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

#marketseverywhere | “Given that these seven stocks are now around 30% of the S&P 500 (only c.1.4% by equal weight) and up from 21.2% at the start of this year, their performance in 2024 will be key to the S&P 500 and possibly even the global economy via the link to animal spirts and financial conditions. Put another way it’s almost impossible to take a view on the S&P 500 (and maybe the global economy) without a view on these seven stocks.” -Deutsche Bank, Jim Reid

Mag 7 = Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

* source: Deutsche Bank, Jim Reid

| “Soft landing fever and FOMO are in full swing. Too far, too fast?” -Emmanuel Cau, Barclays

Global Bond Rally Powers on as Rate Cut Bets Appear Everywhere (globally) -BBG

Aggressive rate cut expectations = Did Markets Go Too Far, Too Fast Is Debate to Dominate December -BBG

* source: Emmanuel Cau, Barclays

| Aggressive rate cut expectations priced in globally…will 2024 set the markets up for a disappointment?

Financials conditions easing boosting equities + bonds

* source: Goldman Sachs Global Investment Research

| #QualityMatters | “Realized EPS growth continued to hold up very well.”

-Michael Kantrowitz, Piper Sandler

* source: Michael Kantrowitz, Piper Sandler

| Short covering + Mutual Fund & Hedge Fund + retail buying pushing markets higher for now…how long will this persist?

* source: Barclays’ Emmanuel Cau

| ADP = Private payrolls increased by 103K in Nov, below expectations

unit labor costs fell more than economists forecasted while productivity increased at a higher rate than anticipated. -CNBC

“labor market continues to weaken, underscored by yesterda’s JOLTS release, which showed much fewer Oct job openings than expected.

* source: Nancy Lazar, Piper Sandler

* source: Oxford Economics

The quit rate — a good leading indicator of wages — held steady at its recent lows, suggesting the Employment Cost Index softens to about 3% over the next few quarters (vs. 3Q’s 4.4%).”

-Nancy Lazar, Piper Sandler

* source: Nancy Lazar, Piper Sandler

* source: Oxford Economics

| Services sector resilient in Q4, but points to slower GDP growth

* source: Oxford Economics

| European stocks hit 4 month high… | Nov/Dec seasonality = positive

* source: CNBC

* source: Barclays’ Emmanuel Cau

| how much more room do small and micro caps have to run? they have been mostly out of favor in 2023…

* source: CNBC

| end of rate hikes and while markets pricing in beginning of rate cuts in 2024, Fed’s balance sheet is projected to shrink = Quantitative Tightening

* source: Grindstone Intelligence

| Disinflation pointing into the right direction but still more work left…

* source: Yardeni Research

| Strong balance sheets have been a consistent outperformer this year as #QualityMatters

* source: Goldman Sachs Global Investment Research

| What are gold + bitcoin telling us?

* source: CNBC

1) KEY TAKEAWAYS

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

big week for jobs data…

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

Stoxx Europe 600 +0.6% APAC stocks HIGHER, 10YR TYield = 4.155%

Dollar LOWER, Gold $2,026, WTI -2%, $70; Brent -2%, $76, Bitcoin $44,085

2) THIS WEEK:

“The US jobs report on Friday will be the highlight of the week, with the University of Michigan data also in focus.

Other notable releases include economic activity indicators in Germany, wages in Japan, and trade in China.

From central banks, there will be the ECB’s consumer expectations survey and
the BoE’s inflation attitudes survey. Monetary policy decisions are also due from
the central banks of Canada and Australia.”

-Deutsche Bank

* source: Barclays’ Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

ECB Warns Banks of Penalty ‘Escalation’ If Climate Risks Ignored – BNN 

-Europe’s top financial supervisor warned that it has more tools up its sleeve than just fines to ensure the region’s banks aren’t mismanaging the fallout on their business from climate change. 

-Last month that the ECB gave about 20 banks individual deadlines to fix deficiencies or face daily penalties. The ECB stated that lenders aren’t doing enough to prepare for the fallout of extreme weather shocks on asset values, or losses on loans if borrowers with big carbon footprints go out of business.

CDP 2023 disclosure data factsheet – CDP 

-In 2023, 23,000+ companies disclosed their environmental performance data to CDP.

38% of disclosing companies are providing environmental performance information on nature-related issues beyond climate, indicating a growing recognition that providing disclosure on climate alone is not enough.

Environmental disclosure is becoming a global market norm, as seen by the increase in disclosures across all regions and the coverage of market indices across developed and emerging markets.

* source: CDP disclosure data factsheet

3) MARKETS, MACRO, CORPORATE NEWS

BofA CEO Moynihan says economy slowing but outlook still positive-BBG
More US holiday shoppers turn to ‘buy now, pay later’ loans-FT
EU to consider debt-reduction targets as part of fiscal revamp-BBG
German factory orders unexpectedly dropped in October-BBG
Japan manufacturers’ mood jumps, second straight month of gains-RTRS
Australian economy surprisingly slows as rates damp spending-BBG
Traders show doubts Fed will cut rates fast as what they’re expecting now-BBG
Economists see Fed keeping rates at 22-year high until at least July-FT
Traders turbocharge ECB bets by predicting 2.5% rate in 2024-BBG
BOJ’s deputy governor highlights benefits of ending ultra-easy policy-RTRS
Japan bond liquidity worse under easing, BOJ review finds-NIKKEI
Worsening China earnings give bears more reasons to sell-BBG
Moody’s outlook cut complicates Beijing’s ‘war’ against market bears-RTRS
China state banks selling dollars for second day to support yuan-RTRS
Janet Yellen on Ukraine, deficits and working with Speaker Johnson-PB
Lawmakers: Congress could strike deal overall gov’t funding this week-HILL
McHenry announces he will pass on reelection-POL
Israel would consider another cease-fire to get back hostages-BBG
Israel now willing to discuss post-war Gaza, U.S. officials say-AXIOS
Ukraine sees ‘big risk’ of losing war if U.S. Congress postpones vital aid-RTRS
Taiwan wants to push bounds of US trade deal to beat isolation-BBG
Elon Musk looks to raise $1B for artificial intelligence startup xAI: filing-NYPOST
Brazil’s Natura explored offloading cosmetics group Avon International-FT
Exclusive: US power utility Allete explores sale, sources say-RTRS
Apple moves towards India-made iPhone batteries in push away from China-FT
CNOOC, VitBol among those shortlisted for Shell Singapore assets-RTRS
Exclusive: China EV maker Nio to spin off its battery production unit-RTRS
UniCredit seeks new chair candidate by early 2024, sources say-RTRS
Sigma to reverse list Chemist Warehouse; preps $350m raise via Goldies-AFR
Amazon targets Shein with big fee cuts for cheap apparel sellers-BBG
Nvidia working with US ensure new chips for China compliant with curbs-RTRS
Airbnb CFO Dave Stephenson new role company reach ‘inflection point’-CNBC
Wells Fargo CEO warns severance costs $1bn; 4th quarter layoffs loom-CNBC
Activist investor urges Disney to add Trian’s Nelson Peltz to its board-CNBC
Trial over JetBlue’s Spirit merger ends with US judge mulling options-RTRS
Eli Lilly’s Zepbound available at pharmacies; Wegovy faces shortages-CNBC
TikTok owner ByteDance offers buy back US$5 billion worth of investor shares as IPO prospects remain slim-SCMP

Oil/Energy Headlines: 1) Unprecedented US exports are weighing on global crude market-BBG 2) Saudi Oil price moves seen pushing Asian customers elsewhere-BBG 3) Putin arrives in Middle East to talk oil with Saudi crown prince-RTRS 4) India’s long-term appetite for Russian crude intact despite recent slowdown-PLATTS 5) Venezuela’s Maduro pledges to permit oil, mines development in disputed territory-RTRS 6) Canada oil firms face losses as booming supply runs into Trans Mountain delays-RTRS 7) US Coast Guard responds to oil spill in Gulf of Mexico-RTRS

Original: Earnings Feed: Aggressive Rate Cut Expectations Priced in Globally