG
• Economist Alberto Musalem named new head of St. Louis Fed-AXIOS
• BOJ easing exit in first half still on table despite earthquake-NIKKEI
• China markets are betting big on further PBOC easing this year-BBG
• Investors are rushing to cash at record pace in first week, BofA says-BBG
• Trader makes massive bet treasuries will get slammed after jobs report-BBG
• Markets see yen’s slump deepening on rethink of Fed, BOJ path-BBG
• Short sellers lost $195 billion in 2023 despite wins on regional banks-BBG
• Scoop: Biden preparing to keep many of Trump's China tariffs-AXIOS
• Blinken heads to Middle East after attacks in Red Sea, Iran-BBG
• Yoav Gallant calls for no Israeli civilian presence in Gaza after war-FT
• Houthi rebels defy US warning with new Red Sea explosion-FT
• White House says Russia used missiles North Korea to strike Ukraine-RTRS
• Bitcoin rises as its volatile year continues ahead expected ETF approval-CNBC
• Islamic State claims responsibility for deadly Iran attack-RTRS

• Biotech boss tells Europe to invest if it wants a homegrown sector-FT
• Goldman CEO David Solomon plans paltry bonuses to nudge out laggards-NYP
• OpenAI says it’s in talks with dozens of publishers about licensing content-BBG
• First Quantum in talks with Jiangxi Copper sale of stake in Zambian mines-RTRS
• Selfridges turns to co-owner central group for cash after Signa collapse-BBG
• Guangzhou Auto considers listing EV unit in Hong Kong-IFR
• Amazon captured 29% of online orders before Christmas-BBG
• McDonald's CEO several markets Middle East seeing impact from conflict-RTRS
• Zuckerberg sold nearly half a billion dollars Meta stock in last two months-BBG
• Shree Cement: I-T dept claims ₹4,000 crore demand for wrongful claims & deductions-CNBC

Oil/Energy Headlines: 1) Oil settles lower on massive US fuel inventory builds-RTRS 2) Shale driller EOG braces for US oil output growth to halve this year-BBG 3) Shipping giant Maersk to divert vessels away from the Red Sea ‘for the foreseeable future’-CNBC 4) Russian November oil price for India hit 12-mth high-RTRS 5) US oil, gas rig count stumbles near 25-month low amid bearish price outlook-PLATTS 6) Nigeria's Port Harcourt oil refinery to complete test run this month-RTRS 7) Shell will be tempted to join US M&A party-RTRS 8) Oil falls on massive US fuel inventory builds-CNBC