The State of Markets: Equities: What's Next?
US and global equities found support at key levels this week, from which they started to build a base/rally. For most major indices, that support level has been at (or just above) the 50-day moving average (e.g. see the chart below). In that respect S&P500 price action has been encouraging for the bulls (and, on most days, has followed a similar pattern). That is, the day has started with some initial weakness, which has then reversed, with the index rallying/closing higher. With that, the index has made higher highs and higher lows during the week.
The key near term question, therefore, is: Has the uptrend resumed? Or was last week merely a short-term bounce before equities move lower (to convincingly test the 50 day, or even 200 day moving average). We outline our view on that in recent research (e.g. see recent ‘Daily Risk Appetite’ & ‘Tactical’ publications for our assessment of that question).
Next week’s US macro data will be watched closely and includes Conference Board consumer confidence (Tuesday), personal income & spending (and PCE inflation) as well as durable goods orders data (on Wednesday). The Fed minutes from the November meeting are due on Tuesday (7pm London time), whilst US markets are closed for Thanksgiving on Thursday. Over in Europe it’s ‘inflation week’, with flash November CPI estimates expected for Germany, Spain (both Thursday), and France, Italy, and the broader Eurozone (Friday). Please see below for full list of key macro data and events.
Key chart: S&P500 futures candlestick shown with its 50 day moving average
Upcoming important data/events this week:
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Events: |
Fed minutes from November meeting (Tues, 7pm); RBNZ policy decision (Fri, 1pm). US Thanksgiving holiday (Thursday – market closed). |
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Monday: |
German IFO business climate (Nov, 9am). |
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Tuesday: |
US new home sales (Oct, 3pm); US Conference Board consumer confidence (Nov, 3pm). |
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Wednesday: |
US durable goods orders (October first estimate, 1:30pm); US Chicago PMI (Nov, 2:45pm); US personal income & spending including headline & core PCE (Oct, 3pm). |
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Thursday: |
Eurozone M3 money supply (Oct, 9am); German headline CPI (November first estimate, 1pm). |
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Friday: |
French headline CPI (November first estimates, 7:45am); Eurozone & Italian headline & core CPI (November first estimates, 10am). |
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Key earnings: |
Agilent Technologies (Mon); Analog Devices, Dell Tech (Tues); Kroger (Thurs). |
Key Research
Longview on Friday, 22nd November 2024:
“The View from New York”
“Economic isolationism would do great harm to our economic growth prospects. The Treasury should understand, too, that denigrating the world’s reserve currency is particularly ill-advised.”
Source: Kevin Warsh (current most likely US Treasury Secretary) – writing in WSJ in March 2018
https://www.wsj.com/articles/the-meaning-of-bitcoins-volatility-1520466081
“So that would be my 3-3-3,” the hedge-fund manager said. The Federal Reserve then “could go into a proper easing cycle.”
Source: Scott Bessent (2nd favoured potential Treasury Secretary) comments/economic plan quoted in MarketWatch, 2024,: https://www.msn.com/en-ie/money/markets/possible-trump-pick-for-treasury-lays-out-3-point-economic-plan-that-calls-for-deregulation-lower-deficit/ar-BB1nPuDo
With the election of a new US Administration two weeks ago and a raft of positions being announced (albeit they will still need to be confirmed by the Senate), it has been a fascinating time to be in New York meeting and talking with money managers, economists, strategists and others.
The consensus from four days of meetings and three dinners is that confusion reigns. Confusion about who will or won’t be nominated as Treasury Secretary (with Kevin Warsh and Scott Bessent) currently tipped as the most likely candidates*. Confusion about what that will mean for Trump’s fiscal and tariffs policy if either is put forward for confirmation by the Senate (especially given they both lean hawkish on debt, deficits and inflation)…..
