Stock Market Today: January 1st - 5th, 2024

Welcome StonkForums to the trading week of January 1st!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:
(N/A.)

 

Powell's Pivot Adds $20 Trillion To Global Debt/Equity Markets In 2023; 'Fiat Alternatives' Fly
FRIDAY, DEC 29, 2023 - 04:00 PM

Global bond and stock markets added almost $20 trillion in capitalization during 2023... and all of that gain came in the last two months of the year after it had tested unchanged on Oct 28th! The gains were dominated by global stocks (which added $13.3TN) while global bonds rose by $6.1TN...



Source: Bloomberg

Nasdaq soared to its best year since the peak of the dotcom bubble in 1999 (and the rest of the US major equity market indices all rallied).



Source: Bloomberg

Bonds ended higher in price (lower in yield) on the year. Gold up, dollar down, oil down, NatGas collapsed as The Fed shocked the world, suddenly flipping from uber-hawk to full-dove-tard...



But, but, but, The Fed is apolitical?



We think not!



Is that how it played out?

And they did all that with 'hard' economic data unchanged in 2023 - no real economic progress - as only 'soft' data (hopes and dreams) provided support for 'goldilocks' narratives...



Source: Bloomberg

But, 2023 was dominated by a few themes:
The Magnificent 7 stocks dominated the price action and outsized index gains in 2023. Investors preferred the 'safe haven' of these mega-cap tech names over longer-duration profit-less tech... until The Fed unleashed hell at the start of November and everything exploded higher...



Source: Bloomberg

Which left a record 72% of stocks in the S&P 500 have under-performed the index this year



Source: Bloomberg

AI - the apparent benefits of AI know no bounds when it comes to investment as Goldman's basket of AI stocks soared over 90% this year (while businesses 'at risk' of AI's impact rose 17% - helped by the everything rally in the last two months)...



Source: Bloomberg

Anti-Obesity Drugs - losing weight the easy way appealed to investors in 2023 as the GLP-1 analogs sparked a surge in biotech/pharma (and hurt food/beer stocks)...



Source: Bloomberg

Banks - SVB's collapse in March sparked an exodus of deposits and demand for Fed bailouts. Regional bank stocks ended the year down just 8% having bounced back from being down around 40% in May (despite record usage of the Fed's bailout facility)...



Source: Bloomberg

Meme Stocks - Retail favorites had a wild year but ended up 25% in 2023, the best year since 2020's chaos, thanks again to the last two months of panic-buying, dash-for-trash trading after The Fed folded...



Source: Bloomberg

Cryptos - 2023 was a huge comeback year after 2022's 'existential threat' moments from FTX to TerraUSD and so on. Of the larger coins, Solana massively outperformed - up around 1000% on the year - but bitcoin (+160%) and ethereum (+100%) also had big years...



Source: Bloomberg

Bonds - Global bonds ended the year with the largest two-month gain in history...



Source: Bloomberg

And that rally pulled the entire curve lower in yields on the year with the 5Y the biggest decliner, down 19bps on the year - after bloodbathing up around 100bps at its highs in October. Bear in mind that Fed Funds added 100bps this year and bond yields are all lower...



Source: Bloomberg

Liquidity - stocks did what they do: follow the money. As macro data disappointed, stocks charged ahead on a re-emerging wave of global liquidity...



Source: Bloomberg

Rate-cuts - It was a very volatile, flip-floppy year for The Fed and Fed-watchers as rate-cut expectations swung wildly from 160bps to less than 60bps to more than 160bps to just 70bps and now back to highs above 160bps (more than 6 cuts, when The Fed 'dots' are calling for 3)...



Source: Bloomberg

Additionally, the odds of a rate-cut as soon as March are now near 90% (up from less than 10% in September)...



Source: Bloomberg

Financial Conditions - The rally in bonds, stocks, and credit - and collapse in the dollar - since The Fed signaled the end of hikes prompted the most aggressive easing of financial conditions ever. Financial conditions are now as easy as they were in May 2022 - when Fed Funds was 300bps below current levels...



