


We discuss: We discuss how upcoming macro data might give conflicting messages on inflation/growth and thus rates could be volatile in Dec, which causes equities to zig-zag. But ultimately, YE rally intact.
Please click below to view our Macro Minute (Duration: 5:02).
It seems like retail sales Black Friday have come in +2% to +5% above last year’s levels, or a new record. In real-terms, this is sort of flat, so I would not look at strong Black Friday numbers as something the Fed has to panic about. But as we look towards markets into YE, we see a “zig-zag” but ultimately a rally towards S&P 500 4,750-4,800 SPY 0.03% .
- The reason for the “zig-zag” is that we know rates markets (10-year) is still hyperreactive to the opposing forces of “falling goods and housing inflation” against resilient labor markets (aka “future inflation risk”). We have seen this dynamic this past year, including how FOMC members themselves react to the incoming data.
- And in the next 3 weeks, we see this dynamic at work:
– 11/30 Oct PCE –> likely “soft” = higher equities
– 12/8 Nov jobs report –> could be “strong” given low claims = market over-reaction
– post-jobs, markets recover as investors “buy the dip”
– 12/12 Nov CPI –> too early to know (Deep Macro sees “soft”) = markets turmoil
– 12/13 Dec FOMC rate decision –> we expect room for “dovish shift” = higher equities - You might wonder why we see a possible strong jobs. To us, it is mainly that the UAW strike is over. So, the undershoot last month from UAW furlough is gone. Is that too simplistic? Maybe.
- See the “zig-zag” at play. This is just our take on how equity markets react to the reaction in rates markets. And in coming days, we will also get some technical perspective from Mark Newton, our Head of Technical Strategy, as well. But this does not rule out ultimately a YE rally towards 4,750 to 4,800.
- The reasons to expect higher prices by YE are multiple. Here are some thoughts:
– incoming data continues to support a “soft landing” vs recession = market too skeptical
– key driver of interest rates likely Dec FOMC and we see room for the Fed to “dovish shift”
– Equities finally seeing positive inflows from retail, the first time since Feb
– the difference is that retail YTD has seen -$240 billion of outflows
– yet, S&P 500 is on track to be ~20% = FOMO coming
– finally, seasonally positive factors as we are in December - This week has some macro data and the 4 most critical (our view) are:
– 11/27 9am ET: Oct New Home Sales +723k
– 11/28 Tue 9am ET: Sept CS Home Price +0.70% MoM
– 11/30 Thu 8:30am ET: Oct Core PCE Deflator +0.20% MoM
– 12/1 Fri 10am ET: Nov ISM Manufacturing 47.7 - Of these, a solid manufacturing ISM reading would be positive. This would be a case of “good news is good news” because as we look towards 2024, we do want to see economic momentum of corporates recover
BOTTON LINE: We are “dip buyer” in a December “zig-zag”
Ultimately, we are buying dips if the markets see selling pressure. For the reasons we outlined above, we see a YE rally, but the key is probably 12/13 December FOMC.
- we like FAANG/Technology QQQ 0.55% XLK 0.56%
- small-caps and Financials IWM -0.04% and XLF 0.10% and banks








Key incoming data December
- 12/01 9:45am ET S&P Global Manufacturing PMI November Final
- 12/01 10am ET November ISM Manufacturing
- 12/05 9:45am ET S&P Global Services & Composite PMI November Final
- 12/05 10am ET JOLTS Job Openings October
- 12/05 10am ET November ISM Services
- 12/06 8:30am ET 3QF 2023 Nonfarm Productivity
- 12/07 9am ET Manheim Used Vehicle Index November Final
- 12/08 8:30am ET November Jobs Report
- 12/08 10am ET U. Mich. Sentiment and Inflation Expectation December Prelim
- 12/12 8:30am ET November CPI
