Nasdaq Markets Outlook

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

"High real interest rates and strong economic growth are positive complements. Today, the Fed needs to push back on calls to lower rates and instead learn more about how innovation is influencing real economic performance."

-Michael Levy writing in the WSJ

| Feeling bubbly? | The Casino crowd is back: Bitcoin, retail favorites surge as FOMO dynamic returns to market -BBG

* source: Goldman Sachs Global Investment Research

* source: BofA's The Flow Show

| investors continue to chase quality...profitability + growth rewarded...

* source: Goldman Sachs Global Investment Research

| "Momentum, which today represents high quality factor themes, is outperforming in all corners of the equity market."

-Piper Sandler

* source: Piper Sandler

| Overvalued? "The share of market cap concentrated in stocks with very high valuations has recently surged to levels similar to those reached during the euphoria of 2021."

-Goldman Sachs Global Investment Research

* source: Goldman Sachs Global Investment Research

YTD: Large Cap Growth > Large Cap Value

* source: John Stoltzfus, Oppenheimer Asset Management

SMIDs not only cheaper but valuations below historical averages

* source: Goldman Sachs Global Investment Research

growth is loved everywhere...

* source: John Stoltzfus, Oppenheimer Asset Management

| current rally is typical of a post-recession rally...or a bubble

"last week saw the 16th weekly gain in the last 18 for the S&P 500 for the first time since 1971. If we make 17 out of 19 this week it will be for the first time since 1964."

-Deutsche Bank, Jim Reid

* source: Deutsche Bank, Jim Reid

| "Quality factor themes (i.e. profitability, margins, growth, etc.) are almost always attractive attributes but tend to do best when risk positioning is without direction, like it has been for well over a year now."

-Piper Sandler

* source: Piper Sandler

| Mag 7 earnings gap narrowing...will mean reversion in performance kick in?

* source: BofA's Savita

| "What would be the signal for investors to take on more risk? A broad based earnings recovery is the most consistent signal for a sustained risk-on recovery but we are not yet seeing it happen."

-Piper Sandler

* source: Piper Sandler

| "5% pullbacks have occurred 3x/yr and we have not had one in four months."

-BofA's Savita

* source: BofA's Savita

| DB Fed expectations: First cut in June, 100bps of cuts in 2024, nominal neutral rate ~3.5%

* source: Deutsche Bank

| Stubborn inflation | "Although inflation rates have fallen from their peak rates of 2022, progress on getting the core rate down to the Fed’s 2% target has been slower than many have hoped. This likely means that a “pivot” to rate reductions could be an event for later in 2024."

* source: John Stoltzfus, Oppenheimer Asset Management

1) KEY TAKEAWAYS

1) Dollar + Oil + Gold HIGHER | Equities + TYields MIXED

-busy macro week ahead | Jobs report on Friday

DJ -0.2% S&P500 -0.1% Nasdaq -0.2% R2K +0.7% Cdn TSX -0.3%

Stoxx Europe 600 -0.2% APAC stocks HIGHER, 10YR TYield = 4.215%

Dollar LOWER, Gold $2,100, WTI +0%, $80; Brent +0%, $84, Bitcoin $66,300

2) Small Caps, Tech, and Consumer Discretionary outperformed while all three defensive sectors underperformed last week...

* source: Goldman Sachs Global Investment Research

3) After sharply rising in Dec. and Jan., both measures of consumer confidence/ sentiment ebbed in February.

* source: John Stoltzfus, Oppenheimer Asset Management

4) TYields continue to trade above the psychological 4% level...

* source: John Stoltzfus, Oppenheimer Asset Management

5) more desirable for the private sector to be in the driver's seat...

"Government spending is providing a substantial boost to the economy"

* source: Deutsche Bank

6) THIS WEEK:

"The US jobs report and Fed Chair Powell's testimonies will be among the highlights next week.

In Europe, there will be the ECB decision and economic activity indicators for key countries.

And on the political side, next week will see 'Super Tuesday' in the US, as well as the UK Budget.

Over in Asia, the focus will be on the National Party Congress in China and the
Tokyo CPI in Japan.

Corporate earnings include Broadcom and Target."

-Deutsche Bank

* source: Barclays' Emmanuel Cau

2) MARKETS, MACRO, CORPORATE NEWS

• Fed’s Powell to double down on ‘no rush to cut’ message-BBG
• ECB’s Goldilocks inflation vision to be tested by data drip feed-BBG
• Odds rise that Japan will lift negative interest rates in March-NIKKEI
• BofA’s Subramanian is latest on Wall Street to boost S&P 500 target-BBG
• Big tech-led rally is unlike past bubbles, Goldman strategists say-BBG
• Super Micro surges as AI server maker set to join S&P 500-RTRS
• Rent is driving inflation. But there’s something off in the data.-WASHPO
• Xi Jinping to resist market pressure to step up China stimulus efforts-FT
• China cancels premier's press conference for first time since 1993-RTRS
• Japan gov't mulls declaring official end to deflation: sources-KYO
• Japan corporate capex jumps, likely swinging revised GDP to expansion-RTRS
• US lawmakers unveil bill to fund government, avert shutdown-RTRS
• Americans sour on both Israel and Palestinian authority in poll-BBG

• Investor group bumps Macy's takeover bid to $6.6B-AXIOS
• Kering leads race to acquire Italian eyewear maker Marcolin-MSTW
• Moto GP owner Bridgepoint eyes £3.5bn bonanza from motor racing sale-SKY
• NEXTDC mulls data centres acquisition; EQT lurking in the wings-AFR
• Mondi boosts takeover proposal for packaging rival DS Smith-BBG
• Reddit is targeting up to $6.5 billion valuation in IPO-BBG
• Belle Fashion revives US$500m–$1bn HK IPO-BBG
• Crafts retailer Joann planning bankruptcy filing that hand keys lenders-BBG
• Britannia explores JVs to enter high-margin categories such as chocolates, fresh dairy and salty snacks-ECON

Oil/Energy Headlines: 1) Venezuela's February oil exports rise, but shipping delays persist-RTRS 2) Kurdistan oil producers say no deal made on resuming exports-BBG 3) US funding bill blocks China from buying oil from Strategic Petroleum Reserve-RTRS 4) Iraq's breakeven oil price will exceed $90/b in 2024 on higher spending, IMF says-PLATTS