Source: Bloomberg

No Recession - expectations heading into 2023 was for a recession - it never came to pass on the backs of exponentially rising govt debt throughout the year and Fed jawboning that lifted macro data in the last month



Source: Bloomberg

Cash Is King - Money-market funds saw their largest annual inflows ever...



Source: Bloomberg

Gold - A weaker dollar, signals of loosening from The Fed, and a world on fire means no one should be surprised by gold's great year, up almost 14% (best year since 2020) to a new all-time record high...



Source: Bloomberg

* * *
Under the hood of the markets this year.

Equities
2023 ended on a down-note with all the US majors tumbling into the red for the week, erasing Santa Claus rally gains, but the afternoon saw dip-buyers return and rescue the weekly win-streak...



Both 'Most Shorted' stocks and the MAG7 were also hit...





Source: Bloomberg

Tech and Consumer Discretionary dominated the performance this year with Staples and Utes the biggest losers (Energy was the other losing sector on the year)...



Source: Bloomberg

Nvidia, Meta Platforms, and Royal Caribbean were the best-performing S&P 500 stocks in 2023 while FMC Corp, Enphase Energy, and Dollar General were the biggest losers...



Source: Bloomberg

While VIX was smashed to an 11 handle at its lows of the year (multi-year lows), it notably decoupled from stocks in the last few weeks



Source: Bloomberg

Small Caps outperformed Nasdaq in the first few months of the year, then the AI boom struck and Nasdaq exploded higher relative to Small Caps (as the latter was hit harder by soaring rates). The last month has seen dramatic outperformance of Small Caps, dragging the NDX/RTY ratio lower...



Source: Bloomberg

But, overall, Nasdaq's dramatic outperformance this year lifted it to a new record high relative to Small Caps... and then fell back (as Small Caps outperformed) to the dotcom highs...



Source: Bloomberg

Bonds
Only the 2Y yield and earlier remain above 4.00%, but the curve is massively inverted from Fed Funds...



Source: Bloomberg

After 2022's massive flattening/inversion of the yield curve, 2023 saw 2s30s actually end steeper (the first steepening year since 2020). The yield curve de-inverted a few times during the year but was unable to sustain it...



Source: Bloomberg

Real yields ended the year basically unchanged - after soaring to their highest since 2008 in October. Since then 10Y real yields have plummeted almost 100bps...



Source: Bloomberg

If S&P 500 valuations are to be believed, the market is expecting negative real yields again soon enough...



Source: Bloomberg

FX
The dollar ended lower against its fiat peers in 2023 (BBDXY -2.9%) - its biggest drop since 2020 back to pre-COVID-spike levels...



Source: Bloomberg

Swissy was the best performing currency (of the majors) against the dollar while Japan's yen was the weakest.



Source: Bloomberg

The Swiss Franc soared to its best year since 2010 and its highest since 2011 (in the middle of the EU crisis)...



Source: Bloomberg

The Japanese Yen spent the first 10 months of 2023 plunging to its weakest against the dollar since 1990. Then as The Fed's dovish pivot and BoJ's hawkish jawboning picked up, the yen surged higher (finding support at Oct 2022 lows)...



Source: Bloomberg

Emerging Market currencies plummeted to their weakest ever (on an indexed level) against the USdollar at the start of October, but the last two months have seen EM FX recover notably as The Fed pivoted...



Source: Bloomberg

Cryptos
The big story of the year was the anticipation of a spot bitcoin ETF, and nowhere is that more clearly illustrated than in the collapse of the massive discount to NAV in GBTC...



Source: Bloomberg

Bitcoin's rally in 2023 erased all of the 'existential' crisis crash losses from 2022 (FTX/TerraUSD/3AC etc.), up to its highest level since April 2022...



Source: Bloomberg

Ethereum did have a good year but only made it back to May 2022 highs...



Source: Bloomberg

ETH underperformed BTC all year until the last week or so that saw ETH/BTC bounce significantly off June 2022 support...



Source: Bloomberg

Commodities
The broad commodity landscape saw prices plunge in 2023 with Bloomberg's Commodity Index down over 12% - its worst year since 2015...



Source: Bloomberg

And that plunge in (growthy) commodities is in direct conflict with the large gains in (growthy) stocks.

