Monday, December 19, 2022
Markets are currently on a three-day — and two-week — losing streak, but early indicators in pre-market trading had been anticipating a mild rebound. But now, after pulling back greater than -3% over the past five trading days, the Dow is -25 points at this hour, the S&P 500 essentially flat and the Nasdaq is +4 points.
We’ll see a fair representation of housing data this week, with the National Association of Homebuilders (NAHB) Index coming out after the opening bell today, Housing Starts and Building Permits for November tomorrow morning, and Existing and New Home Sales Wednesday and Friday. Also Durable Goods for November and University of Michigan consumer sentiment for December are out later this week.
The big report comes out on Friday: the comprehensive Personal Consumption Expenditures (PCE) for November, which are expected to come down a bit from +6.0% year-over-year headline, +5.0% year-over-year core; the consensus +4.7% on core would be the lowest we’ve seen since the late August revision on July’s core PCE numbers. That, in our current environment, counts as progress.
Because we’re winding down the final trading weeks of the year, in between earnings seasons and with most of the economic prints for the month already posted, market participants will be excused for looking ahead into next year — perhaps even to the midway point and beyond. From this vista, it looks like things could go one of two ways: either inflation will have been solved by then (with or without a mild recession in the first half of 2023) and we’ll be off to the races in the second half, or we’ll be slogging through a deeper recession than currently forecast, keeping equity levels down for longer.
If history is any judge, remember this: the third year of a U.S. president’s first term tend to be the best-performing years in the stock market. 2023 is indeed the third year of the Biden administration, and this tendency may lend some bias to the former scenario rather than the latter — a short, mild recession (or no recession at all) in 1H23 could pave the way for the best trading year we’ve seen since 2021’s +27%. Or perhaps we’ll more resemble 2020’s +16%. In any case, we’ll be on alert from 2022’s -20% we’re on pace for, unless a miracle Santa Claus Rally comes late.
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Image: Bigstock
Pre-Markets Mixed, Looking to Break 2-Week Losing Streak
Monday, December 19, 2022
Markets are currently on a three-day — and two-week — losing streak, but early indicators in pre-market trading had been anticipating a mild rebound. But now, after pulling back greater than -3% over the past five trading days, the Dow is -25 points at this hour, the S&P 500 essentially flat and the Nasdaq is +4 points.
We’ll see a fair representation of housing data this week, with the National Association of Homebuilders (NAHB) Index coming out after the opening bell today, Housing Starts and Building Permits for November tomorrow morning, and Existing and New Home Sales Wednesday and Friday. Also Durable Goods for November and University of Michigan consumer sentiment for December are out later this week.
The big report comes out on Friday: the comprehensive Personal Consumption Expenditures (PCE) for November, which are expected to come down a bit from +6.0% year-over-year headline, +5.0% year-over-year core; the consensus +4.7% on core would be the lowest we’ve seen since the late August revision on July’s core PCE numbers. That, in our current environment, counts as progress.
Because we’re winding down the final trading weeks of the year, in between earnings seasons and with most of the economic prints for the month already posted, market participants will be excused for looking ahead into next year — perhaps even to the midway point and beyond. From this vista, it looks like things could go one of two ways: either inflation will have been solved by then (with or without a mild recession in the first half of 2023) and we’ll be off to the races in the second half, or we’ll be slogging through a deeper recession than currently forecast, keeping equity levels down for longer.
If history is any judge, remember this: the third year of a U.S. president’s first term tend to be the best-performing years in the stock market. 2023 is indeed the third year of the Biden administration, and this tendency may lend some bias to the former scenario rather than the latter — a short, mild recession (or no recession at all) in 1H23 could pave the way for the best trading year we’ve seen since 2021’s +27%. Or perhaps we’ll more resemble 2020’s +16%. In any case, we’ll be on alert from 2022’s -20% we’re on pace for, unless a miracle Santa Claus Rally comes late.
Questions or comments about this article and/or its author? Click here>>