Please see this week’s market views from eToro’s global analyst team. The full 5-pager includes latest market data, the house investment view, and ‘special’ focus on big tech.
Fourth quarter earnings been a mixed bag
Mid-way through Q4 earnings and results been mixed. A reminder that rate cuts and earnings improvement are catalysts for 2H. Results beaten lowered forecasts but with high profile misses from TSLA to INTC and EU banks. US revenues improving but earnings growth is less than Q3. Earlier days in Europe but a similar mixed bag. Lessons that Investor hopes high and easily disappointed. Big tech dominates and AI is strong. And depressed energy. Earnings one of two key drivers for markets this year. See Page 4
Big-tech earnings offsets interest rate caution
Fed meeting push-back and a huge jobs report dampened early US rate cut hopes, trimming a strong January. But was offset by a MSFT, META, AMZN led big-tech +50% Q4 results strength. Judge rejected Musk TSLA pay deal. AAPL Vision Pro launched. NYCB’s fall rekindled small bank and real estate concern. See our 2024 Outlook HERE and twitter @laidler_ben. See Page 2
Smaller, broader, and back-ended from here
Bull market pillars in place after a strong January. With coming interest rate cuts and reaccelerating earnings. The February focus is on tech earnings, <3% inflation, and political calendar. See Page 2
The term premium is driving bond yields
US 10-yr bond yield bedrock of finance and been volatile. As dormant term premium returns, on uncertainty from supply/demand to Fed, and may see stickier than hoped yields. See Page 2
Time in the market boosts your chances
Markets normally rise and chances of making money improve over time. A 60% chance of gains in a year rises to 90% over 15 years. See Page 2
‘Dry January’ a beverage stock opportunity
With profit margins potentially bigger as no/low alcohol businesses grow scale, with less tax to be paid but with similar price points, helping those from BUD to HEIA.NV and DGE.L. See Page 2
BTC relief rally stalls
Bitcoin (BTC) rally from <$40,000 as Grayscale ETF outflows eased, and other inflows rose. Fed rate cut pushback stalled more gains. Ethereum (ETH) to go live with Dencun upgrade testnet (Wed). FTX to repay customers. Celsius emerged from bankruptcy. Bukele won in El Salvador. See the latest Weekly Crypto Roundup. See Page 3
Oil slump leads commodities down
Broad commodity prices fell on only drip feed China stimulus and the stronger US dollar. Oil slumped after unchanged OPEC+ supply cuts until March, as container rates showed peaked Red sea concern. Cocoa rose again on West Africa harvest shortfalls. SHEL earnings beat and it raised dividend and buyback. See Page 3
The week ahead: Earnings, US growth, China
1) 100 S&P 500 earnings from MCD, PEP, DIS, LLY plus Europe’s AZN, RMS.PA, UBS. 2) US growth focus on rebounding services PMI and SLOOS lending (Mon). 3) China policy stimulus focus with deflation (Thu) and the coming ‘Year of Dragon’ holiday. 4) The Saudi World Defence Show and building IPO’ after recent AS offering. See Page 3
Our key views: Outlook for a different 2024
We see a stronger but very different 2024. Lower inflation and coming interest rate cuts as growth slows, and the earnings outlook idiosyncratically accelerates. Will drive an investor rotation from 2023 US and big tech winners to rate sensitive losers from Europe to real estate. See Page 5
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