The S&P moved back into ATH territory last week, while the Nasdaq is c.400 points below, with the Dow Jones leading the strength. Other markets were fairly muted, but China onshore and offshore markets saw the beginning of what is expected to be continued volatility.
In line with our views from last week, we continued to see USD strength in the G10 FX space, mostly driven by the inflation report later in the week.
The Week Ahead
The economic calendar is light for the coming days. UK CPI is the first notable event, with data releasing before London’s open. Estimates for YoY figures are 1.9% compared to 2.3% previously.
EU CPI releases on Thursday, which on the macro side of things is the day to follow this week. Shortly after the data print is the ECB interest rate decision. Markets expect a quarter-point reduction. Across the pond, U.S. retail sales are due.
China’s GDP is out on Friday, forecast at 4.6%.
On the earnings front, which will pick up from here over the next few weeks, more banks are in the spotlight as Citi, Bank of America and Morgan Stanley lead the way. ASML, Netflix and Amex are other earnings to note this week.
Without further ado, let’s get into our thoughts on global assets for the week ahead. First up, equities…
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Equities
Power stocks are set to be one of the artificial intelligence beneficiaries due to the high demand for energy needed. They also serve as a great way to diversify AI/tech exposures outside of the picks and shovels.
A handful of other sectors, such as EVs and domestic heating and cooling systems, also act as a tailwind for increasing power demand. A basket of power names is up 144.51% YTD. Two names included in this group are NRG and CEG.
In a recent deal, Microsoft is going to pay a hefty premium for power from the soon-to-be-restarted Three Mile Island nuclear plant (run by Constellation Energy), a recognition that carbon-free electricity is more valuable when it’s available around the clock.
We think there’s more to come in the power space.
TRADE IDEA - GET LONG POWER, NRG + CEG
NRG 90.00
CEG 266.50
While the semiconductor ETF SOXX may not be at highs, it has made a constructive move higher from the August sell-off and looks like it may break above 240 in the coming few days. But there is one semiconductor name that we particularly like for a long trade on the back of a positive move higher in the sector…