Weekly Market Update: Wall Street distracted by WallStreetBets; vaccines continue choppy roll out
It was a historically wild week on Wall Street to say the least, as the Reddit revolution captured the attention of the trading world. Earnings season was largely an afterthought despite roughly 25% of the S&P reporting results and many firms showing increased willingness to provide outlooks into 2021. Gamestop was the posterchild for a basket of highly shorted stocks targeted by WallStreetBets that soared by previously unthinkable amounts without offering up any fundamental news. By midweek high profile hedge fund Melvin Capital was in need of a rescue, sparking concerns that others were like confronting huge losses on their short positions as well. Some trading platforms, most notably Robinhood, were forced to temporarily curtail trading in the targeted stocks in the name of risk management. The overall market saw a surge in volatility and investors took profits despite outstanding earnings releases in many cases, as worries that the excess speculation seen in certain pockets is the latest harbinger of an impending stock market reckoning. For the week, the S&P and DJIA each lost 3.3%, while the Nasdaq fell 3.5%.
In corporate news this week, overall efficacy data for J&J’s vaccine failed to meet that of Pfizer or Moderna’s, but officials were quick to say the news remains positive, pointing in particular to the single-dose vaccination’s strength in preventing severe disease and hospitalizations. Moderna revealed that its COVID-19 vaccine loses potency against some of the most worrying emerging variants from the UK and South Africa, though the shots still retain neutralizing activity against them. Facebook notched record revenue and earnings in its Q4, thanks to strong online holiday shopping numbers and a pandemic-related boost to its ad business. Apple posted a blowout Q1, tallying over $100B in revenue for the first time, lifted by a strong sales cycle for its iPhone 12 line. Tesla reported its first full-year profit on record vehicle deliveries and forecast a 50% long-term annual growth in vehicle sales going forward. NXP and STMicroelectronics reportedly have begun telling customers that they’ll raise prices by 10-20% amid higher demand for chips used in cars and telecommunications equipment. Microsoft earnings impressed, reporting stronger Azure cloud growth than was anticipated. Starbucks COO Roz Brewer announced she would be leaving the coffee giant in order to take the CEO role at Walgreens.
SUN 1/24 NXPI NXP and STMicroelectronics said to have informed customers they will increase prices by 10-20% due to higher demand for chips used in cars and telecommunications equipment - Nikkei (TW) US, UK, Germany and Japan have all asked Taiwan to increase chip supply for auto industry - Nikkei
MON 1/25 (UK) UK reportedly faces three-month 'halfway house' lockdown after Easter to allow for all over-50s to have their second dose of the vaccine - The Telegraph *(DE) GERMANY JAN IFO BUSINESS CLIMATE SURVEY: 90.1 V 91.4E MRNA COVID-19 Vaccine Retains Neutralizing Activity Against Emerging Variants First Identified in the U.K. and the Republic of South Africa; Lower titers may suggest a potential risk of earlier waning of immunity to the new B.1.351 strains *(US) JAN DALLAS FED MANUFACTURING ACTIVITY INDEX: 7.0 V 12.0E (US) Sen Maj Leader Schumer: will try to pass stimulus in a month or a month-and-a-half (UK) BOE Gov Bailey: Digital innovations in payments are here to say; don't think cryptocurrencies are lasting yet - webinar comments (IT) More speculation that PM Conte would likely to resign after informing the cabinet today or tomorrow; hopes to win mandate from Pres Mattarella to form a new govt - press STLD Reports Q4 $0.97 v $0.62 y/y, Rev $2.60B v $2.35B y/y; sees continued steel price strength MRNA Exec: expect durability of protection from primary series of our COVID vaccine to be a year or longer - conf call comments
