Investors preparing for thin trading volume and truncated trading sessions during the holiday breaks over the next couple of weeks must consider whether recent volatility will recede and if the so-called Santa Claus rally will continue. In a note for clients published Friday, Robert Savage, chief executive officer of New York–based hedge fund firm CCTrack Solutions, summed up the situation:“You have to be quiet to hear the bells. Markets are appropriately winding down after a historic week of volatility — the fourth major V-shaped recovery of 2014. There is a constant jingle to markets as they head into the weekend and the holiday Christmas week.” According to Savage, recent stability in oil markets, despite some nerves, has soothed investor fears. He cites a bevy of positive data points that should bolster sentiment, including the Bank of Japan and Japanese Prime Minister Shinzo Abe reiterating their policy course, annual gross domestic product revisions in China that did not include a change in projections, rebounding German economic morale and a U.K. retail spending spree. Culminating in the best three-day rally in the S&P 500 since 2011 — up 3.4 percent for the week — the only potential Grinch that could steal this Christmas rally in Savage’s view is concerns over weakness in Europe’s peripheral economies.
Monday, December 22: The European Commission announces euro zone consumer confidence levels for December, with expectations for a marginal improvement in mood that will still leave the index in negative territory. Existing home sales in the U.S. are also scheduled for release on Monday with consensus forecasts for a seasonally adjusted slowdown in November.
Tuesday, December 23: Japanese markets will be closed Tuesday for the celebration for the celebration of the Emperor’s birthday. In Europe, revised third-quarter GDP data for France is expected by analysts to improve over initial readings, despite continued stress in the nation’s economy, particularly in the industrial sector. In the U.K., consensus forecasts call for a slight moderation in revised GDP for the period. Tuesday will be a very busy day for major economic indicators in the U.S. with revised GDP and November durable goods sales, personal consumption expenditure figures, new home sales and final December University of Michigan consumer sentiment data. Suburban Chicago–headquartered drugstore chain Walgreens will release fiscal first-quarter 2015 prior to the market open.
Wednesday, December 24: In the lead-up to a market holiday, initial jobless claims for the week will be released one day early, as will Energy Information Administration natural gas data in conjunction with oil inventory levels.
Thursday, December 25: While many of the world markets will be shut for the Christmas holiday, a slew of key data points are scheduled for release in Japan. Notes from the November Bank of Japan monetary policy meeting will be published as will corporate service price index levels, unemployment, industrial production and retail sales data and consumer price index data for November. Tokyo-specific December consumer price levels will be issued alongside reports for national levels from the prior months. Analyst forecasts call for a marginally bullish outcome for the data in aggregate, with a slight uptick in the jobless rate.
Friday, December 26: On a partial market holiday in much of Europe and Asia, the primary macroeconomic data release for the day will be November vehicle production levels in Japan, which will be watched for any further impact on currency fluctuations.
