VIDEO: We are watching 3 things closely this week: 4Q24 EPS as insurance and MAG7 report; Jan FOMC Wed and January 31 price close
Please click below to view our Macro Minute (duration: 4:43).
This is the final week of January and so far so good for 2025 with S&P 500 up +3.5% YTD. This is an important week for equity markets with several important events, highlighted below. Overall, we are constructive on markets near-term and expect positive catalysts to support stocks this week:
- As noted, this is a data heavy week and this is what we are watching this week:
– Busy week for 4Q24 Earnings
– 1/27 Mon 8:30 AM ET: Dec Chicago Fed Nat Activity Index -0.06e
– 1/27 Mon 10:00 AM ET: Dec New Home Sales 672ke
– 1/27 Mon 10:30 AM ET: Jan Dallas Fed Manuf. Activity Survey -3.0e
– 1/28 Tue 9:00 AM ET: Nov S&P CS home price 20-City MoM 0.30%e
– 1/28 Tue 10:00 AM ET: Jan Conference Board Consumer Confidence 105.6e
– 1/29 Wed 2:00 PM ET: Jan FOMC Decision Hold
– 1/30 Thu 8:30 AM ET: 4Q A 2024 GDP QoQ 2.5%e
– 1/31 Fri 8:30 AM ET: Dec Core PCE MoM 0.19%e
– 1/31 Fri 8:30 AM ET: 4Q ECI QoQ 0.9%e
– Friday 1/31 is last trading day of January
- Regarding earnings, two things are our focus:
– Insurance EPS from Chubb CB -1.57% and Progressive PGR -0.37%
– due to Hurricane Helene and wildfires in CA
– as well as auto insurance rate rise cooling
– and EPS from Mag7/FAANG
– TSLA -0.04% META 2.44% MSFT 2.77% AAPL 3.64%
– report this week starting Wed afternoon - We think this coming January FOMC rate decision (Wed) will act as a positive catalyst for stocks.
– markets became hawkish after Dec FOMC meeting
– odds of a Fed hike in 2025 surged to 30%
– down to 25% now
– but that seems too high - Why? We wrote about this extensively, but the key is we expect Core CPI to cool in 2025 as the shelter CPI is facing easier comparisons and also the “new tenant rent” index is negative. This points to downside pressure. We realize the CA wildfires and Hurricane Helene might put upward pressure on CPI short-term.
- Finally, we are watching the January 31 close for S&P 500 (Friday) and the key is a positive close for the month. This is the January barometer “as January goes, so goes the year”:
– and The January barometer is as follows:
– If January positive:
– Median FY +19%, 89% win-ratio
– If January negative:
– Median FY +0%, 50% win-ratio - The Dec 31 closing level was 5,881.31, so closing above that is key.
- If we get that positive close, this is a 6th reason 2025 tracking better than expected. There are six reasons (if Jan 31 close positive) that show 2025 tracking better than our base case:
– Barometer “first 5 days” positive = 82% win-ratio
– Sentiment capitulation on Dec to Jan chop = good
– Inflation tracking “softer” than consensus view
– Fears of “day 1 tariffs” overblown = USD weaker
– Cyclicals leading YTD = risk-on signal
– January barometer “positive” = 89% win-ratio
Bottom line: We see 2025 tracking better than our base case.
Bottom line, 2025 is tracking better than our base case. We remain constructive and now see 2025 as less turbulent than we expected. The top sector ideas remain:
- Bitcoin
- Small-caps
- Financials
- Industrials
- Technology
44 SMID GRANNY SHOTS: Updated list is below
SMID grannies are small and mid-cap stocks that appear in at least 2 of our 7 investment strategies.
- We believe the SMID granny shots could benefit from the multiple themes and secular tailwinds.
The Current Portfolio as of 11/25 is as follows (new additions in Bold):
Comm. Services: CARG, QNST, SPOT
Discretionary: CVNA, SHAK, TPX, WSM
Financials: BANF, EWBC, IBCP, MCBS, MCY, SNEX, TBBK
Healthcare: HIMS
Industrials: AIT, AWI, AYI, EME, ESE, FIX, GVA, IESC, MLI, NWPX, PRIM, STRL, VMI
Materials: EXP, LPX, USLM
Staples: SFM
Technology: AGYS, APP, AVPT, CVLT, IONQ, ITRI, MSTR, OSPN, PI, PLUS, TWLO, ZETA
Key incoming data January:
1/2 9:45 AM ET: Dec F S&P Global Manufacturing PMITame1/3 10:00 AM ET: Dec ISM Manufacturing PMITame1/6 9:45 AM ET: Dec F S&P Global Services PMITame1/6 10:00 AM ET: Nov F Durable Goods OrdersTame1/7 8:30 AM ET: Nov Trade BalanceTame1/7 10:00 AM ET: Dec ISM Services PMITame1/7 10:00 AM ET: Nov JOLTS Job OpeningsTame1/8 9:00 AM ET: Dec F Manheim Used vehicle indexTame1/8 2:00 PM ET: Dec FOMC Meeting MinutesTame1/10 8:30 AM ET: Dec Non-Farm PayrollsHot1/10 10:00 AM ET: Jan P U. Mich. Sentiment and Inflation ExpectationHot1/13 11:00 AM ET: Dec NY Fed 1yr Inf ExpTame1/14 6:00 AM ET: Dec Small Business Optimism SurveyTame1/14 8:30 AM ET: Dec PPITame1/15 8:30 AM ET: Dec CPITame1/15 8:30 AM ET: Jan Empire Manufacturing SurveyTame1/15 2:00 PM ET: Jan Fed Releases Beige BookTame1/16 8:30 AM ET: Dec Retail Sales DataTame1/16 8:30 AM ET: Jan Philly Fed Business OutlookMixed1/16 10:00 AM ET: Jan NAHB Housing Market IndexTame1/17 9:00 AM ET: Jan M Manheim Used vehicle indexTame1/17 4:00 PM ET: Nov Net TIC FlowsTame1/24 9:45 AM ET: Jan P S&P Global Manufacturing PMITame1/24 9:45 AM ET: Jan P S&P Global Services PMITame1/24 10:00 AM ET: Jan F U. Mich. Sentiment and Inflation ExpectationHot1/24 10:00 AM ET: Dec Existing Home SalesTame- 1/27 8:30 AM ET: Dec Chicago Fed Nat Activity Index
- 1/27 10:00 AM ET: Dec New Home Sales
- 1/27 10:30 AM ET: Jan Dallas Fed Manuf. Activity Survey
- 1/28 9:00 AM ET: Nov S&P CoreLogic CS home price
- 1/28 10:00 AM ET: Jan Conference Board Consumer Confidence
- 1/28 10:00 AM ET: Dec P Durable Goods Orders
- 1/29 2:00 PM ET: Jan FOMC Decision
- 1/30 8:30 AM ET: 4Q A 2024 GDP
- 1/31 8:30 AM ET: Dec PCE Deflator
- 1/31 8:30 AM ET: 4Q Employment Cost Index
Economic Data Performance Tracker 2025:
Economic Data Performance Tracker 2024:
Economic Data Performance Tracker 2023: