In this solo market briefing recorded on the night of January 23, 2022, the presenter provides a comprehensive week‑ahead outlook for global equities, fixed income, and crypto markets. He begins by recapping the previous week’s sharp sell‑off, highlighting that the Nasdaq suffered its worst week since October 2020 and that real yields have risen sharply as markets price in tighter Federal Reserve policy. He then analyses the Nasdaq’s technical chart, identifying key support levels around 14,369.5 and potential downside targets near the June 2021 lows, while noting a modest bounce in early futures trading. The host reviews historical data on Fed rate‑hike cycles, noting that stocks have delivered positive returns in 11 of the 12 cycles since the 1950s, and cites mid‑term election year pull‑back statistics (average 17% intra‑year decline) to contextualise current volatility. He outlines the macro‑economic calendar for the week, covering flash PMI releases for the US, UK and Eurozone, German IFO, US consumer confidence, the FOMC meeting, Bank of Canada rate decision, US Q4 GDP, weekly jobless claims, and European GDP figures, emphasizing their relevance for market direction. Earnings coverage is previewed, with a focus on mega‑cap names such as Microsoft, Apple, Tesla, IBM, J&J, GE, Verizon, Amex, 3M, Boeing, AT&T, Intel, and Chevron, noting that this week is the second busiest in the US earnings season. The briefing then turns to Fed policy expectations: no rate hike is anticipated at the January meeting, but the Fed may signal the path for future hikes (potentially March, June, September, December) and balance‑sheet runoff timing (April‑June or July‑September). He references Bloomberg and Goldman Sachs surveys on runoff expectations and the possibility of more aggressive tightening if inflation remains sticky. Geopolitical risk is briefly addressed, with a note on US‑Russia tensions and the limited market impact of recent diplomatic statements. Finally, the presenter provides a crypto update: Solana suffered network instability, Bitcoin’s daily chart shows a gap down and resistance near the July 2022 low, with potential moves toward $30k or a $40k bounce, and regulatory pressures from Russia, the UK, Singapore, Spain, and an upcoming US digital‑asset strategy are highlighted. He concludes by promising follow‑up videos on the Fed decision and invites viewer interaction.
Chapters
Okay, hello and welcome to the briefing. Looking at the week ahead then, it's Sunday night, 23rd of January, just gone through the electronic open, 11 PM here in London. So yeah, in terms of this week, plenty of things to get your teeth into, which we're going to briefly recap in a moment. Main highlights being the FOMC meeting on Wednesday. You've got PMI and GDP data coming out from much of the major Western developed world economies. We've also got the latest corporate earnings. The big tech names to look out for include the likes of Microsoft, Apple, and we also have Tesla as well this week. And so going to run you through a few top-level ideas about what to expect from those events, and then we'll look at the markets and how they've opened in electronic trade to get things underway for the week. But starting off with really how last week finished, just to set the scene. And of course, global stocks suffered their worst week since October of 2020, as you can see here. And of course, it's the likes of the NASDAQ which have really felt the brunt. Of course, here, this pink line, the divergence increasing, of course, away from that of the S&P 500, albeit all the indices have been moving lower, but more prevalent, of course, in the likes of the growth and tech names, those more sensitive to the higher yield environment. And of course That is what we've been seeing. Real yields have spiked higher as people start and have been positioning themselves accordingly for the Fed, which we're going to hear the announcement from, from the January meeting this Wednesday. What this means then, looking forward, is first off, how markets open this evening. And yes, we did gap a little lower, but we've already kind of moved higher straight away in electronic trade to get things underway. And I'm going to focus on the NASDAQ given that that's been the main index of focus, looking at the futures market here and just looking on a daily chart really to give the, the best context of what we're looking at at the moment. And you can see here quite a critical level that we're looking at in the Nasdaq. Just to briefly show you here the context of this trend line that we've had going back to November of 2020. And yeah, the biggest sell-off that we've had, um, as per what I've just mentioned from last week, was really down in this October period when we're seeing these, these sell-offs here. So that was really then the commencement, thrashing out that low going into the turn of November 2020, which we tested multiple times. We obviously broke through much earlier, about a week or so ago. Actually, it was this time last week when we broke that, and that added to the weight, plus the 200 DMA break and through the 15,000 psychological level, is really what weighed at the back end of last week on some of these tech stocks. And you You can see here this critical line of support where we're at at the moment. We found a bit of a bounce and we're up about 70 points here at the initial futures open. But 14,369.5 was that low point that we printed back at the beginning of October. And that's a key level here because any further break of that— next area I'd probably be looking at is the peak of the price action going through April of '21 and also a support point through the back end of June before we eventually