Weekly Macro Matters
Macro Matters – Weekly review, w/c January 15
Stocks rallied, reversing a 2024 correction, while US CPI came in hotter than expected, impacting rate cut projections. Earnings season kicked off with mixed results, and the SEC approved Bitcoin ETFs, signaling potential cryptocurrency adoption growth.
TradeDay Macro Matters
Macroeconomic / Geopolitical Developments
• Stocks Rally, Reversing 2024 Correction Sell-Off:
After a weak start to the year, US markets rebounded, with the S&P 500, Nasdaq, and Dow Jones posting strong gains. Bargain hunting and easing inflation concerns drove the rally, complemented by a 6% weekly surge in Japan’s Nikkei 225.
• US CPI Slightly Hotter Than Expected:
December’s CPI rose 3.4% annually, slightly above expectations, driven by elevated shelter costs. Core CPI also edged higher, signaling a slower path to the Fed’s 2% inflation target.
• US Earnings Season Kicks Off:
Major banks reported mixed results:
• JPMorgan: 15% profit decline but revenues rose 12% to $39.94 billion.
• Bank of America: Profit declined, but adjusted earnings exceeded forecasts at $0.70 per share.
• Wells Fargo: Strong Q4 results with $3.45 billion in net income.
• BlackRock: Adjusted earnings beat estimates at $9.66 per share.
• Citigroup: Posted a $1.8 billion loss due to restructuring costs.
• Bank of NY Mellon: Continued trend of surpassing earnings expectations.
• Oil Rallies Amid Middle Eastern Tensions:
Brent crude surged 2.09% to $79.03 per barrel as geopolitical tensions escalated, reversing earlier declines from Saudi price cuts.
• European Central Bank Dovish Tone:
ECB President Christine Lagarde signaled rates have peaked, with potential cuts contingent on inflation stabilizing at 2%.
• SEC Approves Bitcoin ETFs:
Approval of spot Bitcoin ETFs opens the cryptocurrency market to institutional investors, marking a regulatory shift and paving the way for potential approvals of other cryptocurrency ETFs.
• Davos 2024 World Economic Forum:
Global leaders convened under the theme “Rebuilding Trust,” addressing economic growth, AI, and climate change. India played a prominent role, aligning with its “Credible India” vision.
• MLK US Holiday:
Martin Luther King Jr. Day falls on January 15, closing US equity and bond markets, with shortened futures trading hours.
What’s Ahead
Central Bank Watch:
• A quiet week for central banks, with a focus on Fed speakers ahead of their blackout period.
Macro Data Watch:
• Monday, January 15: EU Industrial Production, US MLK Holiday.
• Tuesday, January 16: German CPI, UK Employment, EU ZEW Survey, Canada CPI.
• Wednesday, January 17: China GDP, UK and EU CPI, US Retail Sales.
• Thursday, January 18: Australian Employment Report.
• Friday, January 19: Japan CPI, UK Retail Sales, Michigan Consumer Sentiment.
Earnings Watch:
• Tuesday, January 16: Morgan Stanley, Goldman Sachs.
• Wednesday, January 17: Prologis, Charles Schwab.
• Thursday, January 18: Truist Financial Corp.
• Friday, January 19: Schlumberger, Travelers, State Street.
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