Jan 23rd Morning Note
Chinese Policymakers Considering Measures to Stabilize Stocks
S&P and NASDAQ futures are in the green as we go to print after yesterday’s reversal from the highs. Nasdaq finished yesterday’s session at 17,330 after touching a high of 17,440 at the open. Similarly, the S&P 500 closed with a modest gain of ~11pts at 4,850 after seeing an intraday high of 4865pts. Small cap Russell 2000 was an outperformer with a gain of 2.1%. It seems like the AI driven rally is getting to a point of exhaustion with investors rotating into small cap stocks as they would benefit from goldilocks economic environment and have lagged behind S&P and Nasdaq since last year.
Overnight, Bloomberg reported that Chinese policymakers were considering measures to stabilize stocks, helping Hang Seng close +2.6%, while Shanghai Comp added 0.5%. The offshore yuan appreciated past 7.18 per dollar, hitting its highest levels in nearly two weeks following a renewed pledge by China’s cabinet to stabilize the capital markets.
JPY briefly rallied after an in-line BoJ meeting, but a slightly hawkish Ueda press conference kept the door open for further tightening. He hinted that more data will be made available in April, giving calendar guidance for markets. Big picture, BOJ will eventually tighten and there is room for markets to price this outcome - ie higher JPY and bearish rates.
Treasury yields are higher this morning with 10Y back at 4.13% and 30Y at 4.35%, while 2Y is at 4.40%.
For the calendar today, markets will be focused on the regional Fed surveys after NY Empire’s alarming plunge. Also, this is the second heaviest week of earnings for S&P 500 companies. Investors will be watching NFLX and TXN earnings post market close.
On the the politics front, New Hampshire primary takes place today - polls close 20:00 EST, with results due shortly after. Former Pres. Trump will be looking to follow his decisive victory in Iowa, polls also show Haley trailing Trump by a large margin.
Other news:
New York City Passed an AI Hiring Law. So Far, Few Companies Are Following It (WSJ)
WeWork Wrestles to Amend Leases as Landlords Seek Clarity on Restructuring Plan (WSJ)
It's getting harder for white-collar professionals to change jobs (WSJ)
Container Rates Soar on Escalating Red Sea Tensions (Trading economics)
Why slowing rent hasn't shown up in government inflation data (Axios)
BOJ signals conviction on hitting inflation goal, keeps low rates (RTRS)
BOJ Governor Ueda's comments at the press conference (RTRS)
Desperate property developers resort to bizarre marketing tactics to move properties (WSJ)
China's residential foreclosures increase 43% in 2023 (RTRS)