- 12/13 8:30am ET November PPI
- 12/13 2pm ET FOMC Rate Decision
- 12/14 8:30am ET November Retail Sales Data
- 12/15 8:30am ET December Empire Manufacturing Survey
- 12/15 9:45am ET S&P Global PMI December Prelim
- 12/18 8:30am ET December New York Fed Business Activity Survey
- 12/18 10am ET December NAHB Housing Market Index
- 12/19 9am ET Manheim Used Vehicle Index December Mid-Month
- 12/20 10am ET December Conference Board Consumer Confidence
- 12/21 8:30am ET 3QT 2023 GDP
- 12/21 8:30am ET December Philly Fed Business Outlook Survey
- 12/22 8:30am ET November PCE
- 12/22 10am ET: U. Mich. Sentiment and Inflation Expectation December Final
- 12/26 9am ET December S&P CoreLogic CS home price
- 12/26 10:30am ET Dallas Fed December Manufacturing Activity Survey
Key incoming data November
11/01 9:45am ET S&P Global PMI October FinalTame11/01 10am ET JOLTS Job Openings SeptemberMixed11/01 10am ET October ISM ManufacturingTame11/01 10am ET Treasury 4Q23 Quarterly Refunding Press ConferenceTame11/01 2pm ET FOMC Rate DecisionDovish11/02 8:30am ET: 3Q23 Nonfarm ProductivityTame11/03 8:30am ET October Jobs ReportTame11/03 10am ET October ISM ServicesMixed11/07 9am ET Manheim Used Vehicle Index October FinalTame11/10 10am ET U. Mich. November prelim Sentiment and Inflation ExpectationHot11/14 8:30am ET October CPITame11/15 8:30am ET October PPITame11/15 8:30am ET November Empire Manufacturing SurveyResilient11/15 8:30am ET October Retail Sales DataResilient11/16 8:30am ET November New York Fed Business Activity SurveyTame11/16 8:30am ET November Philly Fed Business Outlook SurveyTame11/16 10am ET November NAHB Housing Market IndexTame11/17 9am ET Manheim Used Vehicle Index November Mid-MonthTame11/21 2pm ET Nov FOMC Meeting MinutesTame11/22 10am ET: U. Mich. November final Sentiment and Inflation ExpectationTame11/24 9:45am ET S&P Global PMI November PrelimMixed- 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 ManufacturingTame -
10/3 10am ET JOLTS Job Openings AugustHot -
10/4 10am ET September ISM ServicesTame 10/6 8:30am ET September Jobs ReportMixed-
10/6 9am ET Manheim Used Vehicle Index September FinalTame 10/10 11am NY Fed Inflation ExpectationsMixed-
10/11 8:30am ET September PPIMixed 10/11 2pm ET Sep FOMC Meeting MinutesTame-
10/12 8:30am ET September CPIMixed -
10/13 10am ET U. Mich. September prelim 1-yr inflationMixed 10/16 8:30am ET October Empire Manufacturing SurveyTame10/17 8:30am ET October New York Fed Business Activity SurveyTame10/17 8:30am ET September Retail Sales DataHot10/17 9am ET Manheim October Mid-Month Used Vehicle Value IndexTame10/17 10am ET October NAHB Housing Market IndexTame10/18 8:30am ET September Housing StartsTame10/18 2pm ET Fed releases Beige BookTame10/19 8:30am ET October Philly Fed Business Outlook SurveyTame10/19 10am ET Existing Home SalesTame10/19 12pm ET Fed (including Powell) at Economic Club of New York10/24 9:45am ET S&P Global PMI October PrelimTame-
10/26 8:30am ET 3Q 2023 GDP AdvanceStrong 10/27 8:30am ET September PCETame10/27 10am ET Oct F UMich Sentiment and Inflation expectationTame10/30 10:30am ET Dallas Fed September Manufacturing Activity SurveyTame10/31 8:30am ET 3Q23 Employment Cost IndexMixed10/31 9am ET August S&P CoreLogic CS home priceMixed10/31 10am ET October Conference Board Consumer ConfidenceTame
Key incoming data September
9/1 8:30am ET August Jobs ReportTame9/1 10am ET August ISM ManufacturingTame9/6 10am ET August ISM ServicesMixed9/6 2pm ET Fed releases Beige BookTame9/8 9am ET Manheim Used Vehicle Index August FinalTame9/8 2Q23 Fed Flow of Funds ReportTame-
9/13 8:30am ET August CPIMixed -
9/14 8:30am ET August PPITame -
