Weekly Market Update: Markets stall as vaccinations roll out slower than expected
2021-01-15T16:03:48.6
Momentum in equity markets began to wane this week but not before indices eked out new highs led by the small cap Russell 2000. The House voted to impeach outgoing President Trump, as expected, setting the stage for a trial in the Senate during the first days the new administration. Hopes for a substantive fiscal stimulus package after Inauguration Day kept upward pressure on US Treasury yields early on and buoyed asset valuations. Rates stabilized after US 10-year and 30-year Treasury sales saw strong demand and US inflation readings remained benign. Also Fed Chairman Powell emphasized the time to raise rates isn’t going to be anytime soon while a chorus of his colleagues opined the current pace of bond buying will be appropriate for quite some time. Initial jobless claims jumped back towards the 1M mark before Powell noted he still sees plenty of slack in the labor market. Surging COVID infections and growing disappointment in the vaccine rollout dented sentiment late in the week and weighed on equities heading into the long holiday weekend. The US dollar continued to rebound helped by softness in the Euro as Italy once again fell into a political crisis. For the week, the S&P slipped 1.4%, the DJIA lost 0.9%, and the Nasdaq fell 1.5%.
In corporate news this week, banks kicked off earnings season with mixed results. JPMorgan posted solid numbers, beating on earnings thanks to upside surprises on credit and trading revenue. Wells Fargo posted a rise in profit, but revenue came in below estimates, sending shares lower despite a new $500M share buyback program. Citi surpassed earnings expectations and missed on revenue, though announced it would join JPM in releasing more reserves than expected that it had set aside for COVID-related defaults. KB Homes blew out EPS estimates and guided ‘meaningfully higher’ revenue and earnings for FY21. Reports early in the week uncovered potential two-month delays in J&J’s vaccine production schedule, though shares gained later in the week as news trickled out that its one-shot COVID vaccine is safe and generates promising immune response in early trials. Big box retailer Target released strong holiday sales numbers, with digital sales more than doubling in November and December. Intel CEO Bob Swan announced he would step down amid activist pressure with VMWare exec Pat Gelsinger taking the reins. Alimentation Couche-Tard submitted a €20/share takeover bid for retailer Carrefour, though the French government pushed back to slow down any potential deal. Visa and fintech firm Plaid agreed to mutual termination of their merger agreement amid regulatory scrutiny.
MON 1/11
MRNA Reportedly in talks to sell more vaccine doses to the EU at a higher price – press
(US) House Democrats formally introduce Articles of Impeachment against Pres Trump for "incitement of insurrection"
TUES 1/12
(UK) BOE Gov Bailey: Have little evidence of the scale of economic impact from latest lockdown measures; too soon to reach any conclusions about the need for future stimulus
KBH Reports Q4 $1.31 v $0.87e, Rev $1.19B v $1.11Be
(US) Sen Maj Leader McConnell reportedly believes Trump committed impeachable offenses and that the attack on Capitol gives GOP a chance to purge the president - NY Times
(US) No. 3 House Republican Cheney (WY) will vote to impeach Pres Trump; House Republican Kinzinger (IL) to back impeachment - press
(KR) South Korea Dec Unemployment Rate: 4.6% v 4.1%e (10-year high)
WEDS 1/13
JNJ Vaccine production is said to be 2 months behind original schedule; to release COVID-19 vaccine trial results as soon as in 2 weeks - NYT
TGT Reports Nov/Dec Total SSS +17.2%; SS Digital sales +102%
*(US) DEC CPI M/M: 0.4% V 0.4%E; CPI (EX-FOOD/ENERGY) M/M: 0.1% V 0.1%E, CPI NSA: 260.474 V 260.401E
INTC Bob Swan to step down as CEO amid activist pressure; VMWare exec Pat Gelsinger to take over - CNBC's Faber
CA.FR Alimentation Couche-Tard confirms submission of a non-binding €20/shr offer letter
*(US) DOE CRUDE: -3.2M V -2.0ME; GASOLINE: +4.4M V +2.0ME; DISTILLATE: +4.8M V +2.0ME
(IT) Italy's Renzi: Confirms his Party's ministers are resigning, takes courage to pull out of Government now
*(US) TREASURY $24B 30-YEAR BOND REOPENING DRAWS 1.825%; BID TO COVER 2.47 V 2.48 PRIOR AND 2.38 OVER LAST 8 REOPENINGS
(US) Association of American Railroads weekly rail traffic report for week ending Jan 9th: 525.3K, +4.7% y/y
BABA Reportedly US govt will continue to allow investment in some Chinese firms like BABA, BIDU, and Tencent; Nine other firms with links to Chinese military will be added to investment black list - press
*(US) DEC MONTHLY BUDGET STATEMENT: -$143.6B V -$143.5BE
(US) House of Representatives impeaches Pres Trump for a second time, with 10 Republicans joining Democrats to vote yes
THURS 1/14
2330.TW Reports Q4 (NT$) Net 142.8B v 137.2Be (v 116.0B y/y); Op 157.1B v 124.2B y/y; Rev 361.5B v 317.2B y/y
(US) Reportedly US researches found new dominant COVID-19 variant [COH.20G/501Y] in the state of Ohio’s capital, Columbus - FT
DAL Reports Q4 -$2.53 v -$2.41e, Rev $3.97B v $3.83Be; Reiterates to be break even on cash flow by spring; Sees business travel pickup in Q2
*(US) INITIAL JOBLESS CLAIMS: 965K V 789KE; CONTINUING CLAIMS: 5.27M V 5.00ME
(DE) New planned COVID lockdown measures in Germany reportedly might include closing schools - German press
FRI 1/15
JPM Reports Q4 $3.79 v $2.72e, Managed Rev $30.2B v $29.3Be
*(US) JAN EMPIRE MANUFACTURING: 3.5 V 6.0E
*(US) DEC ADVANCE RETAIL SALES M/M: -0.7% V 0.0%E; RETAIL SALES (EX-AUTO) M/M: -1.4% V -0.2%E
*(US) DEC INDUSTRIAL PRODUCTION M/M: 1.6% V 0.5%E; CAPACITY UTILIZATION: 74.5% V 73.6%E
*(US) NOV BUSINESS INVENTORIES: 0.5% V 0.5%E
*(US) JAN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 79.2 V 79.5E
(US) Coronavirus vaccine reserve for second doses had reportedly already been exhausted when Trump administration promised to release it - Wash Post
