Case for even STRONGER 2024 emerging. Lunar New Year starts 2/10 and 2024 is Year of the Dragon. Since 1871, S&P 500 up 13% median gain = 5,350. Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.
Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.
Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.
Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

VIDEO: Chinese new year starts 2/10 and 2024 is the year of the Dragon.  Since 1871, equities do particularly well during the Dragon years, gaining 12%.  And small-caps outperform 88% of the time.

Please click below to watch our Macro Minute (duration: 4:04).

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

The S&P 500 touched 5,000 during Thursday’s session. While this is only a “round” number and does not bear true significance, we view this as a magnet level since the start of 2024. And now we will see how markets react around 5,000:

  • The S&P 500 and global equities are in a broadening and strengthening bull market. This started in October 2022 and we think it is time for those skeptical to recognize that global stocks making new highs is a very big milestone. And the question we have is how equities behave after reaching 5,000.
  • The Lunar New Year, or Chinese New Year, starts 2/10 this Saturday. And 2024 is the year of the Dragon. Dragon is pronounced “long” in Chinese (thanks Sean Farrell, our Digital Assets head, for pointing this out). And actually, the year of the Dragon lives up to its reputation:
    – since 1871, returns by lunar year
    – Dragon (2024) 12.7% median, 75% win-ratio SPY 0.42%
    – of the 12 Lunar years, only Rabbit is better (2023)
    – 12.7% implies S&P 500 5,350-5,400, so upside to our 5,200 case
  • More interesting is the return of small-caps IWM 0.34%  in the year of the Dragon:
    – since 1979, relative returns vs S&P 500 by lunar year
    – Dragon (2024) +610bp median, 88% win-ratio
    – this supports our case for small-caps to outperform in 2024
  • Perhaps more interesting, looking at the returns by zodiac for small caps:
    – since 1979, the years following Dragon
    – Dragon, Snake, Horse, Goat, Monkey, Rooster
    – are all great years for small-caps vs S&P 500
    – Relative: +880bp, +440bp, +1,800bp, +1,100bp, +430bp
    – See a pattern? We are entering a 6-year favorable period
  • Why should small-caps outperform? The two strongest arguments for our thesis for small-caps are:
    First, Small-caps relative P/B vs S&P 500 is 44%
    – same as 1999 and that was the launch point of 12-year of gains
    – Lunar calendar sort of argues this
    Second, small-caps benefit from investor inflows into equities
    – as this broadens market participation
    – we see inflows broadening in 2024
  • For the first time in 2024, weekly equity flows were positive at $5.6 billion. So roughly 6 weeks into 2024, and we finally see investor inflows. Weekly inflows totalled $5.6 billion partially reversing $25 billion of outlows so far. We expect investor inflows to turn positive 2024, reversing 2 consecutive years of outflows:
    – 2022 outflows: $54 billion
    – 2023 outflows: $112 billion
  • One might wonder how stocks can rise if investors are liquidating stocks. Well, there are other factors. Companies buyback stock and thus represent demand. Moreover, hedge funds change their gross leverage and this represents changes in demand. Finally, DRIP, or dividend reinvestment plans also represent natural demand. Thus, in a year of negative flows for equities, large caps do better:
    – large-caps buyback stocks
    – large-caps pay dividends
    – hedge funds tend to buy large-caps
  • The last 2 years that saw meaningful equity inflows are 2017 and 2021:
    – 2017 +$187 billion demand, S&P 500 rose +19%
    – 2021 +$295 billion demand, S&P 500 rose +28%
  • Why should 2024 see demand rise for stocks? Easy:
    – Fed is dovish and ready to cut interest rates
    – Corporate profits are accelerating
    – ISM is turning up
    – Global equities hitting all-time highs
    – inflation is falling

Bottom line: The case for a stronger 2024 is emerging

Our base case for 2024 is looking too conservative at S&P 500 5,200. Likely, the upside is 5,400 to 5,500. Does this mean stocks have to rise there now?

  • we do not think so
  • we still see 5,000 as a critical level and will watch for how stocks act around this level
  • our emerging concern is the uncertainty of how the Fed will determine when to cut rates
  • we know for the full year this will not matter
  • but for stocks between now and that point, investors might get anxious
  • moreover, interest rates are still pushing higher, which is a headwind for stocks

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

_____________________________

36 Granny Shot Ideas and 46 SMID Granny Shot Ideas: We performed our quarterly rebalance on 1/17. Full stock list here -> Click here

______________________________

Key incoming data February:

