Shortened holiday week but we expect a positive bias. FOMC minutes to bring focus Fed "dot plots" too high = positive for equities

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

We discuss: We see a positive bias this week with the shortened holiday for several reasons including improving consumer mood, FOMC minutes drive focus on Dec “dot plot” and positive inflection of equity inflows.

Please click below to view our Macro Minute (Duration: 5:13).

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

A shortened trading week is ahead due to the Thanksgiving holiday. This is one of my favorite holidays because the families gather and there are no gifts exchanged. And one of my Thanksgiving traditions is watching Planes Trains and Automobiles. I can’t explain why, but I never tire of this movie.

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Paramount Pictures, John Hughes and Planes, Trains and Automobiles
  • The bias is for markets to rise this week, in my view. Like a few weeks ago, this is a “light data” week but given the favorable seasonals, the rising confidence of falling inflation and general investor skepticism. The recent comments by Walmart’s CEO speak to this change where he noted “high inflation has ended and customers might soon see the opposite” (per Fortune).
  • On Tuesday at 2pm ET, the November FOMC (Fed) minutes are released. Tom Block often cites the banter in these meetings as insightful for future policy. To me, there might be more importance to these minutes because of the upcoming December FOMC rate decision and updated “dot plot” (aka SEP, or Summary Economic Projections) on December 13th.
  • On the last “dot plot” Sept 2023 FOMC median PCE core inflation for YE 2023 as reduced:
    – Core PCE median fell from 3.9% to 3.7% for Dec
    – Core PCE for Sept was 3.7% (was not released)
    – Core PCE for Oct set to track to 3.5%
    – Fed forecast implies same PCE of +3.7% YoY for Sept, Oct, Nov, Dec
    – Clearly Fed “dot plots” seem high by a wide margin
  • Consensus Core PCE also seem a touch too “high”:
    – Street consensus for Dec Core PCE is 3.5%
    – This means Street sees same PCE Oct, Nov and Dec
    – Why flat for 3 consecutive months? Seems stale
  • Core PCE has been falling YoY at 10bp-20bp per month. So doesn’t this make:
    – Dec Core PCE more likely 3.1% to 3.2%
    – Fed Dec PCE “dot plot” is 3.7%
    – Street Dec PCE forecast 3.5%
  • My takeaway? This surely seems constructive as many investors and markets would react positively if the Fed does lower its “dot plots” for 2023 and 2024. Recall:
    – Post-Sept FOMC, when Fed raised “dot plots”
    – US 10-yr yields soared above 5%
    – Stocks fell 10% on the heels of that
  • Nvidia NVDA 2.46%  also reports Tuesday (11/21) after the close. NVDA is a November “Super Granny” which means it is one of top 5 Granny Shots. Our Head of Technical Strategy, Mark Newton, considers this one of his top ideas and this could also act as a positive market driver during this holiday week. Recall, that with holiday weeks like this, many institutional investors are away from their desks, so this could amplify market moves.
  • Lastly, Goldman Sachs Economics team noted global equities flows were strong for the week ending 11/15/2023. This was almost entirely US equity inflows of +$23 billion. Generally, long-term flows seem like they are ready to reverse from outflows for the past 52 weeks towards stabilization or even inflows. One can see on the chart below that these positive inflections are good for US equities. Because these provide a new “bid”

Bottom line: We expect stocks to generally rise this week despite a “light macro” data week

Bottom line, we remain constructive into YE and thus remain “dip buyers” on weakness. Given the FOMC minutes on Tuesday plus NVDA 2.46%  after the close, we think markets could be quite strong on Tuesday.

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Fortune.com

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Washington Post

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: X.com

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Fundstrat

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Federal Reserve

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Goldman Sachs
Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Goldman Sachs

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities
Source: Fundstrat and Goldman Sachs

Key incoming data November

  • 11/01 9:45am ET S&P Global PMI October Final Tame 
  • 11/01 10am ET JOLTS Job Openings September Mixed
  • 11/01 10am ET October ISM Manufacturing Tame
  • 11/01 10am ET Treasury 4Q23 Quarterly Refunding Press Conference Tame
  • 11/01 2pm ET FOMC Rate Decision Dovish
  • 11/02 8:30am ET: 3Q23 Nonfarm Productivity Tame
  • 11/03 8:30am ET October Jobs Report Tame
  • 11/03 10am ET October ISM Services Mixed
  • 11/07 9am ET Manheim Used Vehicle Index October Final Tame
  • 11/10 10am ET U. Mich. November prelim Sentiment and Inflation Expectation Hot
  • 11/14 8:30am ET October CPI Tame
  • 11/15 8:30am ET October PPI Tame
  • 11/15 8:30am ET November Empire Manufacturing Survey  Resilient
  • 11/15 8:30am ET October Retail Sales Data Resilient
  • 11/16 8:30am ET November New York Fed Business Activity Survey Tame
  • 11/16 8:30am ET November Philly Fed Business Outlook Survey Tame
  • 11/16 10am ET November NAHB Housing Market Index  Tame
  • 11/17 9am ET Manheim Used Vehicle Index November Mid-Month Tame
  • 11/21 2pm ET Nov FOMC Meeting Minutes
  • 11/22 10am ET: U. Mich. November final Sentiment and Inflation Expectation
  • 11/24 9:45am ET S&P Global PMI November Prelim 
  • 11/27 10:30am ET Dallas Fed November Manufacturing Activity Survey
  • 11/28 9am ET November S&P CoreLogic CS home price 
  • 11/28 10am ET November Conference Board Consumer Confidence
  • 11/29 8:30am ET 3QS 2023 GDP
  • 11/29 2pm ET Fed Releases Beige Book
  • 11/30 8:30am ET October PCE