moved up through all-time highs. Anything beyond that for the rest of the week and kind of scaling that move down to those June lows, which was also that, um, Jan or mid-Febrile in 2021, and then just using the various other key levels here on the downside. So yeah, obviously the Fed is going to be key to this. What's obviously quite interesting is we've had a sizable correction here in markets, and going off the peak that we printed in the NASDAQ from the 22nd November to where we've printed alone opening of trade this evening, we're down about 14.25%. And so the question mark really is of how much of this is now already priced in for a March hike and is comfortable of the nature of hearing some more clarity over what they're going to do with the balance sheet in future, given the idea then that it probably won't be completely shrinking the balance sheet immediately with the first March hike. And so therefore, how much of this 14% pullback is reflective now of the ability for the Fed to really give clarity of direction on their tightening going forward, much more so than their projections which came out in December? And thus, actually, is this the near-term kind of bottom for the time being? Uh, time, time of course will, will tell. But sticking with the stocks themes, one thing I did mention in my notes, which you can check out— I'm pointing to here, which is my Twitter handle— and there's a really good article here which covers a couple of interesting things. I just wanted to run through them from a statistical point of view. And one was that essentially we've had a really rough start to the year of 2020 as the markets have kind of readjusted themselves for the idea of a faster tightening pace coming coming from the US central bank. But in fact, stocks have risen at an average annualized rate of 9% during the 12 Fed rate hike cycles since the, the 1950s, delivered positive returns in 11 of those instances. This was quoting a fund manager in a study that was issued in a Bloomberg article over the weekend. And if you want to have a look at some of these tables in more detail, I did, I did share them with my notes on my Twitter account. But you can see here is that the idea basically is that, can you have high yields, a tightening of policy, and positive stock performance? Well, the history would say yes, and the main point of that being that the growing economy tends to support corporate profit growth and thus then the stock market. Now you could argue that, look, we're in a bit of an unprecedented point here because we've obviously come such a a long way so quickly, given the dual mechanism of, you know, just humongous fiscal injections that we've seen to offset and counteract the downturn in the pandemic, coupled with these incredibly accommodative policies from the Fed. But, you know, let's see. And, and it's really going to be quite important. Although we've had some short-term pain, one thing to also reiterate is that on average, strategists on the street major US banks do project the S&P 500 will finish this year at around 4982, so just short the 5000 level. And of course, we're trading at the moment, the futures are below 4400. So is this the pullback of which, you know, we had some very shallow pullbacks last year, which we'll get to in a moment? But looking at where we closed on Friday to then the average estimate of what strategists are looking at for the end of this year you're talking about around a 13% move back to the upside from where we're at this present point in time. Although the S&P 500 performance is often strong during a rate hike cycle, the unusually mild pullbacks that we did experience, of course, in 2021 would suggest, looking at when this has happened before in the previous 50 to 70 years, that actually the ensuing or the following year then sees a heightened degree of volatility. So hence pullbacks like what we've had, 15% pretty much straight out the gate in the first month of this year, perhaps aren't going to be uncommon going forward, albeit that the end destination might possibly be higher. I would say, although there's obviously a lot to play for, we've got 11 months to go and obviously there's multiple rate hikes to execute, but the readjustment to the first one is always going to be the most painful in my opinion, because then the stall is set out and the market know the relative number of hikes and the approximate timeline of shrinking of the balance sheet. Details of that are still to come, which means that short term there could be more volatility. But a lot of that would spell that, you know, this perhaps is the worst of it that we're going through at the moment, the readjustment phase. Um, a couple of things as well, not forgetting we do— of course it is a US midterm year at the moment And so if you actually look at the statistics and we start looking at big midterm swings, i.e., looking at the S&P 500's performance pullbacks in a US midterm election year. So since the 1950s, the S&P 500 has averaged an intra-year pullback of around 17% in midterm years. This is according to LPL Financial. And if you haven't checked those guys out, you definitely should. They put out a really good newsletter, actually. But the final 3 months of a midterm year— remember, the midterm's in November— so the final 3 months and then the first 2 quarters of the following year, so once the result of that is known, as the pre-election year, have been some of the strongest quarters for stocks over the 4-year US presidential cycle. And so, yeah, let's see how this plays out. But I think it's just some good statistical background to towards how we tend to perform in these previous periods of conditions that might have some degree of