Gold outperformed among the major commodities (best year since 2020 - after two unchanged years) while crude fell YoY for the first time since 2020. NatGas was clubbed like a baby seal to start the year and never recovered for its worst year since 2001...



Source: Bloomberg

On an energy-equivalent basis, NatGas was systemically 'cheap' to WTI all year after the huge selloff in January...



Source: Bloomberg

The big gains in gold over the last two months reversed the outperformance of oil in the prior quarter, bring the Oil-in-Gold ratio (how many oz of gold to buy a barrel of oil) back down to a key support level in recent years...



Source: Bloomberg

And Finally...
If history rhymes, we can expect this buying-panic-gasm to continue into Q1 as it did in 2000...



Source: Bloomberg

And if you want to know what the catalyst could be in March - it will be the next big banking crisis as The Fed is forced to shut down the BTFP (since it is spewing free-money via arbitrage).

Politically, next year is a big one which makes it noteworthy that for the third year in a row, foreign-born workers dominated all job gains with the native-born American labor force basically unchanged since Biden's election...



Source: Bloomberg

This trend is not America's friend...



Source: Bloomberg

China and Russia are dumping Bonds and buying Bullion.

And the market is starting to sniff it out. 2023 saw the biggest rise in the market's perception of USA's sovereign credit risk since the Lehman crisis in 2008...



Source: Bloomberg

Cloward, Piven, and Chomsky would be proud.

And on that note - happy new year!!

 

DJIA and NASDAQ Best on First Trading Day of New Year



Over the past 21 years, DJIA and NASDAQ have enjoyed the greatest frequency of gains on the first trading day of the New Year, both up 66.7% of the time (up 14, down 7), with average gains of 0.49% and 0.70% respectively. S&P 500 and Russell 2000 have been up 57.1% (up 12, down 9) also with solid average gains of 0.53% and 0.40%. On the second and third trading days of the New Year, performance has been weaker with a modest bearish bias. Average performance turns negative across the board on the second day and is mixed on the third.

Top Charts of 2023


What a year it has been! The economy surprised, the consumer remained resilient, stocks soared to new highs, and even bonds are looking at a nice year thanks to a late innings rally. Just like everyone called it

As you are reading this I’m hopefully enjoying a nice break the final week of the year. As we wind down 2023 and look ahead to 2024, we want to share with you some of our team’s favorite charts on the year.

We’ll kick it off with two of my favorites followed by some picks from across the team.

The Year Played Out as Expected
You might not believe it, but this year actually played out just like it was expected to. Pre-election years are usually strong, but they are even better under a first-term President, up more than 20% on average (something we should hit this year).

Breaking the four-year presidential cycle down by quarters, stocks tend to do quite well the first half of a pre-election year (like 2023), catch their breath in Q3, and then gain into year end. Does that sound familiar? Below is a chart I’ve probably shared 100 times this year, but I’m still amazed how well it all played out.



Inflation Was Expected to Come Back to Earth
Here’s my other favorite chart of the year. We started sharing this chart late last year and it was one of the main reasons we expected to see inflation come back down, likely opening the door for a Fed pivot away from their hawkish stance.

In the chart below we look at private data from Apartment List showing that rent prices collapsed well ahead of the government’s data. I won’t get into all the reasons why now, but the government’s data lags by many, many months and this was a subtle clue that shelter (40% of the core Consumer Price Index) was likely going to crack eventually. Sure enough, late this year we started to see shelter inflation slow and this opened the door for the Fed to pivot (exactly what they did on December 13).



The Manufacturing Renaissance is Here
Below is Sonu Varghese, VP, Global Macro Strategist’s favorite chart of ’23:

I’ve never seen an economic chart like this, especially one related to factory construction of all things. This is a massively underrated story of what’s happening in America right now, and brings together several key themes that center around a renaissance for American manufacturing:

• Reshoring
• Business investment into high-tech equipment like semiconductors (a lot of it driven by AI hardware needs) and EV batteries
• Significant incentives from the Federal government to spur private investment in transformational technology

The good news is that this is not just a 2023 story. There’s going to be more coming, and the “fruits” of these investments will be seen over the next decade in America.