Key incoming data October

  •  10/2 10am ET September ISM Manufacturing Tame
  •  10/3 10am ET JOLTS Job Openings August Hot
  •  10/4 10am ET September ISM Services Tame
  •  10/6 8:30am ET September Jobs Report Mixed
  •  10/6 9am ET Manheim Used Vehicle Index September Final Tame
  • 10/10 11am NY Fed Inflation Expectations Mixed
  •  10/11 8:30am ET September PPI Mixed
  •  10/11 2pm ET Sep FOMC Meeting Minutes Tame
  •  10/12 8:30am ET September CPI Mixed
  •  10/13 10am ET U. Mich. September prelim 1-yr inflation Mixed
  •  10/16 8:30am ET October Empire Manufacturing Survey Tame
  •  10/17 8:30am ET October New York Fed Business Activity Survey Tame
  • 10/17 8:30am ET September Retail Sales Data Hot
  •  10/17 9am ET Manheim October Mid-Month Used Vehicle Value Index Tame
  •  10/17 10am ET October NAHB Housing Market Index Tame
  • 10/18 8:30am ET September Housing Starts Tame
  • 10/18 2pm ET Fed releases Beige Book Tame
  •  10/19 8:30am ET October Philly Fed Business Outlook Survey Tame
  • 10/19 10am ET Existing Home Sales Tame
  • 10/19 12pm ET Fed (including Powell) at Economic Club of New York
  •  10/24 9:45am ET S&P Global PMI October Prelim Tame
  •  10/26 8:30am ET 3Q 2023 GDP Advance Strong
  •  10/27 8:30am ET September PCE Tame
  •  10/27 10am ET Oct F UMich Sentiment and Inflation expectation Tame
  •  10/30 10:30am ET Dallas Fed September Manufacturing Activity Survey Tame
  • 10/31 8:30am ET 3Q23 Employment Cost Index Mixed
  •  10/31 9am ET August S&P CoreLogic CS home price Mixed
  •  10/31 10am ET October Conference Board Consumer Confidence Tame

Key incoming data September

  •  9/1 8:30am ET August Jobs Report Tame
  •  9/1 10am ET August ISM Manufacturing Tame
  •  9/6 10am ET August ISM Services Mixed
  •  9/6 2pm ET Fed releases Beige Book Tame
  •  9/8 9am ET Manheim Used Vehicle Index August Final Tame
  •  9/8 2Q23 Fed Flow of Funds Report Tame
  •   9/13 8:30am ET August CPI Mixed
  •  9/14 8:30am ET August PPI Tame
  •  9/15 8:30am ET September Empire Manufacturing Survey Tame
  •  9/15 10am ET U. Mich. September prelim 1-yr inflation Tame
  •  9/18 8:30am ET September New York Fed Business Activity Survey Tame
  •  9/18 10am ET September NAHB Housing Market Index Tame
  •  9/19 9am ET Manheim September Mid-Month Used Vehicle Value Index Mixed
  •  9/20 2pm ET September FOMC rates decision Market saw Hawkish
  •  9/21 8:30am ET September Philly Fed Business Outlook Survey Mixed
  •  9/22 9:45am ET S&P Global PMI September Prelim
  •  9/25 10:30am ET Dallas Fed September Manufacturing Activity Survey
  •  9/26 9am ET July S&P CoreLogic CS home price
  •  9/26 10am ET September Conference Board Consumer Confidence

Key incoming data August

  • 8/1 10am ET July ISM Manufacturing Tame
  • 8/1 10am ET JOLTS Job Openings Jun Tame
  • 8/2 8:15am ADP National Employment Report Hot
  • 8/3 10am ET July ISM Services Tame
  • 8/4 8:30am ET July Jobs report Tame
  • 8/7 11am ET Manheim Used Vehicle Index July Final Tame
  • 8/10 8:30am ET July CPI Tame
  • 8/11 8:30am ET July PPI Tame
  • 8/11 10am ET U. Mich. July prelim 1-yr inflation Tame
  • 8/11 Atlanta Fed Wage Tracker July Tame
  • 8/15 8:30am ET Aug Empire Manufacturing SurveyMixed 
  • 8/15 10am ET Aug NAHB Housing Market IndexTame
  • 8/16 8:30am ET Aug New York Fed Business Activity SurveyNeutral
  • 8/16 2pm ET FOMC MinutesMixed 
  • 8/17 8:30am ET Aug Philly Fed Business Outlook Survey Positive
  • 8/17 Manheim Aug Mid-Month Used Vehicle Value IndexTame
  • 8/23 9:45am ET S&P Global PMI Aug PrelimWeak
  • 8/25 10am ET Aug Final U Mich 1-yr inflationMixed
  • 8/28 10:30am ET Dallas Fed Aug Manufacturing Activity Survey Tame
  • 8/29 9am ET June S&P CoreLogic CS home price Tame
  • 8/29 10am ET Aug Conference Board Consumer Confidence Tame
  • 8/29 10 am ET Jul JOLTS Tame
  • 8/31 8:30am ET July PCE Tame

Key incoming data July

  • 7/3 10am ET June ISM Manufacturing Tame
  • 7/6 8:15am ADP National Employment Report Hot
  • 7/6 10am ET June ISM Services Tame
  • 7/6 10 am ET May JOLTS Tame
  • 7/7 8:30am ET June Jobs report Mixed
  • 7/10 11am ET Manheim Used Vehicle Index June Final Tame
  • 7/12 8:30am ET June CPI Tame
  • 7/13 8:30am ET June PPI Tame
  • 7/13 Atlanta Fed Wage Tracker June Tame
  • 7/14 10am ET U. Mich. June prelim 1-yr inflation Mixed
  • 7/17 8:30am July Empire Manufacturing Survey
  • 7/18 8:30am July New York Fed Business Activity Survey
  • 7/18 10am July NAHB Housing Market Index in-line
  • 7/18 Manheim July Mid-Month Used Vehicle Value Index Tame
  • 7/25 9am ET May S&P CoreLogic CS home price Tame
  • 7/25 10am ET July Conference Board Consumer Confidence Tame
  • 7/26 2pm ET July FOMC rates decision Tame
  • 7/28 8:30am ET June PCE Tame
  • 7/28 8:30am ET 2Q ECI Employment Cost Index Tame
  • 7/28 10am ET July Final U Mich 1-yr inflation Tame

Key data from June

  • 6/1 10am ET May ISM Manufacturing Tame
  • 6/2 8:30am ET May Jobs report Tame
  • 6/5 10am ET May ISM Services Tame
  • 6/7 Manheim Used Vehicle Value Index May Tame
  • 6/9 Atlanta Fed Wage Tracker April Tame
  • 6/13 8:30am ET May CPI Tame
  • 6/14 8:30am ET May PPI Tame
  • 6/14 2pm ET April FOMC rates decision Tame
  • 6/16 10am ET U. Mich. May prelim 1-yr inflation Tame
  • 6/27 9am ET April S&P CoreLogic CS home price Tame
  • 6/27 10am ET June Conference Board Consumer Confidence Tame
  • 6/30 8:30am ET May PCE Tame
  • 6/30 10am ET June Final U Mich 1-yr inflation Tame

Key data from May

  • 5/1 10am ET April ISM Manufacturing (PMIs turn up) Positive inflection
  • 5/2 10am ET Mar JOLTS Softer than consensus
  • 5/3 10am ET April ISM Services Tame
  • 5/3 2pm Fed May FOMC rates decision Dovish
  • 5/5 8:30am ET April Jobs report Tame
  • 5/5 Manheim Used Vehicle Value Index April Tame
  • 5/8 2pm ET April 2023 Senior Loan Officer Opinion Survey Better than feared
  • 5/10 8:30am ET April CPI Tame
  • 5/11 8:30am ET April PPI Tame
  • 5/12 10am ET U. Mich. April prelim 1-yr inflation Tame
  • 5/12 Atlanta Fed Wage Tracker April Tame
  • 5/24 2pm ET May FOMC minutes Dovish
  • 5/26 8:30am ET PCE April Tame
  • 5/26 10am ET U. Mich. April final 1-yr inflation Tame
  • 5/31 10am ET JOLTS April job openings

_____________________________

36 Granny Shot Ideas: We performed our quarterly rebalance on 10/18. Full stock list here -> Click here

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We publish on a 3-day a week schedule:

– Monday
– SKIP TUESDAY

– Wednesday (no evening Macro Minute Video)
– SKIP THURSDAY
SKIP Friday <– Thanksgiving

Shortened holiday week but we expect a positive bias.  FOMC minutes to bring focus Fed dot plots too high = positive for equities

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