similarity. So just something to bear in mind. A quick look at the overall calendar, and then I'm going to delve into 3 or 4 couple of key points rather than go to everything in great lengths. First off, Monday, obviously Sunday night coming up to midnight here in London, I'm filming this, but come tomorrow, Monday morning session, we're going to get the flash PMI figures. So service manufacturing data for the month of January. So across the UK, Europe, and the US. Then if we go into Tuesday, we get German IFO and US consumer confidence figures. Wednesday, of course, the FOMC from the Fed. We also get the Bank of Canada rate decision where analysts at ING are expecting the BoC to raise rates 25 basis points. This meeting, of course, same day as the Fed. They suggest that activity has been strong, the economy is at record employment, inflation is at a 30-year high. COVID containment measures are also set to be eased at the end of this month, and this should signal essentially the green light to start hiking rates in, in Canada at this point. Then Thursday you get US GDP. This is the advanced Q4 reading expected to show expansion of around 5.6%. in Q4, much higher than the prior quarter of 2.3% we had in Q3, fueled mainly by a pickup in inventories and a modest gain in consumer spending is the rationale there. And we get your weekly jobless claims as well as DEC durable goods on the same day. And then Friday we get things like the personal income consumption numbers, employment cost index coming out the US. This is the final University of Michigan number, so not too much interest there. But we do then get, um, the GDP numbers as well coming out of Europe, where if I just flip over to here, this is looking at the PMI numbers for the eurozone. So as I said, we're going to get these Monday. GDP data comes towards the back end of the week, but GDP readings on Friday from Germany, France, Spain will likely show how badly Omicron variant has hit that particular part of the the Western economies over the period of the fourth quarter. Germany is certain to have contracted, is the general expectation, setting Europe's biggest economy up for a recession, whereas the other two, so France and Spain, are expected to still be growing, albeit at a slower pace than the previous 3 months. Now, when it comes to the PMIs, economic confidence and PMI data will provide us with some early indications then of the euro area. Has it picked up this month, or does it remain somewhat subdued? Obviously, in France, things like Omicron variant case rates are still particularly high, but perhaps not so much so in some of the other areas. One interesting comment we had out of Austria's Robert Holzmann. The reason why he's interesting is he is an ECB member, and he said that in the local press in Austria that a return to conventional monetary policy currently is not possible in Europe. And he's one of the most outlying hawkish members of the ECB still sounding very dovish, as you would pretty much expect. So policy divergence, a lot of that's already been factored in, of course, a few months back when we saw a big division and, and general weight in the EURUSD pair. So not expecting that to play out too much, but just goes to re-emphasize the state of play between the difference of policy timings on those two central banks at this moment in time. Um, and then before I pivot back to the things like the FOMC earnings, um, this is the earnings kind of sheet, if you like, for the week. There's about 101 companies reporting, but much of the focus of course is going to come on the mega-cap type names. So to name a few, you've got IBM after market on Monday, pre-market Tuesday, J&J, GE, Verizon, Amex, 3M. But after market, obviously attention on Microsoft And then pre-market on Wednesday, Boeing, AT&T. Aftermarket, Tesla, always an interesting one of course, and then Intel. And on Thursday you get Apple coming aftermarket. McDonald's also due on that day pre-market. And then on Friday, Chevron, Caterpillar, some of the headline names to look out for. In terms of earnings season, where are we at the moment? So a couple of things to have a look at. So we're here now going into the 101. So this is one of the second most busiest week that we get in US earnings season. Next week, in fact, is the busiest with 110 companies reporting. But in terms of the med— the big ones, of course, over the coming days, as you can see here, and as I've just mentioned, the likes of Google, Facebook, Amazon will come next week, just as a reference point. So yeah, moving back to a couple of things to talk about. Obviously, Jerome Powell Here he is. The Fed decision definitely is the highlight of the week. The Fed not expected to raise rates in this meeting, but they could set the, the scene essentially for how it will act when it finishes up its bond buying program, likely now in March. Of course, many economists expect the Fed to start raising its federal funds rate target from near zero with a quarter percentage point hike in March, and then subsequently carrying out then every calendar quarter rate hike thereafter. So So June, SEP and DEC. The Fed has also said it could move to shrink its balance sheet this year, and it would be another type of policy tightening is how to basically take that as the central bank steps back from replacing maturing securities on its balance sheet with market purchases. To give you a bit of an idea on that side of things, 29% of Bloomberg's economists surveyed expect the runoff to occur between April and June, a larger proportion, 40%, from July to September. The median estimate looking for a monthly reduction between $40 to $60 billion, bringing the balance sheet down to around $8.5 