A daily market update from FS Insight— what you need to know ahead of opening bell
“Finishing races is important, but racing is more important.” — Dale Earnhardt
Overnight
Behind Bitcoin’s Rally Is a Simple Fact: Supplies Are Limited WSJ
Wall Street’s complex debt bonanza hits fastest pace since 2007 FT
Beneath the hood, stocks just suffered their worst day of the year. Some are worried. MW
As China Probes Nvidia, How Trade Battle With the U.S. Could Get a Lot Worse BR
Syria regime topple affects global migration and drug trafficking SEM
Why investing in midcaps may be the way to go in 2025 CNBC
In China’s Rapidly Aging Cities, Young People Flee and Few Babies Are Born WSJ
Stellantis CEO Carlos Tavares lost control of the automaker with ‘arrogant’ mistakes, sources say CNBC
Suspect in UnitedHealth Killing Was Ivy Leaguer With Anticapitalist Leanings WSJ
Who Is David Sacks, Trump’s Pick for AI and Crypto Czar? WSJ
In Salt Lake City, women business owners are pushing boundaries and breaking barriers CNBC
Argentina: has Javier Milei proved his critics wrong? FT
Global ad market to surpass $1 trillion for first time AX
Rupert Murdoch’s effort to leave his media empire to Lachlan — and not his other children — has failed QZ
Mondelez exploring takeover of US chocolate maker Hershey BBG
Man fleeing Ukraine war with his kitten found alive in frigid Romania mountains: “Peach kept my heart warm” CBS
Chart of the Day
| Overnight |
| S&P Futures flat Overnight range: -8 to +1 point(s) |
| APAC |
| Nikkei +0.53%
Topix +0.25% China SHCOMP +0.59% Hang Seng -0.5% Korea +2.43% Singapore +0.49% Australia -0.36% India -0.04% Taiwan -0.64% |
| Europe |
| Stoxx 50 -0.38%
Stoxx 600 -0.26% FTSE 100 -0.58% DAX -0.15% CAC 40 -0.6% Italy -0.21% IBEX -0.31% |
| FX |
| Dollar Index (DXY) +0.15%
to 106.31 EUR/USD -0.23% to 1.053 GBP/USD +0.07% to 1.2759 USD/JPY +0.22% to 151.54 USD/CNY -0.06% to 7.254 USD/CNH -0.12% to 7.2588 USD/CHF +0.11% to 0.8799 USD/CAD -0.01% to 1.4169 AUD/USD -0.67% to 0.6397 |
| Crypto |
| BTC +0.9%
to 97808.61 ETH +1.84% to 3768.7 XRP +0.66% to 2.2506 Cardano +3.31% to 1.0331 Solana -0.18% to 217.78 Avalanche +2.66% to 46.31 Dogecoin -0.91% to 0.4139 Chainlink +7.01% to 23.55 |
| Commodities and Others |
| VIX +0.21%
to 14.22 WTI Crude -0.45% to 68.06 Brent Crude -0.39% to 71.86 Nat Gas -1.19% to 3.14 RBOB Gas -0.09% to 1.951 Heating Oil -0.35% to 2.176 Gold +0.56% to 2675.13 Silver +0.2% to 31.9 Copper -0.64% to 4.196 |
| US Treasuries |
| 1M -2.2bps
to 4.4113% 3M -2.5bps to 4.3667% 6M -9.2bps to 4.2584% 12M -1.4bps to 4.1786% 2Y +0.4bps to 4.1284% 5Y +0.7bps to 4.0809% 7Y +0.8bps to 4.143% 10Y +1.3bps to 4.2147% 20Y +2.0bps to 4.4839% 30Y +2.0bps to 4.4053% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 0.4bps to -28.5
bps 10Y-2 Y Spread widened 0.8bps to 8.2 bps 30Y-10 Y Spread widened 0.7bps to 19.0 bps |
| Yesterday's Recap |
| SPX -0.61%
SPX Eq Wt -0.41% NASDAQ 100 -0.84% NASDAQ Comp -0.62% Russell Midcap -0.92% R2k -0.67% R1k Value -0.7% R1k Growth -0.7% R2k Value -0.17% R2k Growth -1.14% FANG+ -0.94% Semis -1.02% Software -2.07% Biotech -0.91% Regional Banks -1.62% SPX GICS1 Sorted: Healthcare +0.22% REITs +0.09% Materials -0.15% Energy -0.2% Cons Disc -0.33% Tech -0.45% Cons Staples -0.5% SPX -0.61% Indu -0.94% Utes -1.3% Comm Srvcs -1.31% Fin -1.41% |
| USD HY OaS |
| All Sectors +0.9bp
to 310bp All Sectors ex-Energy +0.0bp to 290bp Cons Disc +2.4bp to 250bp Indu -0.2bp to 232bp Tech -0.6bp to 317bp Comm Srvcs +0.8bp to 506bp Materials -3.0bp to 282bp Energy +5.5bp to 305bp Fin Snr -1.2bp to 274bp Fin Sub -0.5bp to 196bp Cons Staples -0.6bp to 273bp Healthcare +1.4bp to 355bp Utes +1.8bp to 218bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 12/10 | 6AM | Nov Small Biz Optimisum | 95.3 | 93.7 |
| 12/10 | 8:30AM | 3Q F Nonfarm Productivity | 2.2 | 2.2 |
| 12/10 | 8:30AM | 3Q F Unit Labor Costs | 1.25 | 1.9 |
| 12/11 | 8:30AM | Nov CPI m/m | 0.3 | 0.2 |
| 12/11 | 8:30AM | Nov Core CPI m/m | 0.3 | 0.3 |
| 12/11 | 8:30AM | Nov CPI y/y | 2.7 | 2.6 |
| 12/11 | 8:30AM | Nov Core CPI y/y | 3.3 | 3.3 |
| 12/12 | 8:30AM | Nov PPI m/m | 0.2 | 0.2 |
| 12/12 | 8:30AM | Nov Core PPI m/m | 0.2 | 0.3 |
| 12/13 | 8:30AM | Nov Import Price m/m | -0.2 | 0.3 |
| 12/16 | 9:45AM | Dec P S&P Manu PMI | n/a | 49.7 |
| 12/16 | 9:45AM | Dec P S&P Srvcs PMI | n/a | 56.1 |
MORNING INSIGHT
Good morning!
NY Fed consumer survey shows improvement, but this could be political bias. Markets now entering “zone of uncertainty.”
Click HERE for more.
TECHNICAL
- SPX pullback likely proves short-lived.
- FXI looks to be turning higher and might push back to challenge Fall 2024 peaks.
- Precious and base metals look to benefit as China loosens its monetary policy.
Click HERE for more.
CRYPTO
- Conditions and flows in traditional markets (CME basis, ETF flows, small-cap tech outperformance) point to strong risk/reward for ETH.
- This thesis appears to be playing out. ETH has shown significant strength over the past couple of days, rallying above $4,000—a level it hasn’t sustained in some time.
Click HERE for more.
First News
It’s not exactly a secret that with intensifying political polarization in the U.S., consumer attitudes about the various aspects of the economy have developed a political divide. Political preferences have become strongly correlated with metrics on consumer confidence, inflation expectations, and reactions to macroeconomic developments such as CPI data releases.
Data confirms this trend. A study in the Journal of Monetary Economics shows the sharp divide in inflation expectations immediately after the COVID pandemic, with Democrats maintaining anchored expectations while Republicans evinced unanchored views. Similarly, the authors of a Brookings Institution paper found that while “historically, consumer attitudes regarding the economy have closely tracked prominent macroeconomic indicators like GDP, unemployment, equity prices, and inflation,” since 2016, the “difference [in] how partisans respond when a member of the opposite party is elected” has become more pronounced.
In a third study, economists looked at the use of economic fundamentals to predict consumer sentiment. They found that “statistical models that aim to predict consumer sentiment with economic fundamentals performed relatively well before the pandemic. But since 2020, these models have broken down,” with political partisanship increasingly influencing sentiment.
Ben Harris, vice president and director of economic studies at the Brookings Institution, has thus taken to questioning the usefulness of sentiment-based economic indicators. “[Given that] macroeconomic indicators have become so divorced from consumer sentiment, it’s reasonable to ask, ‘Does this even matter from an economic standpoint anymore?'” he asked. Some on Wall Street appear to be pondering this as well. Perhaps that’s why they are increasingly seeking “alternative data” for clues about retail performance, rather than relying as much on sentiment surveys. Yet perhaps they are missing the point.
A popular, if somewhat jeering, refrain that has been widely adopted in political debates in recent years is the truism that “facts don’t care about your feelings.” But the reverse is increasingly true as well: “Feelings don’t care about your facts.” This might (and probably should) concern us as citizens, but it is perhaps unsurprising that sentiment and expectations are at least partly irrational. After all, they drive financial choices, and we have long known that such decisions are often irrational.
Smart investors have long understood that, as Fundstrat Head of Research Tom Lee has frequently reminded us: “Confidence drives markets, and confidence changes faster than fundamentals.” As long as this remains true, why consumers feel the way they do will matter less than how they feel. And tracking the latter will remain important.
