Nasdaq Markets Outlook

A mostly graphical daily curated roundup of the markets and the economy from Nasdaq's IR team.

#marketseverywhere | "The main event over the last 24 hours occurred after the US closing bell as results from Microsoft and Alphabet last night soured risk sentiment. Both of the tech giants narrowly beat revenue and earnings estimates, but saw an underwhelming reaction in after-hours trading...

Combined the two companies represent a near $5trn market cap, equating to 11.5% of the S&P 500 so very important for market direction."

-Deutsche Bank, Jim Reid

| Piper Sandler's investor survey - earnings too optimistic? | "Calendar year sell side earnings estimates typically start the year high and fade"

Investors expect '23 leadership (Growth + Quality) to continue into '24

Recession odds are still all over the map

* source: Piper Sandler

1) KEY TAKEAWAYS

1) Equities MIXED w/ Nasdaq Index leading losses

Dollar + TYields + Oil LOWER / Gold HIGHER

-Private payroll growth slowed to just 107K in Jan, <expectations, ADP reports

-FOMC today

-Apple, Amazon, and Meta reporting tonight

-"China continues to underperform with the SHCOMP now giving back most of the RRR cut gains" -Piper Sandler

DJ +0.2% S&P500 -0.6% Nasdaq -1.3% R2K -0.4% Cdn TSX +0.0%

Stoxx Europe 600 +0.3% APAC stocks MIXED, 10YR TYield = 3.956%

Dollar LOWER, Gold $2,052, WTI -1%, $77; Brent -1%, $82, Bitcoin $42,807

2) Strong labor market & lower inflation boost consumer confidence

* source: Oxford Economics

3) Job market + economy not as bad as feared = rate cut odds getting pared back

* source: JP Morgan

4) "Buying of equities has picked up YTD and CTA/systematic positioning is high, yet LOs still have dry powder. As re-risking has been US/Tech centric, Europe/China equities remain under-owned, and Cyclicals positioning is not crowded outside Tech. There is space for a broadening of the rally if soft landing keeps tracking." -Emmanuel Cau, Barclays

* source: Emmanuel Cau, Barclays

5) The January rally has turned off some investors as per JPM's investor poll...

Sentiment is pretty average, neither bullish or bearish

6) Corporate buybacks should provide support in several weeks...

"Buybacks are a function of EPS growth and if earnings improves as expected, it augurs well for equity repurchases this year."

* source: Barclays' Emmanuel Cau

7) Piper Sandler Investor Survey: "While the futures market implies there will be more than 5 cuts in 2024, our client survey results suggests that most investors expect 3 cuts or less which is more in line with the December Fed dot plot."

* source: Piper Sandler

8) A race to cut rates? Fed vs ECB as per JPM investor survey.... | Markets pricing in 90% odds of a cut from the ECB in April

9) Corporate bond spreads are tightening which is generally a bullish sign...

10) Food for thought: Cybersecurity ETF hitting all time highs...

* source: CNBC

11) THIS WEEK:

US: Fed's policy decision Wednesday | Friday, US jobs report for January.

Europe: BoE meeting | CPI and GDP reports across the Eurozone.

Earnings: Apple, Amazon, Microsoft and Meta.

* source: Barclays' Emmanuel Cau

2) ESG, COMPILED BY NATHAN GREENE

EU to delay new green rule in bid to appease protesting farmers - Guardian

-Under the rules, farmers were expected to keep 4% of their arable land free from crop production in an effort to regenerate the health of the soil and increase biodiversity, which is also in crisis.

-Alternatively, farmers could have got an exemption from this “set-aside” rule if they had used 7% of their land for “catch crops” such as clover, which provide cover for the soil after the main crop is harvested.

Banks Set to Lose Temporary Reprieve From EU’s Toughest ESG Rule - BNN

-The European Parliament and the European Council are moving toward an agreement that banks, asset managers and insurers should be viewed in the same way as other companies when it comes to ensuring that their value chains aren’t subject to environmental or human rights violations.

3) MARKETS, MACRO, CORPORATE NEWS

• U.S. winning world economic war-AXIOS
• China's factory activity shrinks again, weak demand hobbles economy-RTRS
• Inflation down in German states, pointing to national decline-RTRS
• Falling French inflation fuels investor bets on early ECB interest rate cut-FT
• German joblessness unexpectedly declines at start of year-BBG
• Traders boost bets on RBA rate cut pivot as inflation cools more-BBG
• Japan’s factory output gains to support economy’s patchy rebound-BBG
• Fed to hold interest rates steady but start considering cuts-BBG
• ECB’s Lagarde says wage data are ‘critically important’-BBG
• BOJ signals rate hike is approaching with ramped-up exit talk-BBG
• Bank of Japan sets stage for normalization with 3rd stealth taper-NIKKEI
• Traders pile into wagers targeting a bigger bond market selloff-BBG
• China stocks sink to five-year low as traders unwind rescue bets-BBG
• China merges hundreds of rural banks as financial risks mount-BBG
• China’s Suzhou does away with all home-buying limits-YICAI
• Biden faces blame for border crisis, swing-state voter poll shows-BBG
• Can Biden respond to Iran-backed attack without escalating the war?-FT
• Iraq's Kataib Hezbollah says it suspends attacks on US forces-RTRS
• Yemen's Houthis threaten more attacks on US, British warships-RTRS
• Saudis resume US defense talks after pause from Israel-Hamas war-BBG

• Byron Allen makes $14 billion offer for Paramount Global-BBG
• At $2.5 billion, this is TCS’s biggest deal ever-MINT
• Nasdaq plans hundreds of job cuts-BBG
• Last orders for Quadrant’s Superior Food; Metcash taps Barrenjoey, HSF-AFR
• Exclusive: Japan's Inpex selling stake in Russian oil project to Itochu-RTRS
• Microsoft’s and Google’s AI plans clouded by concerns of rising costs-FT
• Alphabet’s advertising growth falls short of Wall Street expectations-FT
• Musk’s $55 billion pay package voided, threatening world’s biggest fortune-BBG
• AMD’s weak forecast overshadows prospects for AI chips-BBG
• Samsung sees tech devices demand recovering 2024 record chip loss-RTRS
• Novo Nordisk shares hit record high as weight-loss drugs power profits-FT
• EV maker stocks that were adding billions face bleak future-BBG
• Scoop: Wall Street Journal plans layoffs, restructuring in D.C.-AXIOS
• PayPal to cut around 2,500 jobs as rivals snag market share-BBG

Oil/Energy Headlines: 1) Saudi Arabia ditches plan to raise oil production-FT 2) Venezuelan oil output to fall 30% under renewed US sanctions-BBG 3) Powerful Iran-backed militia in Iraq to suspend military ops against US forces in region-CNN4) Saudi Arabia's Q4 GDP shrinks estimated 3.7% y/y; oil sector weighs-RTRS 5) Saudi Arabia may raise March Arab Light price-RTRS 6) Venezuelan oil output to fall 30% under renewed US sanctions-BBG 7) Red Sea crisis unlikely to end soon, Hapag-Lloyd CEO says-RTRS 8) FUJAIRAH DATA: Oil products stockpiles fall to five-week low as exports rise-PLATTS 9) Biden administration slowly replenishes emergency oil stash-RTRS