MARKET REPORT

Review:
Dollar down another 1%
– Powell DEC 1stpremature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease
– Powell DEC13th “cuts are something “that begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.”
– Markets are now pricing for six cuts of 25bp in 2024, with the first one fully priced in for March.
– BoE & ECB leave rates unchanged
– Strong US retail sales
– Dollar down vs EVERYTHING. Again. AUD +0.6%, Euro -1%, Pound +1.1% (“…..hint, it’s a buy” Yest Mkt Report), Yen 0.45%!
– Gold firms to 2051
– Silver up again to $24.50, $25+ in line now. (“….now in a huge bull market. Buy it. Now. Yest Mkt Report)
– DOW firms small, ES & ND unch
– Crypto: BTC flat at 43k, ETH up a percent to 2300 even.
– Crude rallies 3% to close above $70 handle at $71.50

Upcoming:
– Chinese Retail Sales, Industrial Production, Unemployment Rate Urban Area, Japanese, French, German, EZ, UK, US, Italian PMI (Flash), NY Fed Manufacturing Events: Quad Witching, Speakers: BoE’s Ramsden; BoC’s Macklem.

MAJORS:

DX:
“More pain for the dollar to come. Index will look at 100.”
Mkt Report Yest
We touched 101.40 before closing at 101.55 losing another full percent.
We’ve had NOTHING but stronger Data since Dec 1 when the Fed Chair said it was “premature” to talk about rate cuts, yet less than two weeks later, with stronger data in place and with hotter than expected inflation he states that’s PRECISELY what they talked about at the Fed meet. The Fed just as unexpectedly decided to pull one full rate cut out of the non-election year 2025 and push it into the pre-election 2024. Anyone say ELECTION YEAR. Much firmer NFP, higher CPI, ISM & Michigan = lets ease policy. OK.

AUD:

“….and 67 is on the door-step. 67 WILL BE seen…..”
Yes Mkt Report.
The Judo Bank Flash Australia Manufacturing PMI shrinks further to 47.8 in December 2023, from 47.7 in a month earlier, flash estimates showed. It marked the tenth consecutive month of deterioration in the manufacturing sector as output contracted at a quicker pace despite a slower fall in incoming new orders. Both the rates of contraction for output and new orders remained solid amid softening economic conditions and pressure from high interest rates
We hit 67.20 before settling around 67 the handle US session.
No call immediate, longer overall bullish mkt. 68 to be seen with 70 in Jan.

EUR:

“Euro underperformed both the AUD and the YEN so has more downside to go. Straight to 91.”
Yest Mkt report
We hit 91 and touched 90.85 before settling 90.95.
90 on the cards, after a possible rest.

Pound
Pound:
“126.22, Itll hit 127 and hold.”
Yest Mkt report
We hit 127. Held. Closed 127.65. Pound the strongest (after being the weakest yesterday) of the majors. A rest with further upside on the cards. Dollar is in a bear mkt now.

Yen:

141.85 a close down a 0.5% lagging the other majors as the Yen was the strongest yesterday. Dollar might be in for a little short covering, a rest.

Gold and Silver:

Precious metals firmed even further today as traders still trying to explain Powell’s 180 mystery about face (phone call from the white house perhaps…..). $2050. Silver outperformed hitting $24.50.
Expecting further upside with $2100 and $25, then $27.50. Who knows when, but the early longs were flushed out over payrolls. I think momentum will build.

US Equities:
US: Energy +2.94%, Real Estate +2.62%, Materials +1.68%, Industrials +1.23%, Consumer Discretionary +1.08%, Financials +0.93%, Communication Services -0.04%, Technology -0.34%, Health -0.55%, Utilities -1.28%, Consumer Staples -1.49%.
EUROPEAN CLOSES: DAX -0.08% at 16,752.23, FTSE 100 +1.33% at 7,648.98, CAC 40 +0.59% at 7,575.85, Euro Stoxx 50 +0.20% at 4,539.05

– Adobe (ADBE) -6%: Guidance disappointed, but it did beat on EPS and revenue.
– Moderna (MRNA) +9%: Announced positive data in trial of melanoma treatment with Merck’s (MRK) Keytruda.
– United Airlines (UAL) +5% Delta Airlines (DAL) +3%: Goldman Sachs named the Cos. top airline picks going into the new year.
– Occidental Petroleum (OXY) +2.6%: Berkshire Hathaway (BRK.B) acquired ~10.5mln shares for USD 588.7mln, bringing its total stake to about 27%
– General Motors’ (GM)+7%: Cruise cuts 24% of self-driving car workforce in sweeping layoffs, according to TechCrunch

 

Oil:
Oil prices saw big gains on Thursday after hitting six-month lows the day before, benefitting from the weaker Dollar and simmering geopolitics. WTI and Brent futures moved higher steadily through the whole session to hit peaks of USD 72.46/bbl and 77.35/bbl, respectively, before settlement. The continued fall in the Dollar on the easier Fed policy outlook has all been stimulative for oil and commodities on the demand side. Note also that the IEA hiked its 2024 world oil demand growth forecast by 120k BPD to 1.1mln BPD, albeit cutting its 2023 forecast by 90k BPD to 2.3mln BPD. Meanwhile, there could be an element of geopolitical risk premium in the tape action after a Maersk ship was the latest to be attacked in the Red Sea, not to mention a Russian drone crater found in Romania amid a Russian attack on Ukraine, while six Chinese and Russian military aircraft reportedly entered South Korea’s Defense Identification Zone. On the sell side, JPMorgan expects oil to trade in a wide USD 20/bbl range next year and not very different from what transpired in 2023.
Crude report courtesy of https://www.zerohedge.com/

Bond Yields:

1 Mo: 5.339 -0.019 6Mo 5.313 -0.017 1yr 4.927 -0.028 5yr 3.901 -0.102 10yr 3.921 -0.112 and the 30yr 4.042 -0.142
2’s/10’s -0.47

Crytpo:
BTC rested at 43k. With ETH up another % to hit the 23 handle.
May get a little wishey washing but upside is momentum.

Best of luck out there. Let the market come to you.

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