2024.01.02 Weekly

2024 to have a bumpy start

8 min readJan 2, 2024

I’ve begun to engage on equity shorts and dollar longs now that the market has got its year-end rally and on views expressed over many weeks — Technicals across markets are now very convincing of trend exhaustion; Equity markets priced for huge earnings expansion which given the continual loss of pricing power would seem extremely difficult to justify; Rates largely ignoring the risks of stickier inflation while it’s also becoming increasingly apparent that Geopolitical tensions will remain constantly on the brink of further escalations.



  • Global stock markets record best year since 2019 — S&P 500 ends 2023 just shy of record as investors bet interest rates have peaked (FT). S&P 500 Bulls Drive Longest Weekly Win Since 2004 (BBG). AI Mania Driving Nasdaq 100’s Best Run Since 1999 (BBG). European Stocks Close Best Year Since 2021 on Rate Cut Hopes (BBG). US 10-Year Yield Is Ending 2023 Almost Exactly Where It Started — But it’s been a wild ride, with rates swinging from 3.25%-5% (BBG). AI and Ozempic Were Europe’s Winning 2023 Stock Market Themes While Luxury Stalled (BBG). RBC Says Rally Makes Stocks Vulnerable With US Recession Still Likely — ‘Sizable jump’ in 2024 earnings is now priced into equities (BBG). Japanese Stocks Post Best Yearly Gain Since Abenomics Jolt (BBG). Weak Yen Fuels Japan’s 2023 Equity Rally During Foreign Demand (BBG). Cheap China Stocks Lure Investors Who See 60% Slump as Rock Bottom — Almost a third of survey respondents say they will increase their China investments over the next 12 months (BBG).
  • Central banks poised for rate cuts in 2024, investors and economists predict — Falling headline inflation rates and slowing G7 economies put pressure on monetary policymakers (FT). Federal Reserve bets on smooth landing even as economists anticipate a bumpy ride — Analysts think US central bank officials’ outlook for the economy in 2024 has become too rosy (FT). ECB to start cutting interest rates in second quarter of 2024, economists predict (FT). Central banks rethink forecasting after failures on inflation — ECB, Fed and BOE overlooked potential for global price spikes after end of pandemic and Russian assault on Ukraine (FT).
  • Israel-Iran Tensions Rise as Israeli Forces Trade Fire With Militias in Syria, Lebanon (WSJ). Israel Reshuffles Forces, Prepares for Long-Term Conflict in Gaza — Resisting pressure from U.S. to wind down the war, Israel looks to sustain lower-intensity fighting (WSJ). U.S. Navy Destroys Boats Controlled by Iran-Backed Militias in Red Sea (WSJ). Iran Sends Warship to Red Sea After US Sinks Houthi Boats — Tehran’s move compounds volatile situation in the Red Sea — Maersk suspends Red Sea transit after US-Houthis battle (BBG). Maersk to Resume Red Sea Shipments as Multinational Force Deploys — Moller-Maersk paused shipping in waterway after attacks on its vessels (WSJ). US and UK step up pressure on Houthi rebels to deter Red Sea shipping attacks — London willing to take ‘direct action’ if necessary as Washington vows to protect its interests (FT). US LNG Cargoes to Asia Embark on Longer Routes to Avoid Red Sea (CNBC). Russian Strike on Ukraine Sent Warhead Through Polish Airspace, Warsaw Says — Amid one of the biggest Russian strikes on civilians, a warhead allegedly entered Polish airspace briefly (WSJ). Putin vows to ‘intensify’ attacks against Ukraine military targets (BBC).


  • Mortgage rates slide to lowest since May — Freddie Mac (RTS). November pending home sales were unchanged, despite a sharp drop in mortgage rates (CNBC). Home prices continued climb in October, surveys show (RTS). New US jobless claims rise again as labor market cools (RTS). US holiday retail sales grow 3.1%, down from prior year, Mastercard says (RTS).
  • Biden Struggles to Push Trade Deals With Allies as Election Approaches — The U.S. extended a tariff exemption on European steel and aluminum (WSJ).


