Weekly Macro Note: Running on Holiday Fumes, BoJ Hike, Employment/Inflation Week

In this Weekly Macro Note, we discuss the growing 'fumes' thematic as it relates to global equity markets - in the US, Japan, Canada, & Spain, highlight key macro data for the week, and much more.

Don Johnson (@DonMiami3), Chief Economist

Good Sunday evening MacroEdge Readers & Community,

Yesterday evening we talked extensively about some of the latest developments in the data center & AI space, with rising opposition to data center development becoming a real issue to the ‘data center boom’ moat, which is narrowing going into a midterm year. It will be politically advantageous for candidates on both sides to push back against data center infrastructure - since it’s a relatively non-political issue that can unify independents, etc.

This evening we’re going to cover the busy week ahead - including the double jobs report day on Tuesday, the Bank of Japan hike - and how it’s already baked in from a rate standpoint - as yields continue to push higher there, troubles with the long end, as well as go over some technicals & our chartpack - looking at key ‘bubble gauges’ from around the globe.

Note the dip in public search interest in AI over the last several weeks:

Let’s dive in.

Updates on our New Datasets Arriving in January

As we expand our coverage across key macro areas - like inflation - we’ve got three new datasets rolling out in the new year.

• MacroEdge Inflation Tracker

• MacroEdge Data Center Tracker

• MacroEdge Hiring Tracker

All three will expand upon the capacity we’ve built up to monitor, track, and deliver the most critical economic data - especially in a time of great confusion around government data. With the chance of another government shutdown in January - and looming battle over ACA subsidy credits - our data will continue to serve as a vital picture into key economic realms.

In addition to our new datasets, we’re going to be expanding our MacroEdge contributor network in the new year, adding another 2-3 contributors, covering various sectors within the economy. Stay tuned for more there.

Don’t have access to MacroEdge Ozone? Get two week access below, and transform your financial & data insights:

Daily Macro Minute has Arrived

The first Daily Macro Minute will arrive tomorrow morning at 7am EST, and every market day from here on out (excluding holidays). This will be a fantastic way to digest the most important information from the previous day, and the coming day, quickly - and we’ll include 3 - 5 takeaway charts in shareable format.

Whether you want to include a chart in an executive presentation, or are looking to keep your own clients informed, this is going to be a great way to get what matters, quickly.

To join the Daily Macro Minute distribution list - which is separate from this one - you can subscribe to that email list below:

Weekly Macro Data Preview

• Monday: Empire State MFG, NAHB Housing Market Index

• Tuesday: Double Jobs Report (delayed October - limited data) & November data, Retail Sales

• Wednesday: Housing Starts & Building Permits (for several months)

• Thursday: CPI, Claims, Philly Fed MFG, Bank of Japan Policy Decision

• Friday: PCE Data

Lies About Inflation Continue

The CNBC & Fox Business guest lineups are continuing to push a narrative that Americans should accept a 3% YoY change in CPI in exchange for a continued melt-up in equities. The Administration has also bought into this narrative - though it is politically damaging given what we’re seeing in consumer and small-business surveys.

CPI for November - given the lack of higher input from oil (which lags) - isn’t likely to be a *shock* but we do know that October data was likely hotter - especially for producer prices, which were not released.

Trump’s term (in red) below, for the aggregate CPI basket, which understates true inflation.

In YoY terms - we’re currently at 3%.

Fed’s Long End Troubles & Bank Stress

The CPI data this week is key for the long-end (as well as things like the 2Y). The data this week is the deciding factor, in my opinion, of the January rate cut, which should be priced around 50/50, and will be 95% no cut if CPI remains elevated, and employment data is okay this week. A 4.5% U3 reading for November is to be expected.

The 10Y is at a very key level this week:

A push above would take us back to the 4.35 - 4.4% range.

The Dollar (DXY) Index has been weakening concurrently:

2YR Yield is setting up for a significant directional move

Discount Window usage hit its highest level since April 2024 - highlighting some minor bank stresses.

(likely taking place at regional & community banks)

Bank of Japan Hike Week

As we’ve discussed numerous times of the past few weeks, it’s about a 90% chance that the Bank of Japan hikes this week.

(Continued below - Japanese Rate Decision and Technicals / Chartpack)