We are dip buyers over next 9 days until 12/13 FOMC, if there is weakness. But we are in "zone of uncertainty"

Heads up: Due to travel and my 2024 Outlook on Thursday, I will not be publishing First Word or posting a video Tue-Fri.

We discuss: We discuss how the “up zig” is behind us with Oct PCE on 11/30 and we are likely in for consolidation until Dec 13 FOMC.

Please click below to view our Macro Minute (Duration: 4:28).

We are in the final weeks of 2023 and historically December is an up month with some form of “Santa Claus” rally dynamic. This year should not be any different, particularly since we expect there to be more than the typical performance chasing and FOMO at work:

• Why? Because so many investors in 2023 anchored themselves to a bearish view. One based on sticky inflation leading to a tougher Fed and thus hard landing. We argued against this view all year and as we exit 2023, we see indeed inflation is on a glide path lower.
• Thus, these investors will be buying the tape as they rethink this dynamic of a better fundamental picture. And the fact the S&P 500 is up 20% YTD. Far better than many expected.
• But in the next week and a half, until December FOMC 12/13, we believe markets might be consolidating. This is because we are going to see quite a lot of incoming economic data and some of this could cause interest rates to rise, which are already oversold. Thus, stocks could “zig zag” for a bit, or basically consolidate.
• This is consistent with the view by Mark Newton, our Head of Technical Strategy, who sees many sectors now bumping up against important resistance of downtrend lines. So until these sectors move higher, he thinks the more probable case is consolidation. Again, this is consistent with what could happen the next two weeks.
• As for what is coming between now and 12/13, there is a lot of data, and the highlights are:
  – 12/5 Tue 10am ET: October JOLTS
  – 12/5 Tue 10am ET: Nov ISM Services
  – 12/6 Wed 8:30 ET: 3Q final Unit Labor Cost
  – 12/7 Thu: Tom Lee 2024 Year Ahead!!!
  – 12/8 Fri 8:30am: ET Nov jobs report
  – 12/8 Fri 10am ET: U Mich 1-year inflation
  – 12/12 Tue 8:30am ET: Nov CPI
  – 12/13 Wed 2pm ET: December FOMC
• Will markets sell off sharply after a “hot” report? I don’t think this is the case necessarily. It could be soft and we are dip buying. But the reason we think a sustained decline is less likely is the overall data shows inflation falling faster than consensus. We had argued this view for some time. And even Fed members acknowledge such. And this also puts long-term interest rates towards the downside.

Bottom line: We are dip buyers over next 9 days if there is weakness, but we are in “zone of uncertainty”

We think dip buying prevails and December is an up month. There is a “first 3 days of December” dynamic at work:

• If markets are up in the first 3 days, after a >5% Nov, Equities rise into YE 75% of the time
• If markets are down in first 3 days, after a >5% Nov, Equities rise into YE only 20% of the time
• Day 3 is close of Tuesday 12/5
• Our favorite sectors into YE
• Technology/FAANG XLK -0.34%  QQQ -0.25%
• Financials XLK -0.34%  KRE -0.45%
• Small-caps IWM -0.71%

Key incoming data December

• 12/01 9:45am ET S&P Global Manufacturing PMI November FinalTame 
• 12/01 10am ET November ISM ManufacturingTame 
• 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 FinalTame 
• 11/01 10am ET JOLTS Job Openings SeptemberMixed
• 11/01 10am ET October ISM ManufacturingTame
• 11/01 10am ET Treasury 4Q23 Quarterly Refunding Press ConferenceTame
• 11/01 2pm ET FOMC Rate DecisionDovish
• 11/02 8:30am ET: 3Q23 Nonfarm ProductivityTame
• 11/03 8:30am ET October Jobs Report Tame
• 11/03 10am ET October ISM ServicesMixed
• 11/07 9am ET Manheim Used Vehicle Index October FinalTame
• 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 DataResilient
• 11/16 8:30am ET November New York Fed Business Activity SurveyTame
• 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-MonthTame
• 11/21 2pm ET Nov FOMC Meeting MinutesTame
• 11/22 10am ET: U. Mich. November final Sentiment and Inflation ExpectationTame
• 11/24 9:45am ET S&P Global PMI November Prelim Mixed
• 11/27 10:30am ET Dallas Fed November Manufacturing Activity SurveyTame
• 11/28 9am ET November S&P CoreLogic CS home price Tame
• 11/28 10am ET November Conference Board Consumer ConfidenceTame
• 11/29 8:30am ET 3QS 2023 GDPStrong
• 11/29 2pm ET Fed Releases Beige BookTame
• 11/30 8:30am ET October PCETame

