The State of Markets: “S&P500: (still) Rangebound? Or Breakout Ahead?”
US equities were pushed around by a number of key events and data releases last week. On Wednesday, for example, risk assets sold off on the hotter than expected US CPI data. They then retraced those losses on Thursday, on news that Trump had once again delayed imposing tariffs (at least until early April). With that, though, the S&P500 has remained within its range (i.e. just below its highs from early December and late January, see chart below). Elsewhere the price action in European equities has become frothy/complacent, while certain liquidity barometers have moved sharply higher (e.g. gold and silver).
The key question, therefore, is: Will US equities break out to the upside in coming weeks? Or will they roll over? We outline our views on those questions in recent research (which is available below for subscribers, or click HERE for a trial).
Next week’s US macro data has a strong housing theme, with updates on the NAHB home builders index on Tuesday, housing starts and permits (Wednesday), and existing home sales (Friday). Elsewhere the Conference Board Leading Index is due on Thursday and S&P manufacturing & service sector PMIs (February first estimates) are on Friday. The Fed minutes from the January meeting are due on Wednesday and there are speeches/comments from several key FOMC members during the week. Please see below for full list of key macro data and events.
Key chart: S&P500 March 25 futures candlestick shown with 50 day moving average
Upcoming important data/events this week:
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Events: |
Fed minutes from January meeting (Wed, 7pm); PBOC policy decision (Thurs, 1am); market holiday in the US on account of Washington’s Birthday & in Canada on account of Family Day (Mon); RBA policy decision (Tues, 3:30am); RBNZ policy decision (Wed, 1am). |
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Monday: |
N/A |
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Tuesday: |
UK employment, jobless claims & average weekly earnings (Jan/Dec, 7am). |
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Wednesday: |
Chinese new & used home prices (Jan, 1:30am); UK headline & core CPI (Jan, 7am); US housing starts & building permits (Jan, 1:30pm). |
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Thursday: |
US Conference Board leading index (Jan, 3pm). |
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Friday: |
Flash manufacturing & service sector PMIs for Japan (12:30am), France (8:15am), Germany (8:30am), Eurozone (9am), UK (9:30am) & US (2:45pm) – all February first estimates; US existing home sales (Jan, 3pm). |
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Key earnings: |
Arista Networks, Medtronic, Cadence Design (Tues); Analog Devices, Copart, Garmin (Wed); Walmart, Booking, MercadoLibre, Southern, Newmont Goldcorp (Thurs); Constellation Energy (Fri). |
Key Research
Longview on Friday, 14th February 2025:
“Trump, Tariffs and Triffin”
As is well known, one of the key policy goals of Trump’s Presidency is to reduce America’s large trade deficit. That deficit reached almost $100 billion last month ($98 bn – FIG 1). Over the past 12 months, it’s $918bn.
The deficit, in Trump’s eyes, is a clear sign that America is being ‘ripped off’ by other countries (whether they are friendly/allies, like the EU – or strategic competitors, like China). Many in his administration (and those closely linked to it) have argued that China has been stealing intellectual property, dumping excess capacity on the world (especially on the US) and engaging in unfair trade practices. For example, Bob Lighthizer, Trump’s trade representative in his first Administration, published a book in 2023, called “No Trade is Free”. In the book he argues that ‘unfair trade’ (with China and others) is hollowing out middle American jobs (& ‘dignity’), i.e. mostly in the manufacturing space.
