Shortened by the Thanksgiving Day holiday, the S&P 500 (SPX) mostly rose during a slow trading week, only dipping slightly on Friday, November 25, 2022 to end the week at 4,026.12. The index is 770.44 points (or 16.1%) below the index' all-time record high close on January 3, 2022.

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The newly updated alternative futures chart shows the index' trajectory as running to the high side of the range associated with investors focusing their attention on the current quarter of 2022-Q4.

We'll soon be entering a period where the echoes of past volatility will skew the dividend futures' model's raw projections. Looking past that period however, we see the projections for 2023-Q1 are rising to a similar level as today's stock prices. That opens up the possibility that when investors act to shift their forward-looking focus away from the current quarter, which they'll be forced to do in the next several weeks, stock prices may not change much from their current level.

Until, that is, investors have reason to look past 2023-Q1 to consider what comes after. As we've seen over the past several weeks, the top two drivers affecting how far into the future investors are looking is what the Fed will do with interest rates and when it will do them.

We'll cover what changes they're expecting and when they're expecting them at the end, but for now, here are the market moving headlines of the week to provide the context in which investors made decisions during the holiday-shortened, slow trading week that was.

Monday, 21 November 2022

• Signs and portents for the U.S. economy:
  • Oil rebounds from early plunge after Saudis deny OPEC+ output report
• Fed minions say smaller rate hikes ahead, Federal Funds Rate to peak around 5%
  • Fed's Mester says she supports smaller rate hike in December
  • Fed's Daly: Currently expect fed funds rate to top out around 5%
    • Fed's Daly: Lots of options on table for December FOMC rate hike
    • Real impact of Fed hikes likely bigger than what target rate implies, Daly says
• Bigger trouble developing in China:
  • Beijing reports 316 new local COVID cases, enforces inbound travel rules
• Bigger stimulus developing in China:
  • China tells banks to step up credit support for economy
  • China leaves lending benchmarks unchanged for 3rd straight month in Nov
  • China regulator plans to improve balance sheets of 'good quality' developers
  • China to provide 200 billion yuan in loans to commercial banks for housing completions
• JapanGov, BOJ minions looking to deliver more stimulus:
  • Japan finance minister urges swift adoption of more spending measures
  • BOJ deputy governor candidate calls for more flexible rate policy
• Positive growth signs, bigger stimulus developing in Eurozone:
  • German tax take rebounds in October -ministry report
  • German industry calls for more support to diversify beyond China
• ECB minions thinking about backing off from bigger rate hikes, say Eurozone inflation will top out in early 2023:
  • ECB's Lane makes case for smaller rate hikes ahead - MNI
    • ECB's Centeno sees possibility of rate hike smaller than 75 bps
  • ECB's Villeroy: inflation in France and Europe will peak in first half of 2023
• Wall Street slips as concerns rise of stricter China COVID curbs

Tuesday, 22 November 2022

• Signs and portents for the U.S. economy:
  • Oil rises 1% as OPEC+ focus on supply cuts outweighs recession concerns
• Fed minions say their focused on fighting inflation with rate hikes, wonder why Americans aren't saving more:
  • Fed's Mester: Lowering inflation remains Fed's main goal
  • Fed's George: Could take higher interest rates for longer to encourage saving
• Bigger trouble, stimulus developing in the Eurozone:
  • Europe to be hit hardest in global slowdown -OECD
    • Almost one in five Germans dipping into savings to get by - poll
  • Euro zone must keep investing during slowdown, help ECB fight inflation -Commission
    • German finance minister: must talk about fiscal stimulus for 2024 budget
• BOJ minions see inflation hit record high while they continue never-ending stimulus:
  • BOJ's price gauge hits record high in sign of broadening inflation
• ECB minions excited to deliver smaller rate hikes with Eurozone entering recession:
  • ECB set to raise deposit rate 50 bps as euro zone enters recession -economists: Reuters poll
  • ECB's Nagel opens door to smaller hikes but sees long way to go
  • ECB's Rehn says inflation, economy will decide pace of rate hikes
  • ECB's Holzmann says leaning towards a 0.75% rate hike as things stand
  • ECB still has long way ahead of it on rate hikes -Ifo president
• S&P closes at more than two-month high on retail, energy lift

Wednesday, 23 November 2022

• Signs and portents for the U.S. economy:
  • Oil slides over 3% on Russian price cap talks, U.S. gasoline build
  • U.S. weekly jobless claims at 3-month high; equipment spending resilient
  • U.S. new home sales unexpectedly rise in October
  • U.S. business activity weakens further in November - S&P Global survey
  • U.S. core capital goods orders, shipments rebound strongly in October
• Fed minions getting set to shrink size of rate hikes:
  • 'Substantial majority' of Fed officials see slowdown in rate hikes 'soon'
    • At November Fed meeting, officials flagged market resilience amid volatile conditions
• Bigger stimulus developing in China:
  • China will use timely RRR cuts to keep liquidity ample -state media cites cabinet
• ECB minions thinking about smaller rate hikes as they expect recession to take hold this quarter:
  • Centeno wants ECB to send clear message of gentler rate hikes
  • Euro zone growth will likely be negative in Q4, inflation high, ECB's De Guindos Says
    • French economy contracted in November - flash PMI
    • German downturn eases in Nov, bringing hope for milder recession -flash PMI
• Wall Street rises as Fed signals slowdown in rate hikes

Friday, 25 November 2022

• Signs and portents for the U.S. economy:
  • Oil prices fall 2% as Chinese demand worries linger
• Bigger trouble developing in Japan:
  • Japan Nov factory activity shrinks at quickest pace in 2 years
  • Consumer inflation in Japan's capital rises at fastest pace in 40 years
• BOJ minions looking for reasons to continue never-ending stimulus:
  • Global risks to keep BOJ from adjusting yield cap next year - ex-central bank executive
• Bigger stimulus developing in China:
  • China banks pledge $162 billion in credit to developers, shares rally
  • Bank of China agrees to provide credit lines totaling more than 600 billion yuan to 10 property developers
  • China frees up $70 billion for banks to underpin slowing economy
• ECB minions point at inflation to justify rate hikes, claim its peaking:
  • ECB accounts show inflation fears justifying more rate hikes
  • Euro area inflation likely near its peak, ECB's De Guindos says
  • ECB's Schnabel pushes back on smaller rate hikes
  • ECB's Lane plays down wage, core inflation fears
• Nasdaq ends down as investors eye Black Friday sales, China infections

The CME Group's FedWatch Tool continues to project a half point rate hikes at the Fed's upcoming December (2022-Q4) and February 2023 (2023-Q1) meetings. Followed by a quarter point rate hike in March (2023-Q1), the Federal Funds Rate is still projected to peak at a target range of 5.00-5.25%. Looking further forward, the FedWatch tool now anticipates a quarter point rate cut in July (2023-Q3) as the Fed is forced to go into reverse by developing recessionary conditions in the U.S. economy.

The Atlanta Fed's GDPNow tool's projection for real GDP growth in 2022-Q4 rose slightly to +4.3% from last week's +4.2% estimate. There continues to be a large gap between its current projection and the so-called "Blue Chip consensus" that predicts near zero growth in 2022-Q4.

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