AI YAI YAI!
And from Jake Bleicher, Portfolio Manager, a stock chart candidate for top chart of the year:

To me, the narrative of 2023 is captured by a chart of NVIDIA, the maker of high-end computer chips that have become the bedrock of artificial intelligence. Emerging from the depths of the 2022 bear market, the introduction of ChatGPT illuminated the potential of AI for the layman, igniting a remarkable surge in related tech stocks. Despite higher interest rates, mega-cap technology companies roared higher. As we approach 2024, the AI theme appears enduring, but investors are now recognizing its broader implications as this transformative technology permeates businesses of all shapes and sizes, not just mega cap tech.



Source: FactSet 12/18/2023

Yields Back Where They Started
And here is Barry Gilbert, VP, Asset Allocation Strategist’s top chart from ’23.

For me, nothing tells the story of markets in 2023 like yields, and the 10-year Treasury yield is a great reference point. We can read off its movements all the big stories of 2023: accelerating disinflation; an aggressive Fed; and a thriving U.S. economy despite all the skeptics.

The 10-year Treasury yield entered the year at 3.88% and it looked like rates might be starting to stabilize after peaking near 4.2% in October 2022 and causing a heap of pain going back to the summer of 2020. But the Fed was determined in its fight against inflation as the economy continued to defy expectations. By mid-October, the 10-year Treasury yield was just short of 5% and at a level not seen since before the Great Financial Crisis.

But then a funny thing happened. The disinflation expected by many accelerated, economic growth went from great to just pretty good with a few downside economic surprises, and a tough-talking Fed began to use more balanced language. The flood gates of bond demand opened and we saw the 10-year Treasury yield plummet more than a full percentage point in about two months, taking it back to just a little higher than where it started the year.

With the yield curve flat, no movement in the 10-year yield for the year left returns for short-term Treasuries and intermediate bonds about the same. But if you were willing to still shy away from rate-sensitive bonds early in the year and add rate sensitivity aggressively late (consistent with Carson Investment Team recommendations), it was a pretty good round trip.

We often connect our “no recession in 2023” call to our equity overweight, but where it may have had a more profound impact, especially in bond-heavy allocations, was on the fixed income side, another reason why the 10-year Treasury yield is my candidate for 2023 Chart of the Year.



Value and Growth Also Back Where They Started
And here is Grant Engelbart, VP, Investment Strategist’s top chart from ’23:

The decision to invest in value stocks or growth stocks is one of the most impactful an equity investor or manager can make, and something I keep a close eye on. 2022 was a painful year across asset classes (sorry to bring it up!), but on a relative basis, value investors did quite well. Now relative performance doesn’t pay the bills in a down year, but value did provide some help in 2022 by outperforming growth stocks by the most since the tech bubble burst in 2000!

As we know, the stock market has a tendency to react in ways that go against the expectations of the crowd. And sure enough, in 2023 growth stocks began to outperform value stocks, and did so in dramatic fashion. Thus far in 2023, growth is outperforming value by the second most since the inception of the widely followed Russell style indices (1979).

My chart of the year is the returns of value and growth stocks relative to the broad Russell 1000, which encompasses both. When you look at the picture from the beginning of 2022, all of the outperformance of value stocks has now been washed away by the growth rebound in 2023. The game is tied 0-0, right back where we started! If these massive divergences don’t beg for a balanced investing approach with highly research-driven decisions around portfolio adjustments, I don’t know what does.



What a year is has been. We are honored you’ve been with us on this ride and we will continue to do all we can to be the most trusted and transparent research shop out there.

Claims Characteristics Check Up
Thu, Dec 28, 2023

This morning's release of initial jobless claims disappointed relative to expectations as they climbed up to 218K versus expectations for an increase to only 210K from last week's reading of 206K. At current levels, jobless claims are rounding out 2023 in the middle of the past couple of years' range: not as strong as the late 2022 low of 182K, but not as high as the peak earlier this year.



Before the seasonal adjustment, claims are trending higher as could be expected given the time of year. Claims jumped this week to 272.6K which is the highest level for the comparable week of the year since 2019. Based on seasonal patterns, claims tend to peak right around New Year or the first couple of weeks in January meaning that the headwinds are likely to fade soon.