  • Eurozone set for weak growth next year, say economists — FT survey respondents also warn of geopolitical risks from Russian victory in Ukraine and a Trump election victory in US (FT). Spain extends measures to help with living costs into 2024 (RTS).
  • UK Food Inflation Drops as Grocers Compete for Christmas Sales (BBG). UK economy will enter ‘grey gloom’ until polling day, economists say (FT). UK investors shy away from London-listed equities — Analysts say poor performance, cost of living pressures and higher mortgage rates have driven flight from local market (FT).


  • China aims to expand domestic demand, ensure speedy recovery — according to an interim report on China’s 14th five-year plan; “prioritise the restoration and expansion of consumption, stabilise bulk consumption and promote consumption of services,” accelerate reforms aimed at expanding the country’s middle-income bracket; “ co-ordinate the resolution of risks in real estate, local government debt, and small and medium-sized financial institutions” (RTS). Foreign investors unwind $33bn bet on China growth rebound — Almost 90% of money that flowed into Chinese stocks in 2023 has left amid concern about economy (FT). China factory activity growth accelerates in Dec — Caixin PMI — stronger gains in output and new orders, but business confidence for 2024 remained subdued (RTS). China’s industrial profits post double-digit gains but recovery uneven (RTS). Macau’s Casino Hub Revival Holds Up in China’s Slowdown (BBG).
  • Japan Nov factory output falls on weaker autos (RTS). Japan corporate service inflation steady in November (RTS).
  • Last Taiwan Polls Show US-Friendly DPP Set for Election Victory — Surveys show ruling-party candidate heading for narrow win, Voter sentiment could still change ahead of Jan. 13 election (BBG). South Korean Opposition Leader Stabbed in Neck, Hospitalized — Injuries do not appear to be life-threatening (BBG).
  • Australian Home-Price Growth Slows Further as Sydney Cools — Cost of living pressures are taking heat out of housing market — RBA rate cut in 2024 could help spur demand, CoreLogic says (BBG).


Global equities have finished the year strong but there is some signs of exhaustion nearing with 13 daily and 9 weekly DeMark countups.

There is also very strong technical confluence in US equities to offer a potential inflection point to the strong year-end rally:

SPX fib extension zone and trendline to compliment DeMark signals.

Same with NDX.

Mega-techs also suggesting short-term trend exhaustion via bearish RSI divergence at the top of a rising wedge structure.

Dow ATH’s made at the 161.8 extension.

Russell2k weekly reversal from overbought conditions.

Similarly the index of most-shorted stocks has also produced a strong reversal from this strong pivot area.

Demand for downside protection just beginning to creep in over the last few weeks of 2023.

Slight pick up in put premiums coincided with the topping out in the US Cyclicals-Defensive spread.

US equities is priced for perfection — setting a very high bar to sustain further gains going into the new year.


Commodities have been broadly consolidating lower in 2023 with RSI going into oversold territory in December, and it’s beginning to climb higher coming into the new year.

Geopolitical tensions will be the focus of commodity markets and I suspect we could see renewed price pressures for the goods economy that drove the fall in inflation last year.

Seeing upside risks to commodities and goods inflation from ongoing geopolitical tensions, I continue to like the theme of long Energy and short Precious metals.


We’ve seen a stunning bond rally in the last quarter of 2023 (Purple-Orange) sending the yield curve back to where it was at the start of 2023 (Green).

The rally is looking rather stretched for the near-term however with UST futures already showing exhaustive price action.

10year yield has found support ~3.85% and it would not surprise me to see that mark the range low for the start of 2024, particularly if geopolitical tensions and stronger energy prices puts upward pressure in inflation breakevens.


  • EUR and GBP start the year on the backfoot and so is the USD which is looking faeable given how far lower rates have moved. With Europe the most sensitive to a rebound in Energy prices, I’m once again focused on the short Europe theme.
  • USD has sold off a to key support area, and if it is to find a bounce, I think it would be here at current levels.
  • Higher beta’s are looking increasingly vulnerable to a pullback. Rally in Antipodeans looking devoid of momentum with the index charts beginning to hint a turn.
  • CHF has had a tremendous year outperforming all currencies on G8 index view while JPY was weakest. Looking for those trends to reverse in 2024 are thematically the most attractive on European recession risks and BOJ exit from ZIRP. Interestingly, the monthly JPY charts have printed a DeMark 9 countup which has done a decent job at marking out turns hitoriscally.

Wishing us all a fruitful trading year!