Markets convulse then reverse after Russia invades Ukraine

TradeTheNews.com 

Weekly Market Update: Markets convulse then reverse after Russia invades Ukraine

2022-02-25T16:12:21.88

As predicted by President Biden and other Western leaders, Russia did commence a large scale military offensive into the Ukraine this week. As the markets woke up to this reality, Thursday saw the NASDQ officially open in bear market territory as investors rushed for safety, pushing down stocks and lifting the prices of oil, gold, and government bonds. Brent crude broke above $100 for the first time since 2014, while the Ruble and the Russian stock market came under considerable pressure.

Central bankers said they will monitor the impacts of the Russian invasion, particularly on energy markets and inflation. But hawks like the Fed’s Bullard continued to express the need to start normalizing policy given that sanctions on Russia will not have a great deal of direct impact on Western economies. Stock markets saw wild volatility, with a 1,000 DJIA swing on Thursday and European bourses on Friday posting their best gains in months, as trader bet on a short term bottom. For the week the S&P gained 0.8%, the DJIA slipped 0.1%, and the Nasdaq rose 1.1%.



In corporate news this week, Home Depot posted a beat on its top and bottom line but shares dipped amid declining margins and signs the pandemic boom is moderating. Macy’s notched strong EPS and Rev for its holiday quarter though, like most retailers, continued to face headwinds from inflation and a labor market. Automotive components original equipment manufacturer Tenneco agreed to be acquired by Apollo for $7.1B, a nearly 100% premium. Volkswagen said it was in late-stage talks regarding a potential spinoff of its Porsche unit in order to raise cash as it transitions to electric vehicles. Soo Kim’s Standard General announced it would acquire broadcaster Tegna for $5.4B, ending a takeover saga that had lasted many years and involved several potential suiters.