Continuing claims have risen significantly since late Q3, but more recently that increase has begun to plateau right around levels from the spring peak. Currently, continuing claims stand at 1.875K, a 14K increase week over week.



In addition to weekly claims, below we show the latest data on unemployment claimant characteristics through November. As shown below, some industries that received a lot of attention for layoffs earlier this year and observed actual increases in claims, like tech, real estate, and finance, have more recently seen pivots lower in claims. Although that marks some improvements (potentially as a result of expirations of benefits), overall those industries do not account for the largest shares of claims. Instead, industries like construction or manufacturing account for greater burdens on claims.





JP Morgan [Performance] Chase
Wed, Dec 27, 2023

Just about every price chart lately looks like a one-way move higher, but in scanning through various charts earlier, we were struck by how steep and one-directional the move in JP Morgan Chase (JPM) has been over the last two months. Besides a handful of days with red bars, the stock has seemingly done nothing but go higher each day.



Just how impressive has the move over the last two months been? In the last 40 trading days, JPM has finished the day higher 30 times. While we don't have price data going back to the days of J.P. Morgan himself, going back to 1980, the current frequency of positive days over a 40 trading day period has never been seen.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2023-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 12.29.23-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 12.29.23-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for December 29th, 2023
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 12/31/23
Video from ShadowTrader Peter Reznicek

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums 2024 Yearly Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your yearly market direction vote and stock picks for this year 2024!

StonkForums Q1 2024 Quarterly Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your quarterly market direction vote and stock picks for Q1 of this year 2024!

StonkForums January 2024 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market direction vote and stock picks for January of this year 2024!

StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (1/1-1/5) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Tuesday (1/2) <-- click there to cast your daily market direction vote for this coming Tuesday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 1.1.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF NEW YEAR'S DAY.)

Monday 1.1.24 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF NEW YEAR'S DAY.)

Tuesday 1.2.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(NONE.)

Tuesday 1.2.24 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 1.3.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 1.3.24 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 1.4.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 1.4.24 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 1.5.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 1.5.24 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($WBA $LW $STZ $UNF $RPM $CAG $CALM $SLP $KRUS $LNN $FC $SMPL $ANGO $GBX $RDUS $RGP)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning January 1st, 2024 <-- click there to view!

 

(REMINDER: U.S. MARKETS ARE CLOSED ON MONDAY, JANUARY 1ST, 2024 IN OBSERVANCE OF NEW YEAR'S DAY.)

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the new trading year and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are under an hour from the US cash market open.

GLTA on this Tuesday, January the 2nd, 2024!

 

Morning Lineup - 1/2/24 - Introducing 2024
Tue, Jan 2, 2024

2024 is not picking up where 2023 left off as futures are sharply lower with the Nasdaq indicated to open the year down over 1% and the S&P 500 down 0.8%. Things weren’t as bad overnight, but the sellers appeared to step in just after Europe opened for trading. While an earthquake in Japan over the weekend and geo-political concerns in the Middle East haven’t helped concerning this morning’s market picture, they wouldn’t account for such a large decline at the open. The more likely culprit is simply a round of profit-taking after a monster rally to close out 2023.

The economic calendar in the US is light today with the S&P Markit Manufacturing PMI at 9:45 and Construction Spending at 10 AM. PMI readings for the rest of the world that have already been released were generally slightly better than expected even as the manufacturing sectors for Europe’s largest economies remain in contractionary territory.

One area of the market not feeling the pressure this morning is Bitcoin. After a rally of over 150% in 2023, the world’s largest cryptocurrency isn’t skipping a beat in 2024 as it’s already up over 7% YTD and above $45K. Bitcoin traded in a bit of a sideways range from early December through the end of the year, but a rally in the first two days of the new year has helped it to clear resistance and reach new 52-week highs.



From a longer-term perspective, bitcoin is still well off its record highs from late 2021, but it has also essentially erased all its losses from 2022. There’s still plenty of overhead resistance above, but with $45K cleared, $50K, a level it has only crossed above or below 16 times, will be the next area to watch.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, January 2nd, 2024.