Key North American macro data & events:
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Events: |
Fed minutes from January meeting (Wed, 7pm); speeches by the Fed’s Harker on the Economic Outlook (Mon, 2:30pm), Bowman & Daly to American Bankers Association (Mon & Tues, 3:20pm), Goolsbee in a moderated Q&A (Thurs, 2:35pm) & Musalem to Economic Club of NY (Thurs, 5:05pm); market holiday in the US on account of Washington’s Birthday & in Canada on account of Family Day (Mon). |
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Monday: |
Canadian housing starts (Jan, 1:15pm). |
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Tuesday: |
US Empire manufacturing (Jan, 1:30pm); Canadian core CPI (Jan, 1:30pm); Canadian existing home sales (Jan, 2pm). US NAHB housing market index (Feb, 3pm); US total TIC flows (Dec, 9pm). |
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Wednesday: |
US housing starts & building permits (Jan, 1:30pm); US New York Fed service sector business activity (Feb, 1:30pm). |
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Thursday: |
US Philadelphia Fed business outlook (Feb, 1:30pm); US weekly jobless claims (1:30pm); US Conference Board leading index (Jan, 3pm). |
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Friday: |
Canadian retail sales (Dec, 1:30pm); US S&P manufacturing & service sector PMIs (February first estimate, 2:45pm); US Michigan sentiment (February final estimate, 3pm); US existing home sales (Jan, 3pm). |
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Key earnings: |
Arista Networks, Medtronic, Cadence Design (Tues); Analog Devices, Copart, Garmin (Wed); Walmart, Booking, MercadoLibre, Southern, Newmont Goldcorp (Thurs); Constellation Energy (Fri). |
Fig B: US Conference Board leading index (Y-o-Y %)
Key European macro data & events
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Events: |
Speeches by the ECB’s Holzmann in Vienna (Tues, 9am), Cipollone in MNI livestreamed event (Tues, 2pm), Makhlouf on the Irish Economy (Thurs, 1pm) & Lane in Vienna (Fri, 2:30pm); ECB publishes financial statements for 2024 (Wed, 11am). |
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Monday: |
Eurozone trade balance (Dec, 10am). |
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Tuesday: |
French headline & core CPI (January first estimate, 7:45am); German & Eurozone ZEW survey – expectations & current situation (Feb, 10am). |
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Wednesday: |
Spanish mortgage approvals (Dec, 8am); ECB current account (Dec, 9am); Italian current account balance (Dec, 9:30am). |
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Thursday: |
German PPI (Jan, 7am); Spanish home sales (Nov, 8am); Eurozone construction output (Dec, 10am); Eurozone consumer confidence (January first estimate, 3pm). |
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Friday: |
French INSEE business & manufacturing confidence (Feb, 7:45am); HCOB manufacturing & service sector PMIs for France (8:15am), Germany (8:30am) & Eurozone (9am) – all February first estimates; Italian core CPI (Jan, 9am). |
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Key earnings: |
Schneider Electric, Airbus Group (Thurs); Air Liquide (Fri). |
Fig C: Eurozone consumer confidence (index)
Key UK macro data & events
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Events: |
N/A |
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Monday: |
Rightmove house prices (Feb, 12:01am). |
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Tuesday: |
Employment, jobless claims & average weekly earnings (Jan/Dec, 7am). |
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Wednesday: |
Headline & core CPI, RPI & PPI (Jan, 7am); Land Registry house price index (Dec, 9:30am). |
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Thursday: |
CBI industrial trends survey (Feb, 11am). |
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Friday: |
Gfk consumer confidence (Feb, 12:01am); public sector finances (Jan, 7am); retail sales (Jan, 7am); S&P manufacturing & service sector PMIs (February first estimates, 9:30am). |
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Key earnings: |
HSBC, Rio Tinto PLC, Glencore (Wed); Lloyds Banking (Thurs); Standard Chartered (Fri). |
Fig D: UK S&P manufacturing & service sector PMIs
Key Asia-Pacific macro data & events
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Events: |
RBA policy decision (Tues, 3:30am); RBNZ policy decision (Wed, 1am); PBOC policy decision (Thurs, 1am). |
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Monday: |
Japanese industrial production & capacity utilisation (December final estimate, 4:30am). |
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Tuesday: |
Japanese imports/exports, & trade balance (Jan, 11:50pm); Australian Westpac leading index (Jan, 11:30pm); Japanese machinery orders (Dec, 12:50am). |
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Wednesday: |
Australian wage price index (Q4, 12:30am); Chinese new & used home prices (Jan, 1:30am). |
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Thursday: |
Australian employment data (Jan, 12:30am); Australian S&P manufacturing & services sector PMI (February final estimate, 10pm); Japanese headline & core CPI (Jan, 11:30pm). |
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Friday: |
Japanese Jibun Bank manufacturing & services sector PMI (February first estimate, 12:30am). |
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Key earnings: |
BHP Group Ltd, Westpac Banking (Mon); Rio Tinto Ltd, National Australia Bank (Wed); Westfarmers (Thurs). |
Fig E: Japanese Jibun Bank manufacturing & service sector PMIs (index)
Last week:
Longview on Friday, 14th February 2025:
“Gold & the Heightened Equity Pullback Risk”
Longview Letter No. 147, 12th February 2025:
“The British Economy –> Ways to Fix the Lack of Growth” - Section 2
The SHORT VIEW (& market positioning), 11th February 2025:
“Gold: When is ‘Max FOMO’?”
Prior week:
Longview on Friday, 7th February 2025:
“Gold & the Heightened Equity Pullback Risk”
(Strategic) Global Asset Allocation Alert, 6th February 2025:
“Reduce Risk in Strategic Portfolio a.k.a. US Pullback Risks Rising”
Commodity Fundamentals Report No. 185, 4th February 2025:
“Europe: Another Nat Gas Price Shock?”
Tactical Equity Asset Allocation No. 253, 3rd February 2025:
“Tactically Cautious (for now) a.k.a. Macro Risks Rising; Models Largely on SELL”