Key North American macro data & events:
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Events: |
Fed minutes from November meeting (Tues, 7pm). Thanksgiving holiday (Thursday – market closed). |
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Monday: |
US Chicago Fed national activity index (Oct, 1:30pm); US Dallas Fed manufacturing sector activity (Nov, 3:30pm). |
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Tuesday: |
US Philadelphia Fed service sector activity (Nov, 1:30pm); US FHFA house price index (Sept, 2pm); US house price purchase index (Q3, 2pm); US S&P/Case-Shiller 20-city & national house prices (Sept, 2pm); US new home sales (Oct, 3pm); US Conference Board consumer confidence (Nov, 3pm); US Richmond Fed manufacturing (Nov, 3pm); US Dallas Fed service sector activity (Nov, 3:30pm). |
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Wednesday: |
US GDP (Q3 second estimate, 1:30pm); US wholesale & retail inventories (October first estimate, 1:30pm); US durable goods orders (October first estimate, 1:30pm); US weekly jobless claims (1:30pm); US Chicago PMI (Nov, 2:45pm); US personal income & spending including headline & core PCE (Oct, 3pm); US pending home sales (Oct, 3pm). |
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Thursday: |
Canadian CFIB business barometer (Nov, 12pm); Canadian employment change (Sept, 1:30pm). |
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Friday: |
Canadian GDP (Sept, 1:30pm). |
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Key earnings: |
Agilent Technologies (Mon); Analog Devices, Dell Tech, CrowdStrike Holdings, Workday, Autodesk (Tues); Kroger (Thurs). |
Fig B: US Conference Board consumer confidence (index)
Key European macro data & events
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Events: |
Speeches by the ECB’s Lane in London (Mon, 4:30pm), Nagel in Dortmund (Mon, 5:30pm), Makhlouf at Society of Professional Economists annual dinner (Mon, 7pm), Villeroy in Paris (Tues, 8am & 9:15am), Centeno in Lisbon (Tues, 9am), Rehn at the Finnish Parliament (Tues, 10am), Lane in Frankfurt (Wed, 6pm) & Nagel at Euro20+ event (Fri, 1pm). |
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Monday: |
Spanish PPI (Oct, 8am); German IFO business climate (Nov, 9am). |
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Tuesday: |
N/A |
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Wednesday: |
French INSEE consumer confidence (Nov, 7:45am); German GfK consumer confidence (Dec, 9:30am). |
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Thursday: |
Spanish total mortgage lending (Sept, 8am); Spanish headline & core CPI (November first estimate, 8am); Italian ISTAT consumer & manufacturing confidence (Nov, 9am); Eurozone M3 money supply (Oct, 9am); Eurozone consumer confidence (November final estimate, 10am); Italian PPI (Oct, 10am); German headline CPI (November first estimate, 1pm). |
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Friday: |
German retail sales (Oct, 7am); French GDP (Q3 final estimate, 7:45am); French headline CPI & PPI (November first estimates, 7:45am); Spanish retail sales (Oct, 8am); German unemployment change (Nov, 8:55am); ECB 1 & 3 year inflation expectations (Oct, 9am); Eurozone & Italian headline & core CPI (November first estimates, 10am). |
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Key earnings: |
N/A |
Fig C: Eurozone M3 money supply (Y-o-Y%)
Key UK macro data & events
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Events: |
Bank of England publishes financial stability review and FPC summary (Fri, 10:30am); speeches by the Bank of England’s Lombardelli & Dhingra at the BOE Watchers' conference in London (Mon, 9am & 10:30am). |
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Monday: |
N/A |
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Tuesday: |
BRC retail prices (Nov, 12:01am); CBI distributive trades survey (Nov, 11am). |
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Wednesday: |
N/A |
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Thursday: |
N/A |
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Friday: |
Lloyds business barometer (Nov, 12:01am); Net consumer credit, mortgage approvals, mortgage lending & M4 money supply (Oct, 9:30am). |
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Key earnings: |
Diageo, BAE Systems (Wed). |
Fig D: UK M4 lending vs. M4 money supply growth (Y-o-Y%)
Key Asia-Pacific macro data & events
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Events: |
RBNZ policy decision (Fri, 1pm); speech by the RBA’s Bullock at the Annual CEDA Conference (Thurs, 8:55am). |
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Monday: |
Japanese ESRI leading index (September final estimate, 5am); Japanese PPI services (Oct, 11:50pm). |
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Tuesday: |
N/A |
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Wednesday: |
Australian headline CPI (Oct, 12:30am); Chinese industrial profits (Oct, 1:30am). |
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Thursday: |
Australian private capital expenditure (Q3, 12:30am); Japanese jobless rate (Oct, 11:30pm); Japanese retail sales (Oct, 11:50pm); Japanese industrial production (October first estimate, 11:50pm). |
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Friday: |
Australian private sector credit (Oct, 12:30am); Japanese housing stats (Oct, 5am); Japanese ESRI consumer confidence (Nov, 5am). |
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Saturday: |
Chinese manufacturing & service sector PMIs (Nov, 1:30am). |
| Key earnings: |
N/A |
Fig E: Chinese manufacturing & service sector PMIs (NBS)
Last week:
Longview on Friday, 22nd November 2024:
“The View from New York”
Monthly Global Asset Allocation No. 55, 21st November 2024:
“Trump & The Oil Price: Does The Coming New Energy Policy Matter?”
The SHORT VIEW (& market positioning), 19th November 2024:
“Copper: (near term) Bounce Likely”
Prior week:
Longview on Friday, 15th November 2024:
“Minsky Moments, Einhorn's Inflation Concerns & Assessing Tariff Risks”
Quant Monthly Appendix 1, 14th November 2024:
“S&P500 Sector Valuation Overview”
Monthly Global Asset Allocation No. 54, 13th November 2024:
“ADD US Small & Mid-Cap Exposure”
The SHORT VIEW (& market positioning), 12th November 2024:
“Post Election Themes: Gold, Bitcoin & Equities”