Santa is coming to Wall Street

Remember I said we would get a scary Halloween market ? and then Christmas gifts? ??

Santa might be early this year, so let's see if this will truly become a merry Christmas ??

This is an update to our Q3 market insight in global macro and Nordic Commercial Real Estate

This is the most comprehensive insight I've EVER released on >US macro?? >EUCRE?? >Nordic Commercial Real Estate,

which you can read and download for free here: https://www.dhirubhai.net/posts/aleksanderborg_q3-global-macro-nordic-cre-report-activity-7123216692012347392-V4gx?utm_source=share&utm_medium=member_desktop

So let's have a look and see why we might have a Black Week in markets heading towards Christmas gifts. Halloween is over after all.

1. The volatility (fear) index is falling drastically

as FED announce rate pause today (2nd of November)

hence stability, which is all markets need to prosper

Economists are notoriously bad at predicting the direction of the rate

Courtesy of Andre Rzym and Steven Desmyter

So why don't we take a statistical look at how the rate actually changes?

Courtesy of Alex Warfel, CFA

As we can see rate cuts tend to happen after 5 months from the peak - at the earliest!

If we expect todays rate pause to be the peak (or around the last pause),

We could already see rate cuts in march next year.

Or as James Bianco mentioned:

At the same time, the US is running a massive fiscal deficit to fund proxy-wars, which help markets along although it costs us through inflation and therefore falling purchasing power:

We wrote more on the global conflict and war-time markets here:

https://lnkd.in/dxw7Wyh2

Which is part of a greater financial repression framework to navigate the world and its economics through chaos and conflict, read more about that here:

https://lnkd.in/d8wmgcWB

So this, among worrisome consumer data is why there is an overweight of bears out there who short the market or otherwise expect it to go further down:

Perhaps the short squeeze Ruggero De Rossi wrote about is coming.

https://www.dhirubhai.net/pulse/big-short-squeeze-ruggero-de-rossi/?trackingId=tPdFQQy1SaOxl9dPOfpa%2FA%3

But what about consumers are they really doing that bad?

Debt is rising and so are delinquencies, which has been in focus for a while.

Except, in a historical context this is really a nothing burger:

So after a 35% fall in the market in 2020 and subsequently 27% in 2022, who is left to sell? Why would anyone sell here?

And if the majority wants to sell because they are expecting a recession (as they and everyone else have been for 2 years now) why didn't they already?

This is why I don't think we will see the catastrophic fall in markets - because everyone already expect it.

So contrary to popular belief, we can see here that the S&P500 showed significant strength this week:

Former trendline (higher lows) did not sustain increasing selling pressure

and markets have declined during this fall - statistically highly probable

When we look at the monthly chart, this Halloween decline is a natural reaction to an exceptional 2023

Support at 4100 held up very well with a powerful buying pressure (higher low)

if this continues we might look at a short squeeze pushing prices even higher

hopefully above 4700 (higher high) around Christmas

so let's see if this becomes a bull trend (higher high + higher low)

otherwise we are looking at some downside:

Below 4000 invalidates the 2023 bull trend entirely

Although we are not out of the woods yet, we are seeing a light at the end of the tunnel:

Oil price is lowering which is beneficial for consumers.

Even the DAX showed serious buying pressure at support level as well

Short term the trend is still heading down

while on monthly timeframe - this is the dip

Even the Norwegian index is doing quite well, mainly due to oil and weapon sales and sticky inflation, but still quite impressive :)

And US housing sector is going a bit wild here - as mentioned markets only need stability and with rate pause, that's what they get.

Remember markets rally before rate cuts, as they price in future expectations.

So the expectation that rates have peaked is sufficient for markets to flourish.

And as we have mentioned in our mega insight (over 50 slides) read and download here:

https://www.dhirubhai.net/posts/aleksanderborg_q3-global-macro-nordic-cre-report-activity-7123216692012347392-V4gx?utm_source=share&utm_medium=member_desktop

housing has fallen drastically, but actually this is more of a return to the mean

than a catastrophic downfall, see for yourself:

Courtesy of Chuck Cowan

So we see that CRE is largely returning to mean reversion (just below or at normal trend)

And since the bottleneck is liquidity as rates keep a tight grip on markets, why not have a look at that?

Courtesy of CrossBorder Capital and Gustavo Philippsen Fuhr

It's too early to get our hopes up, data is still contradictory

But we mentioned before that it is reasonable to expect short term volatility and long term bull market:

Scary fall (Halloween)

and a merry Christmas

So why shouldn't we get a bull trend with Christmas presents for everyone?

and don't hesitate or regret to follow or connect for more sensible

and comprehensible

On Nordic Commercial Real Estate and Macroeconomics

Book 30min FREE consulting right here ?? https://lnkd.in/dAbYac78

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