Conference Board survey further adds to "growth scare" concerns. But we continue to see as a "flesh wound" and turnaround likely Wed with $NVDA results. Array ( [cookie] => a7e010-6efc8e-b12b6a-53d610-6bc58f [current_usage] => 1 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 0 [reason] => Usage under limits [method] => ) 1 and can accesss 1

VIDEO: The cumulation of headlines in recent weeks is adding up to a “Growth scare” for investors.  And thus, good news is what is needed to aid stocks.  We expect NVDA 2.89%  to be a key turning point

Please click below to view our Macro Minute (duration: 5:50).

Over the past 4 trading days, the S&P 500 fell -4% and momentum stocks (MTUM 0.70%  ETF) down a larger -7%. The selling is broad-based (and indiscriminate), reflective of an abrupt shift to “risk off” coupled with likely margin calls. This move is sudden but as we discuss below, there are reasons we believe we are close to the “end of selling” and ultimately this “growth scare” will have proven to be a buying opportunity.

• Today’s Conference Board Consumer Confidence Survey rattled investors for two reasons:
  – first, the headline sentiment fell to 98.3, -7 vs last month
  – second, the 1-yr inflation expectation moved to +6% (5.2% Dec)
• Neither figure is positive. The commentary shows consumers are increasingly reacting to comments from the White House. As the summary notes:
  “References to inflation and prices in general continue to rank high in write-in responses, but the focus shifted towards other topics. There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current Administration and its policies dominated the responses.“
• Consumer confidence weakening probably adds further fuel to “growth scare” concerns among investors. This is another of several recent data points:
  – last week, WMT -1.06%  2025 sales guidance softer than expected
  – last week, TD Cowen channel checks about data center demand
  – last week, Point72’s Steve Cohen speaking about negative economic impact of tariffs/DOGE
• It is probably not entirely surprising that the correlation between stocks and bond yields have now turned positive. This means, weaker economic data (=lower yields) leads to lower stocks. This means, for stocks to go up, good news is good news. Similarly, the implied # of Fed cuts by year-end 2025 jumped to 2.4 from 1.0 three weeks ago. This reflects the market’s concern with growth scares.
• But here is some reasons we think this remains merely a “flesh wound” and not a true concern about growth:
  – first, consumer surveys likely polluted by political bias
  – second, AXON 16.18%  (tue after close) and NVDA 2.89%  (wed after close) affirm AI spending intact
  – third, Mark Newton notes that many signs of “selling drying up” emerging = bottom
• As highlighted below, there is a lot of reasons to think these consumer surveys reflect political bias:
  – U Mich Jan survey breakdown of inflation responses
  – Democratic: 319, +80 vs Dec
  – Republican: 231, +13 vs Dec
  – Ratio Dem vs Rep: 3:2
• This ratio 3:2 is not reflective of the overall population. And the fact that Democratic responses surged in Jan also skews the data. In fact, prior to Jan, the number of Dem vs Rep respondents was closer to 50:50. Since the move higher in inflation for U Mich mirrors Conference Board, we wonder if both have this political bias.
  – besides, truflation.com data shows inflation is softer now vs last 2 months at +2.3% YoY.
• As for earnings, we wrote about this recently, but NVDA 2.89%  rarely falls into EPS reports:
  – in past 5 years, ex-2022 bear
  – zero instances NVDA 2.89%  down into EPS results (8 weeks)
  – in cumulative 3M period (8 weeks prior + 1M later)
  – NVDA 2.89%  gain median +16.4%
  – current is -3.7%, or 2,000bp difference
• Hence, we see high odds Nvidia rallies post-EPS. And this should boost stocks overall.
• Don’t forget, there is a key economic report this Friday, Jan Core PCE:
  – 2/24 Mon 8:30 AM ET: Jan Chicago Fed Nat Activity Index    -0.03 vs -0.05e
  – 2/24 Mon 10:30 AM ET: Feb Dallas Fed Manuf. Activity Survey    -8.3 vs 6.4e
  – 2/25 Tue 9:00 AM ET: Dec S&P CS home price 20-City MoM    0.52% vs 0.40%e
  – 2/25 Tue 10:00 AM ET: Feb Conference Board Consumer Confidence    98.3 vs 103e
  – 2/26 Wed 10:00 AM ET: Jan New Home Sales    680ke
  – 2/26 Wed 3:00 PM ET: Fireside Chat with Anthony Scaramucci
  – 2/27 Thu 8:30 AM ET: 4Q S 2024 GDP Annualized QoQ    2.3%e
  – 2/27 Thu 8:30 AM ET: Jan P Durable Goods Orders MoM    2.0%e
  – 2/28 Fri 8:30 AM ET: Jan Core PCE MoM    0.28%%e
• There is also Fed speak this week, no Powell though:
  – 2/25 Tue 4:20 AM ET: Logan Speaks at Balance Sheet Conference   
  – 2/25 Tue 11:45 AM ET: Barr Gives Remarks on Financial Stability With Q&A   
  – 2/25 Tue 1:00 PM ET: Barkin Speaks on Inflation   
  – 2/26 Wed 12:00 PM ET: Bostic Speaks on Economic Outlook, Housing   
  – 2/27 Thu 9:15 AM ET: Schmid Gives Remarks at USDA Event   
  – 2/27 Thu 10:00 AM ET: Barr Speaks on Novel Activity Supervision   
  – 2/27 Thu 11:45 AM ET: Bowman Speaks on Community Banking   
  – 2/27 Thu 1:15 PM ET: Hammack Gives Keynote Speech at Conference   
  – 2/27 Thu 3:15 PM ET: Harker Gives Speech on Economic Outlook   
  – 2/28 Fri 10:15 PM ET: Goolsbee Speaks in Moderated Q&A   
• More broadly speaking, we do not think a “major top” is in place. We discussed 3 reasons last week for our view, but the first one (below) is the most important:
  – first, Investors are “bearish” while S&P 500 is at all-time high
  – second, there is $7 trillion of cash on sidelines
  – third, this is a further sign that the bull market of 2023-2024 continues
• Basically, we just don’t expect investors to be bearish at the top. And this is what has been in place for the past few weeks. Investors have turned bearish as the equity markets made a new high. AAII Net bulls is a good proxy for sentiment (we consider this the best measure of retail sentiment).
• There are only 11 prior instances the S&P 500 is within 1% of a 52-week high while net bulls is -15 or worse:
  – in past 40 years, only 11 instances, or 0.5% of readings
  – median 12M forward gain +15.7%
  – win-ratio 83%
• Since 2009, there are 6 such readings, week of:
  – 11/9/09 +11%, next 12 mos
  – 10/18/12 +20%
  – 4/11/13 +14%
  – 3/10/17 +17%
  – 8/10/20 +32%
  – 12/7/21 -16%
• So in the last 15 years, this has been a great tactical signal and as you can see above, with really good returns. After all, if investors are skeptical of markets at all-time highs, we believe the odds of an actual high in play is low. That is, this is a contrarian bullish signal.

BOTTOM LINE: Investors are “buying the dip” as 2025 is tracking better than expected

But the bigger message is that we expect investors to buy the dip. We believe this should be the key takeaway this week. And secondarily, that the market participation is broadening beyond MAG7.

There are six reasons 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

• January 2025 closed +2.7%. This is the January barometer “as January goes, so goes the year”:
  – 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 top sector ideas remain:
• Bitcoin
• Small-caps
• Financials
• Industrials
• Technology

_____________________________

45 SMID Granny Shot Ideas: We performed our quarterly rebalance on 2/18. 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.

___________________________

Key incoming data February:

• 2/3 9:45 AM ET: Jan F S&P Global Manufacturing PMI Tame
• 2/3 10:00 AM ET: Jan ISM Manufacturing PMI Tame
• 2/4 10:00 AM ET: Dec JOLTS Job Openings Tame
• 2/4 10:00 AM ET: Dec F Durable Goods Orders Tame
• 2/5 8:30 AM ET: Dec Trade Balance Tame
• 2/5 9:45 AM ET: Jan F S&P Global Services PMI Tame
• 2/5 10:00 AM ET: Jan ISM Services PMI Tame
• 2/6 8:30 AM ET: 4Q P Non-Farm Productivity Tame
• 2/6 8:30 AM ET: 4Q P Unit Labor Costs Tame
• 2/7 8:30 AM ET: Jan Non-Farm Payrolls Tame
• 2/7 9:00 AM ET: Dec F Manheim Used Vehicle index Tame
• 2/7 10:00 AM ET: Feb P U. Mich. Sentiment and Inflation Expectation Hot
• 2/10 11:00 AM ET: Jan NY Fed 1yr Inf Exp Tame
• 2/11 6:00 AM ET: Jan Small Business Optimism Survey Tame
• 2/12 8:30 AM ET: Jan CPI Hot
• 2/13 8:30 AM ET: Jan PPI Hot
• 2/14 8:30 AM ET: Jan Retail Sales Data Tame
• 2/18 8:30 AM ET: Feb Empire Manufacturing Survey Tame
• 2/18 10:00 AM ET: Feb NAHB Housing Market Index Tame
• 2/18 4:00 PM ET: Dec Net TIC Flows Tame
• 2/19 9:00 AM ET: Jan M Manheim Used Vehicle index Tame
• 2/19 2:00 PM ET: Jan FOMC Meeting Minutes Dovish
• 2/20 8:30 AM ET: Feb Philly Fed Business Outlook Tame
• 2/21 9:45 AM ET: Feb P S&P Global Manufacturing PMI Tame
• 2/21 9:45 AM ET: Feb P S&P Global Services PMI Tame
• 2/21 10:00 AM ET: Feb F U. Mich. Sentiment and Inflation Expectation Hot
• 2/21 10:00 AM ET: Jan Existing Home Sales Tame
• 2/24 8:30 AM ET: Jan Chicago Fed Nat Activity Index Tame
• 2/24 10:30 AM ET: Feb Dallas Fed Manuf. Activity Survey Tame
• 2/25 9:00 AM ET: Dec S&P CoreLogic CS home price Mixed
• 2/25 10:00 AM ET: Feb Conference Board Consumer Confidence Tame
• 2/26 10:00 AM ET: Jan New Home Sales
• 2/27 8:30 AM ET: 4Q S GDP
• 2/27 10:00 AM ET: Jan P Durable Goods Orders
• 2/28 8:30 AM ET: Jan PCE Deflator

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: