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

The Fed/Powell pivots / premature? / is 3% inflation the new 2%? inflation? | “central banks signal victory over inflation in sight…central banks around the world move from monetary tightening to talk of rate cuts.” -WSJ

| “The Chairman’s Paul Volcker era is over. Easier money is on the way.” -WSJ, The Editorial Board

“Inflation is just like alcoholism…the good effects come first, and the bad effects only come later. That’s why in both cases there is a strong temptation to overdo it—to drink too much and to print too much money.” -Milton Friedman, Noble Prize Economics 1976

* source: Goldman Sachs Global Investment Research

* source: CME FedWatch Tool, produced by Gavin Zaentz

| Will the markets get what they are asking for? | easier money! | markets reflect 6 rate cuts…

* source: Oxford Economics

| Powell: “we still have a ways to go,” and “no one is declaring victory” over inflation.

“The financial markets didn’t believe a word of it.” -WSJ Editorial Board

Equities soared to new heights, yield sensitive sectors like Real Estate +3.9% & Utes +3.8%, Small Caps outperformed

* source: Factset, produced by Gavin Zaentz

| Will inflation make a comeback? | bond yields plunged yesterday and continues to trend lower today…

* source: CNBC

* source: BofA

1) KEY TAKEAWAYS

1) Equities HIGHER w/ small caps leading / TYields + Dollar LOWER / Gold + Oil HIGHER

Weekly AAII (Retail) Sentiment | Bullish rose to the highest level since the summer, bearish fell to the lowest level since January 2018.

DJ +0.3% S&P500 +0.5% Nasdaq +0.7% R2K +2.7% Cdn TSX +0.8%

Stoxx Europe 600 +0.9% APAC stocks MIXED, 10YR TYield = 3.954%

Dollar LOWER, Gold $2,044, WTI +3%, $72; Brent +3%, $77, Bitcoin $42,666

2) CPI still not at 2% target, is 3% the new 2%?

* source: Yardeni Research

3) “There is decent evidence that the VIX lags Fed Funds by around two years.”

“So is the most aggressive hiking cycle for 40 years about to bite in the same way, and with similar timing as most hiking cycles eventually do, or “is this time different?” Are the Fed pivoting just in time to ensure the lag never fully happens and we achieve the soft landing?”

-Jim Reid, Deutsche Bank

* source: Deutsche Bank, Jim Reid

4) Job market: “Initial jobless claims continue to bounce around due to seasonal noise, falling last week to their lowest level since mid-October. Continued claims, meanwhile, are still trending higher.”

“Upward trend in continued claims suggests some unemployed individuals may be finding it harder to get a new job, which would be consistent with the sharp drop in job openings in October and moderating payroll growth in November after accounting for strike activity.”

-Oxford Economics

* source: Oxford Economics

5) “The solid rise in retail sales in November more than reversed the decline in October”

* source: Oxford Economics

6) Will Small Caps play catch up now that the Fed has signaled easy money?

* source: Grindstone Intelligence

7) Politics…

* source: Piper Sandler

8) THIS WEEK:

US: CPI, small business optimism, Fed rate decision are key highlights

* source: Barclays’ Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

EU agrees on forced labour, environmental harm disclosures for companies – Reuters

-Large companies in the European Union will have to identify and take remedial action if they find their supply chains employing child labour or damaging the environment, the bloc’s lawmakers and council of member states agreed on Thursday. 

-The law will override current voluntary net zero pledges at banks and other financial firms, which have largely failed, and fast track the sector to align with the Paris Agreement, said the World Benchmarking Alliance.

Russia Seeks to Unite BRICS on Climate Initiatives After COP28 – BNN 

-Russia’s “task is to combine efforts and common approaches in the Eurasian space and in the BRICS space” when it comes to the climate agenda, First Deputy Economy Minister Ilya Torosov said in an interview Tuesday at the COP28 conference.

3) MARKETS, MACRO, CORPORATE NEWS

Fed pivots to rate cuts as inflation heads toward 2% goal-BBG
Goldman revises fed call, seeing ‘earlier and faster’ cuts-BBG
ECB has tough job to fight rate cut bets as inflation falls-RTRS
Stagnant UK poses headache for boe rate-setters-BBG
Norway’s final hike defying global shift sparks krone surge-BBG
SNB calls end to hiking cycle, signals shift in franc policy-BBG
Japan’s negative rate exit scenario muddled by Fed outlook-NIKKEI
China’s central bank set to boost liquidity injection-Y
Treasuries 10-year yield falls below 4% as fed sees rate cuts-BBG
Yellen expects inflation to fall in range of 2% by end of 2024-BBG
Fitch says China’s outlook is neutral, sees growing debt risks-BBG
China’s economy seen weakening on drags from deflation, property-BBG
China Nov bank loans rise less than expected, more easing expected-RTRS
Japan Oct machinery orders unexpectedly rise-RTRS
German 2024 budget deal could spur EU agreement on budget revision-RTRS
Australian jobs beat estimates, sending currency higher-BBG
New Zealand economy unexpectedly contracted in third quarter-BBG
Israel strikes southern Gaza as disease stalks residents-RTRS
US leads push for buffer between Israel and Hizbollah-FT
Top defence officials from US and China meet after Taiwan rift-FT
Venezuela nearly doubles budget as maduro prepares for election-BBG
A year after audit deal, Chinese IPOs in US are small and rare-BBG
Border deal shows signs of life after Biden offer-TWP
Trump pulls ahead in Michigan as union, women voters sour on Biden-BBG
Supreme Court agrees to hear case-MSN
House GOP votes to formalize Biden impeachment inquiry-TWP
We’re voting against Allkem’s $16b merger with Livent, Ausbil says-AFR
Santander to buy BNP Paribas’ Mexico asset management business-RTRS
Samsung C&T pushed to make changes by third activist investor-BBG
Apple set to be hit by EU antitrust order in app store fight with Spotify-BBG
Adobe signals that AI boost will take longer than expected-BBG
Mattel developing ‘American Girl’ movie with Paramount, Temple Hill-THR
Etsy stock falls after company lays off 11% of its staff-CNBC
GM’s long-time product development chief set to retire-Y
Disney, Comcast increase US ad spending on Instagram-RTRS
OpenAI & Axel Springer strike deal to offer news in ChatGPT-CNBC 

Oil/Energy Headlines: 1) Oil investors to usher in 2024 amid oversupply, demand concerns –RTRS 2) Oil Rises as Large US Stockpile Drawdown Gives Bears Pause –Y 3) Oil demand growth shows signs of sharper slowdown, IEA says –BBG 4) World oil demand next year to rise faster than expected, IEA says –RTRS 5) Commodities 2024: Asia seen as oil’s bright spot in 2024; India to edge past China’s growth –Platts 6) Oil demand growth in India to taper in 2024 after bumper run –BBG 7) India’s Nov Russian oil imports up 3% from Oct – trade –RTRS

Original: Earnings Feed: Will the Markets Get What They Are Asking For?