trillion by the end of the year from around, uh, just short of $9 trillion, $8.8 or so, that it is currently at this present point in time. So you can see, even though they're shrinking the balance sheet, the number of the balance sheet is still absolutely huge at this point. So a couple of other things on the back of that was a latest Economist note coming out of the the team led by Jan Hatzius, the chief economist at Goldman Sachs. I don't think it's new information the fact that Goldman sits in a camp that sees 4 rate hikes for this year, again commencing in March, June, September, December. They announced as far as a date, they fit in that 40% camp from that Bloomberg Economist survey that they think they'll start the Fed, the reduction of its balance sheet in July. But they said some interesting comments. They said that inflation pressures mean that risks are tilted somewhat to the upside for their baseline, and there is a chance officials will act at every meeting until the inflation picture changes. Let me repeat that. They said there is a chance that the Fed officials could act at every meeting until the inflation picture changes. That's 8 meetings. So again, they're just saying that as a, as a non-baseline hypothetical, but nonetheless. And this raises the possibility, of course, of additional hikes and earlier balance sheet announcement in May, and of more than 4 hikes this year, as we've just— I just mentioned. So yeah, the Fed really is the big one that's going to be coming out on Wednesday. What I'll do is I'll put out another video as a preview on the morning of Wednesday before that comes out, and then I'll do a review the following morning on Thursday. So I've got you covered Uh, don't worry. Um, just having a look then at what else is to talk about, but I think I've pretty much covered most things. Two other headlines, just briefly. One on US-Russia relations, just given the current status quo with the tensions in Ukraine, the uptick we've had in geopolitics of late. And US Secretary of State Antony Blinken rejected pressure to immediately escalate sanctions on Russia. For its military buildup around Ukraine, saying it would limit Western options in the future. So at the moment, diplomacy rules. Fairly passive, somewhat diplomatic means being pursued at this point in time. You would kind of expect that to be the order of play as far as they can take it for the time being. So at the moment, I don't really see too much of an impact for markets. As it is right now. Certainly though, any movement on that side, energy prices, gas and so forth, would be the things to look out for this week. And then I just wanted to give a quick mention for cryptocurrencies. Solana, one of the largest blockchain networks, was hit by instability issues over the weekend and they tanked pretty much. And then just having a look at Bitcoin, yeah, after what's been a pretty horrendous time for, for the crypto space more broadly. But if we look at the Bitcoin futures chart here on a daily, you can see we actually gapped down. We were down in excess of $2,000 at the open, just tracking some of the weekend movement that we'd seen in Bitcoin. But quite interesting here, if I just kind of zoom that in a little bit, you can see we opened below what is here, these previous lows that we printed back on 27th of July. And at the close of last week, And you can see we gapped down, rallied back up in the first half an hour of trade, but we're finding a little bit of resistance at that same level. Going to be a really interesting week to see how this performs because obviously now we're below there. Technically does open prospects of perhaps deeper moves lower. If we did, um, the next real clear definable stop is 30, but I think it's kind of make or break here to a certain extent. Do we get a pretty wicked pullback here back up towards the 40K mark, or do we go 30? I'd say the way that this has been behaving, I'd be surprised if we were to consolidate in a narrow 2 to 3K range. I think we're going 10,000 in either direction. We might end up back around here, but before then, I think we're going to see one or the other. And perhaps the, the Fed meeting acts as a bit of catalyst for that, on how much do they deliver when they comment on their hawkish intentions for the future midweek. So perhaps second half of the week could be particularly telling in that regard. Other things as well, of course, that's been weighing aside from just tracking some of the rotation out of growth and things like that, which is also having a mimicking kind of movement in sympathy in the crypto space, is regulators from Russia, UK, Singapore, Spain. They've all announced intentions that could undermine crypto companies looking to grow in those particular regions. The Biden administration is also said to be preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies are assessing risks and opportunities that they pose, according to people familiar with the matter, as published in an article on Bloomberg, um, at the weekend. This all, of course, comes after that aggressive move we've had in yields, which has been predominant rationale for a lot weakness. But look, that is it. I'll leave it there. Any questions at all, feel free to drop me a comment. As I said, intermittent with any big breaking news stories, anything interesting or hot topics that come up during the week, I'll put out a video. But I'll definitely have something for the Fed on the Wednesday preview and the review on the Thursday. And then don't forget to check out the podcast as well. Just search Amplify Me Market Maker for your weekly rap as well. All right, have a good week, take care, and I'll see you for the next session. Take care.