  • 2/01 8:30am ET 4QP 2023 Nonfarm Productivity Mixed
  • 2/01 9:45am ET S&P Global Manufacturing PMI January Final Tame
  • 2/01 10am ET January ISM Manufacturing Mixed
  • 2/02 8:30am ET January Jobs Report  Hot
  • 2/02 10am ET: U. Mich. Sentiment and Inflation Expectation January Final Tame
  • 2/05 9:45am ET S&P Global Services & Composite PMI January Final Tame
  • 2/05 10am ET January ISM Services Tame
  • 2/07 9am ET Manheim Used Vehicle Index January Final
  • 2/09 CPI Revisions
  • 2/13 8:30am ET January CPI 
  • 2/14 PPI Revisions
  • 2/15 8:30am ET February Empire Manufacturing Survey 
  • 2/15 8:30am ET February Philly Fed Business Outlook Survey
  • 2/15 8:30am ET January Retail Sales Data
  • 2/15 10am EST February NAHB Housing Market Index 
  • 2/16 8:30am ET January PPI
  • 2/16 8:30am ET February New York Fed Business Activity Survey
  • 2/16 10am ET U. Mich. Sentiment and Inflation Expectation February Prelim
  • 2/19 9am ET Manheim Used Vehicle Index February Mid-Month
  • 2/21 2pm ET January FOMC Meeting Minutes
  • 2/22 9:45am ET S&P Global PMI February Prelim 
  • 2/26 9:30am ET February Dallas Fed Manufacturing Activity Survey
  • 2/27 9am ET February S&P CoreLogic CS home price 
  • 2/27 10am ET February Conference Board Consumer Confidence
  • 2/28 8:30am ET 4QS 2023 GDP
  • 2/29 8:30am ET January PCE

Key incoming data January:

  • 1/02 9:45am ET S&P Global Manufacturing PMI December Final Mixed
  • 1/03 10am ET December ISM Manufacturing Tame
  • 1/03 10am ET JOLTS Job Openings November Tame
  • 1/03 2pm ET December FOMC Meeting Minutes Tame
  • 1/04 9:45am ET S&P Global Services & Composite PMI December Final Tame
  • 1/05 8:30am ET December Jobs Report Mixed
  • 1/05 10am ET December ISM Services Tame
  • 1/08 9am ET Manheim Used Vehicle Index December Final Tame
  • 1/11 8:30am ET December CPI Details Suggest Tame
  • 1/12 8:30am ET December PPI Tame
  • 1/16 8:30am ET January Empire Manufacturing Survey Tame
  • 1/17 8:30am ET January New York Fed Business Activity Survey Tame
  • 1/17 8:30am ET December Retail Sales Data Strong
  • 1/17 9am ET Manheim Used Vehicle Index January Mid-Month Tame
  • 1/17 10am EST January NAHB Housing Market Index Mixed
  • 1/18 8:30am ET January Philly Fed Business Outlook Survey Tame
  • 1/19 10am ET U. Mich. Sentiment and Inflation Expectation January Prelim Tame
  • 1/24 9:45am ET S&P Global PMI January Prelim Mixed
  • 1/25 8:30am ET 4QA 2023 GDP Mixed
  • 1/26 8:30am ET December PCE Tame
  • 1/29 9:30am ET Dallas Fed January Manufacturing Activity Survey Tame
  • 1/30 9am ET January S&P CoreLogic CS home price Tame
  • 1/30 10am ET January Conference Board Consumer Confidence Tame
  • 1/30 10am ET JOLTS Job Openings December Mixed
  • 1/31 2pm ET FOMC Rate Decision Tame

Key incoming data December

  • 12/01 9:45am ET S&P Global Manufacturing PMI November Final Tame 
  • 12/01 10am ET November ISM Manufacturing Strong 
  • 12/05 9:45am ET S&P Global Services & Composite PMI November Final Strong 
  • 12/05 10am ET JOLTS Job Openings October Tame 
  • 12/05 10am ET November ISM Services Strong 
  • 12/06 8:30am ET 3QF 2023 Nonfarm Productivity Strong 
  • 12/07 9am ET Manheim Used Vehicle Index November Final Tame 
  • 12/08 8:30am ET November Jobs Report Tame 
  • 12/08 10am ET U. Mich. Sentiment and Inflation Expectation December Prelim Tame 
  • 12/12 8:30am ET November CPI Tame 
  • 12/13 8:30am ET November PPI Tame
  • 12/13 2pm ET FOMC Rate Decision Dovish
  • 12/14 8:30am ET November Retail Sales Data Tame
  • 12/15 8:30am ET December Empire Manufacturing Survey Tame
  • 12/15 9:45am ET S&P Global PMI December Prelim Tame
  • 12/18 8:30am ET December New York Fed Business Activity Survey Tame
  • 12/18 10am ET December NAHB Housing Market Index Tame
  • 12/19 9am ET Manheim Used Vehicle Index December Mid-Month Tame
  • 12/20 10am ET December Conference Board Consumer Confidence Tame
  • 12/21 8:30am ET 3QT 2023 GDP Mixed
  • 12/21 8:30am ET December Philly Fed Business Outlook Survey Mixed
  • 12/22 8:30am ET November PCE Tame
  • 12/22 10am ET: U. Mich. Sentiment and Inflation Expectation December Final Tame
  • 12/26 9am ET December S&P CoreLogic CS home price Tame
  • 12/26 10:30am ET Dallas Fed December Manufacturing Activity Survey Tame
  • 12/29 9:45am ET December Chicago PMI

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

Case for even STRONGER 2024 emerging.  Lunar New Year starts 2/10 and 2024 is Year of the Dragon.  Since 1871, S&P 500 up 13% median gain = 5,350.  Since 1979, Russell 2000 outperforms 88% of time.

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