TUES 1/26 UBSG.CH Reports Q4 Net $1.71B v $722M y/y; Adj Pretax $2.06B v $1.2B y/y; Rev $8.12B v $7.05B y/y; To launch new buyback of up to CHF4B; Proposes $0.37/shr dividend for 2020 GE Reports Q4 $0.08 v $0.08e, Rev $21.9B v $21.3Be MMM Reports Q4 $2.38 v $2.19e, Rev $8.58B v $8.49Be VZ Reports Q4 $1.21 v $1.16e, Rev $34.7B v $34.4Be PCAR Reports Q4 $1.17 v $1.21e, Rev $5.57B v $5.03Be; Class 8 EV truck climbs Pikes Peak - EV truck production to begin Q2 2021 BAC CEO: Jan consumer spending is up 9% on the year; we feel very constructive about consumer activity - CNBC interview *(US) JAN RICHMOND FED MANUFACTURING: 14 V 19E *(US) JAN CONSUMER CONFIDENCE: 89.3 V 89.0E (US) Pres Biden executive order to instruct DOJ to not renew contracts with private prisons - press MSFT Reports Q2 $2.03 v $1.64e, Rev $43.1B v $40.1Be WBA Reportedly to name outgoing Starbucks exec Roz Brewer as new CEO; announcement could come later this week - press 005930.KR Reportedly plans to boost FY21 chip capex to KRW35T, +20% y/y (~$31.8B) v ~KRW29T y/y; will focus on Xi'an No 2 plant in china and Pyeongtaek No 2 plant in Korea - Korean press 2330.TW Intel to outsource 3nm chips production to Taiwan Semi in 2022 – DigiTImes
WEDS 1/27 GME Reportedly Melvin Capital is out of GME position - CNBC BA Reports Q4 -$15.25* v -$1.78e, Rev $15.3B v $15.3Be; 5 airlines return 787 MAX to daily service *(US) DEC PRELIMINARY DURABLE GOODS ORDERS: 0.2% V 1.0%E; DURABLES (EX-TRANSPORTATION): 0.7% V 0.5%E (DE) Germany Economy Ministry cuts 2021 GDP growth forecast from 4.4% to 3.0% (as speculated) *(US) DOE CRUDE: -9.9M V +0.5ME; GASOLINE: +2.5M V +1ME; DISTILLATE: -0.8M V -0.5ME BMW.DE Reports prelim Q4 Automotive segment FCF €2.8B v €1.5B y/y, FY20 FCF €3.4B v €2.6B y/y (ahead of forecasts) (US) Association of American Railroads weekly rail traffic report for week ending Jan 23rd: 529K, +9% y/y *(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); PACE OF RECOVERY HAS MODERATED IN RECENT MONTHS (US) Fed Chair Powell: reiterates Fed is strongly committed to achieving dual mandate; path ahead remains highly uncertain - post rate decision press conference FB Reports Q4 $3.88 v $3.24e, Rev $28.1B v $26.4Be; Authorizes new buyback of up to $25B CP Reports Q4 C$5.95 v C$4.93e, Rev C$2.01B v C$2.07Be TSLA Reports Q4 $0.80 v $0.90e, Rev $10.7B v $10.1Be 005930.KR Reports final Q4 (KRW) Net 6.6T v 5.2T y/y; Op 9.1T v 9.0T prelim; Rev 61.6T v 61T prelim
THURS 1/28 066570.KR Reports final FY20 (KRW) Net 2.06T v 180.0B y/y, Op 3.20T v 2.44T y/y, Rev 63.3T v 63.3T prelim (HK) Macau Dec Hotel Occupancy Rate: 53.1% v 43.9% prior DGE.UK Reports H1 Net £1.58B v £1.87B y/y, Adj Op £2.26B v £2.50B y/y, Rev £6.87B v £7.20B y/y *(EU) EURO ZONE JAN ECONOMIC CONFIDENCE: 91.5 V 89.6E MA Reports Q4 $1.64 v $1.51e, Rev $4.1B v $4.00Be *(US) INITIAL JOBLESS CLAIMS: 847K V 875KE; CONTINUING CLAIMS: 4.771M V 5.09ME *(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 4.0% V 4.2%E; PERSONAL CONSUMPTION: 2.5% V 3.1%E *(US) Q4 ADVANCE GDP PRICE INDEX: 2.0% V 2.2%E; CORE PCE Q/Q: 1.4% V 1.2%E (US) Nevada reports Dec casino gaming Rev $683.7M, -35% y/y; Las Vegas strip Rev $292M, -50.7% y/y *(US) DEC NEW HOME SALES: 842K V 870KE *(US) DEC LEADING INDEX: 0.3% V 0.3%E (US) South Africa COVID variant identified in the US after two cases diagnosed in South Carolina - press DAI.DE Reports prelim FY20 adj EBIT €8.64B v €7.12Be, industrial FCF €8.26B v €5.3Be AMGN StatNews' Feuerstein: BREAKING: 'A milestone in oncology’: $AMGN KRAS-blocking drug proves effective for lung cancer SWKS Reports Q1 $3.36 v $2.08e, Rev $1.51B v $1.06Be
FRI 1/29 SAP.DE Reports final Q4 EPS €1.69 v €1.82 y/y; Op €2.77B v €2.77B prelim; Rev €7.54B v €7.54B prelim; Affirms guidance *(FR) FRANCE Q4 PRELIMINARY GDP Q/Q: -1.3% V -4.0%E; Y/Y: -5.0% V -7.6%E *(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: 0.1% V 0.0%E; Y/Y: -3.9% V -4.0%E CAT Reports Q4 $2.12 v $1.46e, Rev $11.2B v $11.2Be JNJ Announces single-shot Janssen COVID-19 vaccine candidate, Ad26.COV2.S, met primary endpoints in interim analysis of its Phase 3 ENSEMBLE Trial; 66% effective overall (72% effective in US) and 85% effective in stopping severe COVID-19 (US) SEC statement: agency is closely monitoring extreme price volatility; will review actions by entities that inhibit trading ability *(US) DEC PENDING HOME SALES M/M: -0.3% V -0.5%E; Y/Y: 22.8% V 20.3%E *(US) JAN FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 79.0 V 79.3E (EU) ECB: to stress test 38 euro zone banks as part of the 2021 EU-wide stress tests led by the EBA