All Eyes on Fed Dot Plot Today
A mostly graphical daily curated roundup of the markets and the economy from Nasdaq’s IR team.
#marketseverywhere | volatility is dead: VIX closed at the lowest level since Nov 2019 yesterday
| “The consumer-price index for November showed Tuesday that inflation still isn’t vanquished, and the Fed will do better to ignore the clamoring on Wall Street and Washington for rate cuts.” -Wall Street Journal, The Editorial Board, Jay Powell’s Mixed Inflation Signals
“This week’s FOMC meeting will be critical, with its revised dot plot set to clarify if market sentiment remains more dovish than actual Fed communications.” -JP Morgan Asset Management
“…the dot plot is expected to shift in a dovish direction for the first time since the pandemic…if the Fed do publish a more dovish dot plot, then perhaps historians will point to this meeting as one of the initial signs of impending rate cuts.” -Deutsche Bank, Jim Reid
* source: Deutsche Bank, Jim Reid
* source: Yardeni Research
* source: CNBC
* source: CME FedWatch Tool, produced by Gavin Zaentz
* source: BofA
1) KEY TAKEAWAYS
1) Equities MIXED / TYields LOWER / Gold + Dollar + Oil HIGHER
Market-implied inflation expectations fall to lowest levels since June -BBG
Hedge Funds Challenging SEC’s New Short-Sale Disclosure Rules -BBG
DJ -0.1% S&P500 +0.1% Nasdaq +0.2% R2K -0.0% Cdn TSX -0.5%
Stoxx Europe 600 +0.2% APAC stocks LOWER, 10YR TYield = 4.168%
Dollar HIGHER, Gold $1,982, WTI +1%, $69; Brent +1%, $74, Bitcoin $41,430
* source: Goldman Sachs Global Investment Research
2) “For the second consecutive month, decreases in energy prices helped offset price increases elsewhere for producers, with higher foods and core prices leaving the headline index unchanged.” -Oxford Economics
* source: Oxford Economics
3) Breaking CPI down…goods deflation, services inflation…
“The big inflation dichotomy these days is between goods and services.” -WSJ, Editorial Board
“The Unprecedented Inflation-Deflation Tug-of-War”
“The stay-at-home bubble is popping, creating deflation in many categories”
“Bottom line: Rising unemployment helps explain why inflation is slowing, but in order for prices to slow on a sustained basis, joblessness needs to clearly rise to generate a sustained downshift in wages.” -Piper Sandler
* source: Piper Sandler
* source: Oxford Economics
4) Consumer spending cuts…
* source: Piper Sandler
5) “Small Business Owners Pessimistic About Future Business Conditions…NFIB’s Optimism Index remains below the 50-year average” -NFIB
“However, even with the growing economy, small business owners have not seen a strong wave of workers to fill their open positions. Inflation also continues to be an issue among small businesses.” -NFIB Chief Economist Bill Dunkelberg
* source: NFIB
6) Will earnings rebound? Expectations too high?
“S&P 500 CY2024 earnings preview: analysts expect double-digit earnings growth” -Factset Insight
* source: Factset Insight
7) A relatively good year for the industrials sector!
* source: Grindstone Intelligence
8) uranium prices going up! energy demand + war…
* source: CNBC
9) Politics…
* source: Piper Sandler
10) THIS WEEK:
US: CPI, small business optimism, Fed rate decision are key highlights
* source: Barclays’ Emmanuel Cau
2) ESG, COMPILED BY NATHAN GREENE
BlackRock, Other Investment Firms Next Target in House ESG Probe – BNN
-House Judiciary Chairman Jim Jordan is close to finalizing subpoenas for BlackRock Inc., Glass Lewis, State Street, and Institutional Shareholder Services for documents related to the committee’s inquiry into whether their efforts to combat climate change violate US antitrust law.
-The panel is looking into allegations from critics of these investment firms that they colluded in committing to make the investments. The probe underscores the deteriorating relationship between the Republican Party and Wall Street.
Good Cop, bad Cop: what the Cop28 agreement says and what it means – The Guardian
-The decision text from Cop28 has been greeted as “historic”, for being the first ever call by nations for a “transition away” from fossil fuels, and as “weak and ineffectual” and containing a “litany of loopholes” for the fossil fuel industry.
3) MARKETS, MACRO, CORPORATE NEWS
Federal Reserve set to hold interest rates at 22-year high-FT
Bond market’s big rate-cut wager faces a reckoning from the Fed-BBG
Fed to start cutting rates midyear in ’24 with high chance of soft landing-CNBC
China poised to inject cash to aid liquidity, boost growth-BBG
Fed can trigger rush to exit on stretched market positioning-BBG
US stocks sluggish? Some blame a looming $5 trillion options expiration-RTRS
Argentina devalues peso, cuts spending to treat fiscal deficit ‘addiction’-RTRS
Yellen sees inflation gradually heading back to fed’s 2% target-BBG
UK economy shrinks unexpectedly in October-FT
Scholz settles coalition divisions with deal on revised budget-Y
German GDP to contract 0.5% in 2024 due to budget crisis – IW-Y
Japan’s business mood hits near 2-year high, keeps BOJ exit in focus-RTRS
S. Korea’s on-year job growth slows down in November-YNHP
Import prices snap 4-month rise in Nov on fall in oil, chemical prices-YNHP
Xi disappoints investors by skipping signal for big stimulus-BBG
China says it will step up policy adjustments to spur recovery in 2024-RTRS
Lawmakers call on U.S. regulator to thwart Kroger-Albertsons deal-CNBC
Boots owner in talks to offload £7 billion UK pharmacy chain-BBG
Blue Origin aims to launch first New Shepard rocket in over a year-CNBC
US expects Israel to scale back Gaza offensive as soon as January-FT
Joe Biden warns Benjamin Netanyahu to change tack-FT
Biden says Netanyahu must ‘change’ or lose global support-BBG
U.S. intelligence assesses Ukraine war has cost Russia 315K casualties-RTRS
US doubts performance, yield of Huawei’s advanced chip-BBG
Carlyle weighs $4.6 billion exit for Switzerland’s Acrotec-BBG
Italy considers move to gain control of key Telecom Italia unit-BBG
Metro Bank freezes bid for BoE regulatory sign-off on risk models-FT
Oil/Energy Headlines: 1) US EIA lowers 2024 Brent price forecast despite OPEC+ oil output cuts –RTRS 2) Russia’s Crude Flows Surge as Black Sea Port Rebounds From Storm-BBG 3) Norway oil and gas investments set to soar in 2024, industry says –RTRS 4) Bangladesh permits privately-owned refineries to help ease supply situation –Platts 5) COP28: Leaders agree to transition away from fossil fuels in final text of stocktake –Platts 6) India’s BPCL looking at buying Venezuela oil, official says –RTRS 7) FUJAIRAH DATA: Oil products inventories slump to 11-week low –Platts8) Oil market comfortably supplied after OPEC+ cuts –RTRS 9) Oil falls to five-month lows as US, Russia bolster glut concerns –BBG 10) Gas prices have fallen 19% since September, hit lowest point of year ahead of holiday –CNBC 11) Nations strike deal at COP28 to transition away from fossil fuels –RTRS