Despite the post-pandemic hangover intensifying for some parts of the economy, stocks are off session lows as the bull continues bucking the bears with nascent signs of an economic landing of some type other than hard supported by steady-state activity data, lower inflation expectations, and hopes for a dovish Fed turn keep investors hopes alive.

While not without some uneven price action, the new year has brought a broadly positive tone across the markets.

Recent market sponsors have been very broad-based. Furthermore, the tax loss selling that dominated December (mainly in US mega-cap tech) is behind us.

Once we chop through the cudgel of earnings reports, one can reasonably expect the buyback tailwind to resume in force come February. Then it becomes a question of what retail will do with their equity risk.

Still, the opportunity set in non-US markets continues to look more attractive. And while China remains the faster horse in the race, still after a run of resilient activity data, lower gas prices, easier financial conditions and earlier China reopening, investors should take note of the solid non-recessionary vibes emanating from Europe.


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However, all roads lead to Friday when we get a new PCE inflation report — a key indicator for Fed funds policy and still the essential factor for the risk market despite the recent pivot to growth.


Every day continues to be a good day to buy gold.

EM official institutions continue to back up the truck in what is expected to be a solid year of the rabbit for gold, helped by the turn in the dollar amid a less threatening interest-rate climate. Indeed, China’s first gold purchases in three years give market bulls a reason to be optimistic about the price outlook in 2023 after recent setbacks. After all, central banks are one of the most reliable indicators signalling the start of a bull market.


Euro is trading stronger as traders extrapolate an even more hawkish ECB after Australia’s surprising inflation shocker sent price pressure reverberation through the FX ecosystem, especially to those countries still in the thrall of high consumer price concerns. A strong currency makes imported goods less expensive; hence the hawkish ECB take. That will help some of the EU zone inflation concerns.


Although relatively unchanged, oil is still holding the $86 handle as people are still flying with jet-maker BA highlighting plans to increase production.

David Sheppard @ FT sums up the bull case from a trader’s perspective.

“Any shortfall of Russian product exports could coincide with higher demand in China, tightening markets even further and raising the prospect of price spikes that renew inflationary pressure,” said Henning Gloystein, an analyst at Eurasia Group.

And keeping it real !!

“One senior oil trader at a European commodities house said there was the prospect of a “shit show” developing in oil markets in the coming weeks, due to the logistical challenges involved, when China’s reopening of its economy is expected to boost demand.”

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT