Stocks and bond yield rise as inflation signals remain dormant
2021-02-12T16:12:35.747
Stocks hovered in record territory this week, buoyed by movement toward a fresh round of stimulus spending, strong corporate earnings and apparent progress in the rollout of Covid-19 vaccines. With quarterly results in from about three-quarters of S&P 500 companies, more than 80% have surpassed estimates and many management teams have signaled they have enough clarity to begin providing forecasts for the new fiscal year. Wednesday’s CPI figures were once again softer than expected but did little to quell the markets’ rising inflation expectations. Crude oil prices continued to rise along with interest rates helped by the belief the Biden administration will remain aggressive in delivering on campaign promises. WTI crude hit a one-year high just under $60/bbl, while the 30-year bond yield edged above 2.00% for the first time in a year. Meanwhile, Fed Chairman Powell reiterated the Fed will not even entertain the idea of withdrawing monetary policy support until the pandemic is over and that he does not expect any sustained inflation gains in the near term. For the week, the S&P gained 1.2%, the DJIA was up 1%, and the Nasdaq added 1.7%.
In corporate news this week, Disney posted beats on its Q1 top and bottom lines as it continues to exceed expectations for its streaming service subscriber numbers. Nucor issued some guidance, noting it is encouraged by ‘positive economic trends and robust demand’ that it is seeing across its markets. Twitter shares continued their rise back toward 2013 highs as ad sales boosted Q4 revenue to a new record level. GM said it would have to extend production cuts through mid-March at three North American plants due to global semiconductor shortages, which it foresees impacting its FY21 outlook. Separately Ford noted that it expects some relief from the chip drought by Q2 and hopes to make up for its lost production. On the crypto front, Bank of New York Mellon confirmed plans to form a new digital assets division to develop a multi-asset platform which would include cryptocurrencies. Tesla said it invested $1.5B of cash into Bitcoin and plans to begin accepting it as a payment in the near future. In M&A news, EA agreed to acquire game developer Gluu Mobile in a $2B deal. Microsoft reportedly made an approach to acquire Pinterest in recent months but the talks are not ongoing. Amazon-backed EV maker Rivian is said to be considering an IPO this year, which could be valued north of $50B.
MON 2/8
(US) Jan NY Fed Survey of Consumer Expectations: survey shows increased optimism; expectations of future consumer spending surge in Jan
TUES 2/9
PFE Expects almost 50% Cut in COVID-19 vaccine production time (production time could drop from about 110 days to about 60 days)
NUE Guides Q1 net earnings >$900M; encouraged by positive economic trends and the robust demand we are seeing across our markets
GM To extend production cuts caused by semiconductor shortages at three N.A. production plants through mid-March - press
7203.JP Reports 9M Net ¥1.47T v ¥1.71T y/y; Op ¥1.51T v ¥2.04T y/y; Rev ¥19.53T v ¥22.97T y/y
WEDS 2/10
(CN) Fitch: China Internet Majors Remain Resilient to Macro, Regulatory Risks
HEIA.NL Reports FY20 Net -€88M v +€2.37B y/y Op €788M v €3.63B y/y, Rev €23.8B v €28.5B y/y; To cut 8k jobs saving ~€350M p.a
KO Reports Q4 $0.47 v $0.41e, Rev $8.60B v $8.74Be
GM Reports Q4 $1.93 v $1.62e, Rev $37.5B v $36.9Be; Semiconductor shortage to impact FY21 outlook
(EU) ECB chief Lagarde: Reiterates stance that fiscal policy needs to complement monetary policy - webinar comments
GM CEO: $7B of the FY21 Capex target of $9-10B dedicated to EVS and AVS - post earnings comments
*(US) JAN CPI M/M: 0.3% V 0.3%E; CPI (EX-FOOD/ENERGY) M/M: 0.0% V 0.2%E; CPI NSA: 261.582 V 261.800E
GME Executives from Melvin Capital, Robinhood and Citadel expected to testify in DC - press
*(US) DEC FINAL WHOLESALE INVENTORIES M/M: 0.3% V 0.1%E
*(US) DOE CRUDE: -6.6M V +0.5ME; GASOLINE: +4.3M V +1.5ME; DISTILLATE: -1.7M V -1ME
*(US) JAN MONTHLY BUDGET STATEMENT: -$162.8B V -$150.0BE
(US) Fed Chair Powell: Fed will be patiently accommodative with monetary policy; Fed will maintain support until it has achieved job and inflation goals; will not tighten monetary policy solely in response to strong labor market
(US) Association of American Railroads weekly rail traffic report for week ending Feb 6th: 495.8K, +2.2% y/y
(US) President Biden Admin issues readout of call with China President Xi; talks about trade, climate, human rights
(CN) China President Xi: Cooperation is only correct choice for China and US, US and China should respect each other, properly manage disputes constructively - Comments after call with Biden
THURS 2/11
MT.NL Reports Q4 Net $1.21B v -$1.88B y/y, EBITDA $1.73B v $925M; Rev $14.2B v $15.5B y/y; Names Aditya Mittal CEO; proposes to restart dividend payments
AZN.UK Reports Q4 Core EPS $1.07 v $1.09e, Rev $7.41B v $7.2Be
RDS.A Sets out its strategy to accelerate its transformation into a provider of net-zero emissions energy products and services: Affirmed near-term annual cash Capex of $19-22B
OPEC Monthly Oil Report: global economy is showing signs of a healthy recovery in 2021
*(US) INITIAL JOBLESS CLAIMS: 793K V 760KE; CONTINUING CLAIMS: 4.545M V 4.42ME
BK Confirms to form New Digital Assets Unit to build industry's first multi-asset digital platform, including cryptocurrencies
PYPL CEO Schulman: PayPal Digital Wallet app to potentially have investing platform capabilities along with banking capabilities - investor day comments
(US) White House official: Biden administration is working aggressively on semiconductor shortage; chip supply is a key issue in an upcoming executive order
(UK) Foreign Min Raab: decision by Chinese govt to ban BBC broadcasting in China is unacceptable
*(US) TREASURY $27B 30-YEAR BOND AUCTION DRAWS 1.933%; BID TO COVER 2.18 V 2.29 PRIOR AND 2.33 OVER LAST 4 AUCTIONS
FRI 2/12
*(UK) Q4 PRELIMINARY GDP Q/Q: 1.0% V 0.5%E; Y/Y: -7.8% V -8.1%E
(RU) Russia Foreign Min Lavrov: Prepared to break off relationship with EU if the bloc imposes sanctions that damage Russia’s economy
CPNG Files to sell $1B IPO shares on NYSE - filing
COHR Confirms receipt of cash and stock offer of $260/shr from II-VI in $5.8B in cash and share deal
(US) FEB PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 76.2 V 80.9E
(IT) Mario Draghi officially confirms he can form a govt and will accept post as Italy PM