9/15 8:30am ET September Empire Manufacturing SurveyTame 9/15 10am ET U. Mich. September prelim 1-yr inflationTame-
9/18 8:30am ET September New York Fed Business Activity SurveyTame -
9/18 10am ET September NAHB Housing Market IndexTame 9/19 9am ET Manheim September Mid-Month Used Vehicle Value IndexMixed9/20 2pm ET September FOMC rates decisionMarket saw Hawkish-
9/21 8:30am ET September Philly Fed Business Outlook SurveyMixed 9/22 9:45am ET S&P Global PMI September Prelim9/25 10:30am ET Dallas Fed September Manufacturing Activity Survey9/26 9am ET July S&P CoreLogic CS home price9/26 10am ET September Conference Board Consumer Confidence
Key incoming data August
8/1 10am ET July ISM ManufacturingTame8/1 10am ET JOLTS Job Openings JunTame8/2 8:15am ADP National Employment ReportHot8/3 10am ET July ISM ServicesTame8/4 8:30am ET July Jobs reportTame8/7 11am ET Manheim Used Vehicle Index July FinalTame8/10 8:30am ET July CPITame8/11 8:30am ET July PPITame8/11 10am ET U. Mich. July prelim 1-yr inflationTame8/11 Atlanta Fed Wage Tracker JulyTame8/15 8:30am ET Aug Empire Manufacturing SurveyMixed8/15 10am ET Aug NAHB Housing Market IndexTame8/16 8:30am ET Aug New York Fed Business Activity SurveyNeutral8/16 2pm ET FOMC MinutesMixed8/17 8:30am ET Aug Philly Fed Business Outlook SurveyPositive8/17 Manheim Aug Mid-Month Used Vehicle Value IndexTame8/23 9:45am ET S&P Global PMI Aug PrelimWeak8/25 10am ET Aug Final U Mich 1-yr inflationMixed8/28 10:30am ET Dallas Fed Aug Manufacturing Activity SurveyTame8/29 9am ET June S&P CoreLogic CS home priceTame8/29 10am ET Aug Conference Board Consumer ConfidenceTame8/29 10 am ET Jul JOLTSTame8/31 8:30am ET July PCETame
Key incoming data July
7/3 10am ET June ISM ManufacturingTame7/6 8:15am ADP National Employment ReportHot7/6 10am ET June ISM ServicesTame7/6 10 am ET May JOLTSTame7/7 8:30am ET June Jobs reportMixed7/10 11am ET Manheim Used Vehicle Index June FinalTame7/12 8:30am ET June CPITame7/13 8:30am ET June PPITame7/13 Atlanta Fed Wage Tracker JuneTame7/14 10am ET U. Mich. June prelim 1-yr inflationMixed7/17 8:30am July Empire Manufacturing Survey7/18 8:30am July New York Fed Business Activity Survey7/18 10am July NAHB Housing Market Indexin-line7/18 Manheim July Mid-Month Used Vehicle Value IndexTame7/25 9am ET May S&P CoreLogic CS home priceTame7/25 10am ET July Conference Board Consumer ConfidenceTame7/26 2pm ET July FOMC rates decisionTame7/28 8:30am ET June PCETame7/28 8:30am ET 2Q ECI Employment Cost IndexTame7/28 10am ET July Final U Mich 1-yr inflationTame
Key data from June
6/1 10am ET May ISM ManufacturingTame6/2 8:30am ET May Jobs reportTame6/5 10am ET May ISM ServicesTame6/7 Manheim Used Vehicle Value Index MayTame6/9 Atlanta Fed Wage Tracker AprilTame6/13 8:30am ET May CPITame6/14 8:30am ET May PPITame6/14 2pm ET April FOMC rates decisionTame6/16 10am ET U. Mich. May prelim 1-yr inflationTame6/27 9am ET April S&P CoreLogic CS home priceTame6/27 10am ET June Conference Board Consumer ConfidenceTame6/30 8:30am ET May PCETame6/30 10am ET June Final U Mich 1-yr inflationTame
Key data from May
5/1 10am ET April ISM Manufacturing (PMIs turn up)Positive inflection5/2 10am ET Mar JOLTSSofter than consensus5/3 10am ET April ISM ServicesTame5/3 2pm Fed May FOMC rates decisionDovish5/5 8:30am ET April Jobs reportTame5/5 Manheim Used Vehicle Value Index AprilTame5/8 2pm ET April 2023 Senior Loan Officer Opinion SurveyBetter than feared5/10 8:30am ET April CPITame5/11 8:30am ET April PPITame5/12 10am ET U. Mich. April prelim 1-yr inflationTame5/12 Atlanta Fed Wage Tracker AprilTame5/24 2pm ET May FOMC minutesDovish5/26 8:30am ET PCE AprilTame5/26 10am ET U. Mich. April final 1-yr inflationTame5/31 10am ET JOLTS April job openings
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