Weekly Market Update: risk appetite remains despite accumulating vaccine distribution issues
2021-01-22T16:16:16.4
US stocks markets continued to move up this week and risk assets in general saw inflows as the US formally transitioned to the Biden administration. Risk appetite was stoked by hopes the new administration will get more stimulus passed and get vaccinations back on track amid emerging technical delays at the vaccine manufacturers. US economic data largely surpassed expectations, while manufacturing readings and some corporate managements gave indications of rising pricing pressures.
The ECB meeting went largely as expected though the policy statement was explicit in flagging the possibility the central bank may not need to use the entire €1.85T Pandemic Emergency Purchase Program. Italy’s government appeared to overcome another government crisis but PM Conte’s fragile coalition still faces hurdles heading into another key vote next week. The US dollar gave back some ground coming off of last week’s one week high while rates in the US tracked sideways and EU sovereign yields backed up. Bitcoin remained volatile, experiencing its worst week since September. For the week, the S&P gained 1.9% and the DJIA added 0.6%, while the Nasdaq surged 4.2% as large cap tech came back into favor.
In corporate news this week, Netflix saw its biggest daily gain in over four years on the back of strong subscriber growth in Europe and solid guidance. Intel posted record revenue numbers for Q4 in its last quarter with Bob Swan at the helm, while incoming CEO Gelsinger promised the majority of its products will be manufactured internally by 2023, spurning calls to outsource chip manufacturing. IBM revenue missed top line Q4 estimates as it saw its revenue continue to drop, though it did forecast positive sales growth in 2021. Bank of America shares moved lower after posting a quarterly beat on EPS but disappointing sales, with trading revenue coming in below consensus. Morgan Stanley’s fourth quarter blew away street estimates, though the bank somewhat tempered FY21 trading expectations. GM’s Cruise unit entered a long-term strategic agreement with Microsoft as part of a new $2B round of investment in its autonomous car joint venture. Google threatened to shut down its entire search engine in Australia if a proposed law there to require payments for posting news articles goes into effect. President Biden issued an executive order canceling the Keystone XL oil pipeline permit, reversing a priority of former President Trump, despite calls from the Canadian government to maintain the project.
SUN 1/17
(US) Treasury Sec nominee Yellen reportedly to affirm commitment to market-determined US dollar rate; will make clear US does not seek weaker dollar for competitive advantage - US financial press
TRP US President-elect Biden is planning to use executive order to cancel the Keystone XL Pipeline permit - Canada press
*(CN) CHINA Q4 GDP Q/Q: 2.6% V 2.7%E; Y/Y: 6.5% V 6.2%E
MON 1/18
(US) Treasury Sec nominee Yellen: Time to act big for recovery with rates low; US economy was K-shaped before COVID - speech notes ahead of Jan 19th hearing
RIO.AU Reports Q4 Pilbara Iron Ore production 86.0Mt v 83.6Mt y/y; Shipments 88.9Mt v 86.8Mt y/y
TUES 1/19
*(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: -66.4 V -68.3E; EXPECTATIONS SURVEY: 61.8 V 59.4E
BAC Reports Q4 $0.59 v $0.56e, Rev $20.1B v $20.4Be
GM Cruise JV and GM enter long-term strategic agreement with Microsoft to commercialize self-driving vehicles; to invest more than $2B in Cruise
*(IT) ITALY PM CONTE WINS SENATE (UPPER HOUSE) CONFIDENCE VOTE - PRESS
WEDS 1/20
*(EU) EURO ZONE DEC FINAL CPI Y/Y: -0.3% V -0.3%E; CPI CORE Y/Y: 0.2% V 0.2%E
FAST Reports Dec net sales $428.8M, +14.7% y/y
PG Reports Q2 $1.64 v $1.51e, Rev $19.7B v $19.1Be; Now sees $10B in stock buybacks in 2021 (prior $7-9B)
*(US) JAN NAHB HOUSING MARKET INDEX: 83 V 86E
(US) Association of American Railroads weekly rail traffic report for week ending Jan 16th: 528.6K, +5.8% y/y
AA Reports Q4 $0.26 v $0.15e, Rev $2.39B v $2.35Be
UAL Reports Q4 -$7.00 adj v -$6.56e, Rev $3.41B v $3.42Be
THURS 1/21
*(EU) ECB LEAVES MAIN 7-DAY REFINANCING RATE UNCHANGED AT 0.00%; AS EXPECTED; Maintains size and duration of PEPP program and notes it may not need to be used in full
*(US) DEC HOUSING STARTS: 1.669M V 1.560ME; BUILDING PERMITS: 1.709M V 1.608ME
*(US) INITIAL JOBLESS CLAIMS: 900K V 935KE; CONTINUING CLAIMS: 5.05M V 5.30ME
*(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: 26.5 V 11.8E
(EU) ECB chief Lagarde: Reiterates stance that prepared to adjust all instruments as needed as uncertainty remains high - Prepared Remarks
(EU) ECB chief Lagarde: Inflation to turn positive on reversal of German VAT cut, domestic prices will continue to be subdued - Q&A
SIE.DE Reports prelim Q1 Digital Industries Adj EBITA €848M v €592Me, Rev €3.77B v €3.56Be, Orders €4.12B v €4.0Be, Adj EBITA margin 22.5% v 16.6%e
IBM Reports Q4 $2.07 v $1.78e, Rev $20.4B v $20.6Be
INTC Reports Q4 $1.52 v $1.10e, Rev $20.0B v $17.5Be; Raises Quarterly dividend 5.3% to $0.3475 from $0.33 (indicated yield 2.21%)
FRI 1/22
GOOGL Says to block search engine in Australia if it is forced to pay for news - financial press
*(UK) DEC RETAIL SALES (EX-AUTO/FUEL) M/M: 0.4% V 1.0%E; Y/Y: 6.4% V 7.4%E
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 57.0 V 57.2E (7th month of expansion)
*(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 54.7 V 54.4E (7th month of expansion)
*(UK) JAN PRELIMINARY PMI MANUFACTURING: 52.9 V 53.6E (8th straight expansion)
(DE) Additional chatter German Government to cut 2021 GDP growth from 4.4% to 3.0% - German press
VOW3.DE Raises FY20 adj Op ~€10B v €19.3B y/y (prior Op 'positive' but significant decline), Automotive net cash flow ~€6B
(UK) Health officials: the virus may no longer be spreading exponentially
(US) JAN PRELIMINARY MARKIT MANUFACTURING PMI: 59.1 V 56.5E (highest on record)
(US) DEC EXISTING HOME SALES: 6.76M V 6.56ME
(US) DOE CRUDE: +4.4M V -1.5ME; GASOLINE: -0.3M V +2ME; D (IT) Italy health officials say virus reproduction ('R') rate has fallen below 1 after a five week rise
(US) Nevada reports 2020 casino gaming Rev $6.75B, -23% y/y; Las Vegas strip Rev $3.39B, -24.2% y/y
