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

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

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

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 QQQ
  • Financials XLK KRE
  • Small-caps IWM

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

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

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

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

Key incoming data December

  • 12/01 9:45am ET S&P Global Manufacturing PMI November Final Tame 
  • 12/01 10am ET November ISM Manufacturing Tame 
  • 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 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 Tame
  • 11/22 10am ET: U. Mich. November final Sentiment and Inflation Expectation Tame
  • 11/24 9:45am ET S&P Global PMI November Prelim Mixed
  • 11/27 10:30am ET Dallas Fed November Manufacturing Activity Survey Tame
  • 11/28 9am ET November S&P CoreLogic CS home price  Tame
  • 11/28 10am ET November Conference Board Consumer Confidence Tame
  • 11/29 8:30am ET 3QS 2023 GDP Strong
  • 11/29 2pm ET Fed Releases Beige Book Tame
  • 11/30 8:30am ET October PCE Tame

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

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Macro Schedule (Week of 12/4):

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

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