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 SurveyTame
•  10/17 8:30am ET October New York Fed Business Activity SurveyTame
• 10/17 8:30am ET September Retail Sales DataHot
•  10/17 9am ET Manheim October Mid-Month Used Vehicle Value IndexTame
•  10/17 10am ET October NAHB Housing Market IndexTame
• 10/18 8:30am ET September Housing StartsTame
• 10/18 2pm ET Fed releases Beige BookTame
•  10/19 8:30am ET October Philly Fed Business Outlook SurveyTame
• 10/19 10am ET Existing Home SalesTame
• 10/19 12pm ET Fed (including Powell) at Economic Club of New York
•  10/24 9:45am ET S&P Global PMI October PrelimTame
•  10/26 8:30am ET 3Q 2023 GDP AdvanceStrong
•  10/27 8:30am ET September PCETame
•  10/27 10am ET Oct F UMich Sentiment and Inflation expectationTame
•  10/30 10:30am ET Dallas Fed September Manufacturing Activity SurveyTame
• 10/31 8:30am ET 3Q23 Employment Cost IndexMixed
•  10/31 9am ET August S&P CoreLogic CS home priceMixed
•  10/31 10am ET October Conference Board Consumer ConfidenceTame

Key incoming data September

•  9/1 8:30am ET August Jobs ReportTame
•  9/1 10am ET August ISM ManufacturingTame
•  9/6 10am ET August ISM ServicesMixed
•  9/6 2pm ET Fed releases Beige BookTame
•  9/8 9am ET Manheim Used Vehicle Index August FinalTame
•  9/8 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 IndexMixed
•  9/20 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 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 ManufacturingTame
• 8/1 10am ET JOLTS Job Openings JunTame
• 8/2 8:15am ADP National Employment ReportHot
• 8/3 10am ET July ISM ServicesTame
• 8/4 8:30am ET July Jobs reportTame
• 8/7 11am ET Manheim Used Vehicle Index July FinalTame
• 8/10 8:30am ET July CPITame
• 8/11 8:30am ET July PPITame
• 8/11 10am ET U. Mich. July prelim 1-yr inflation Tame
• 8/11 Atlanta Fed Wage Tracker JulyTame
• 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 SurveyPositive
• 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 SurveyTame
• 8/29 9am ET June S&P CoreLogic CS home priceTame
• 8/29 10am ET Aug Conference Board Consumer ConfidenceTame
• 8/29 10 am ET Jul JOLTSTame
• 8/31 8:30am ET July PCETame

Key incoming data July

• 7/3 10am ET June ISM ManufacturingTame
• 7/6 8:15am ADP National Employment Report Hot
• 7/6 10am ET June ISM ServicesTame
• 7/6 10 am ET May JOLTSTame
• 7/7 8:30am ET June Jobs reportMixed
• 7/10 11am ET Manheim Used Vehicle Index June FinalTame
• 7/12 8:30am ET June CPITame
• 7/13 8:30am ET June PPITame
• 7/13 Atlanta Fed Wage Tracker JuneTame
• 7/14 10am ET U. Mich. June prelim 1-yr inflationMixed
• 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 Indexin-line
• 7/18 Manheim July Mid-Month Used Vehicle Value IndexTame
• 7/25 9am ET May S&P CoreLogic CS home priceTame
• 7/25 10am ET July Conference Board Consumer ConfidenceTame
• 7/26 2pm ET July FOMC rates decisionTame
• 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 ManufacturingTame
• 6/2 8:30am ET May Jobs reportTame
• 6/5 10am ET May ISM ServicesTame
• 6/7 Manheim Used Vehicle Value Index MayTame
• 6/9 Atlanta Fed Wage Tracker AprilTame
• 6/13 8:30am ET May CPITame
• 6/14 8:30am ET May PPITame
• 6/14 2pm ET April FOMC rates decisionTame
• 6/16 10am ET U. Mich. May prelim 1-yr inflationTame
• 6/27 9am ET April S&P CoreLogic CS home priceTame
• 6/27 10am ET June Conference Board Consumer ConfidenceTame
• 6/30 8:30am ET May PCETame
• 6/30 10am ET June Final U Mich 1-yr inflationTame

Key data from May

• 5/1 10am ET April ISM Manufacturing (PMIs turn up)Positive inflection
• 5/2 10am ET Mar JOLTSSofter than consensus
• 5/3 10am ET April ISM ServicesTame
• 5/3 2pm Fed May FOMC rates decisionDovish
• 5/5 8:30am ET April Jobs reportTame
• 5/5 Manheim Used Vehicle Value Index AprilTame
• 5/8 2pm ET April 2023 Senior Loan Officer Opinion SurveyBetter than feared
• 5/10 8:30am ET April CPITame
• 5/11 8:30am ET April PPITame
• 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 minutesDovish
• 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

______________________________

PS: if you are enjoying our service and its evidence-based approach, please leave us a positive 5-star review on Google reviews —> Click here.

Macro Schedule (Week of 12/4):