SUN 2/20
*(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: LEAVES BOTH 1-YEAR AND 5-YEAR RATES
(RU) US Biden Plan would cut correspondent banking relationships between US and Russia banks as part of initial sanctions package - Press
MON 2/21
(DE) Germany Jan PPI M/M: 2.2% v 1.5%e; Y/Y: 25.0% v 24.4%e (highest since 1949)
*(FR) FRANCE FEB PRELIMINARY MANUFACTURING PMI: 57.6 V 55.5E (15th month of expansion and highest reading since July 2021)
*(DE) GERMANY FEB PRELIMINARY MANUFACTURING PMI 58.5 V 59.8E (20th month of expansion)
*(EU) EURO ZONE FEB PRELIMINARY MANUFACTURING PMI: 58.4 V 58.7E (20th month of expansion)
*(UK) FEB PRELIMINARY PMI MANUFACTURING: 57.3 V 57.0E (21st straight expansion)
(RU) Donetsk separatists reportedly claim they need military and financial aid from Russia - Russian press
(RU) Russia Army (Southerm Military District) said to have prevented border violation from Ukraine; says 5 Ukraine soldiers killed in situation
(RU) Donbas separatist groups in Eastern Ukraine said to have asked Russia to recognize independence - Russian tv
(RU) President Putin: Ukraine does not plan to fulfill the Minsk agreements; To discuss Donbas situation and should discuss separatist recognition - comments attributed to Russia's security council extra-ordinary meeting
(RU) Russia President Putin: Eastern Ukraine territories are ancient Russian lands; Ukraine has become US colony with a puppet government - national tv address
(EU) ECB's Villeroy (France): No need to decide rate-hike dates now; Reiterates call to end APP purchases (conventional QE) around Q3 2022
*(RU) RUSSIAN PRESIDENT PUTIN FORMALLY ORDERS TO RECOGNIZE DONBAS LPR AND DPR SEPARATISTS - NATIONAL TV ADDRESS; Putin also ordered troops from Russia to enter the two breakaway regions of Ukraine [Donetsk and Luhansk]
XOM Workers at Beaumont (Texas) refinery have ratified contract offer; the move paves the way to ending the 10-month lockout - US financial press
MPC Louisiana refinery [578K bpd] had an explosion and fire; the cause of the incident has not yet been disclosed; officials have given the all-clear sign related to the refinery - US press
5.HK Reports FY21 Adj pretax $21.9B v $12.1B y/y, Adj Rev $50.09B v $50.4B y/y; to buyback $1.0B in shares
TUES 2/22
(RU) Reportedly Russia may recognize Ukranian Separatist claims over more land than already recognized - press
VOW3.DE Notes it is in advanced discussions with Porsche Automobil Holding SE regarding a potential IPO of Porsche AG
*(DE) GERMANY FEB IFO BUSINESS CLIMATE SURVEY: 98.9 V 96.5E (2nd straight improvement)
(RU) Russia Foreign Min Lavrov: Ukraine does not have a right to sovereignty
(RU) Russia Deputy Foreign Min Andrey Rudenko: Russia recognized the separatists within the border they perform their duties and jurisdiction in
(DE) German Chancellor Scholz: Russia's decision is serious breach of international law; No certification of Nord Stream 2 can occur at this time - statement on Russia-Ukraine situation
HD Reports Q4 $3.21 v $3.20e, Rev $35.7B v $34.6Be; Raises Quarterly dividend 15.2% to $1.90 from $1.65 (indicated yield 2.19%)
M Reports Q4 $2.45 v $2.00e, Rev $8.66B v $8.45Be; Completes business review and will NOT separate digital assets; New $2B share repurchase program authorized; Raises Quarterly dividend 5% to $0.1575 from $0.15 (indicated yield 2.45%);
TGNA Confirms to be acquired by Standard General L.P. for $24.00/shr in $5.4B cash deal
EXPD Reports Q4 $2.66 v $2.02e, Rev $5.40B v $4.26Be
(US) Feb Philadelphia Fed Non-Manufacturing Index: +15.9 v -16.2 prior
*(US) FEB PRELIMINARY MARKIT MANUFACTURING PMI: 57.5 V 56.0E
*(US) FEB RICHMOND FED MANUFACTURING INDEX: 1 V 10E
*(US) FEB CONSUMER CONFIDENCE: 110.5 V 110.0E
(DE) German Chancellor Scholz: A full invasion of Ukraine must be prevented; We are in a position to decide on further sanctions if there will actually be a complete military invasion of Ukraine by Russia
PANW Reports Q2 $1.74 v $1.65e, Rev $1.32B v $1.28Be
(US) Sec of State Blinken: Cancels meeting with Russia's Lavrov following invasion of Ukraine
*(NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) RAISES OFFICIAL CASH RATE (OCR) BY 25BPS TO 1.00%; AS EXPECTED
992.HK Reports Q3 Net $640M v $395M y/y, Rev $20.1B v $17.3B y/y
WEDS 2/23
(AT) ECB’s Holzmann (Austria): It is possible for ECB to hike rates before ending conventional QE program; Council should consider two rate hikes in 2022
BN.FR Reports FY21 Net €1.92B v €1.96B y/y, Recurring Op €3.34B v €3.32B y/y, Rev €24.3B v €23.6B y/y; Local First implementation on track; Europe transformation completed
STLA Reports FY21 Net €13.4B v €4.79B y/y, Adj EBIT €18.0B v €9.22B y/y; Rev €152.1B v €47.7B y/y
(RU) TTN Research alert: on Feb 27th, Belarus will hold a constitutional referendum that includes a vote on end of 'nuclear-free status' to make it legal to host Russian nuclear weapons
MUV2.DE CEO: Nord Stream 2 pipeline insurance contract has been canceled - conf call comments
*(EU) EURO ZONE JAN FINAL CPI Y/Y: 5.1% V 5.1%E (record high); CPI CORE Y/Y: 2.3% V 2.3%E
TEN To be acquired by Apollo Funds for $20.00/shr in cash valued at $7.1B
(UR) US officials reportedly have given intel to Ukraine Pres Zelenskiy that indicates Russia is preparing to conduct a full-scale invasion within 48 hours - Newsweek
(ES) ECB’s de Cos (Spain): Inflation spike is largely unexpected and lasting longer than expected
(US) Association of American Railroads weekly rail traffic report for week ending Feb 19th: 497.8K total units, +32% y/y
(UR) US Sec of State Blinken: Believes Russia will invade Ukraine before night ends - NBC News
*(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE AT 1.25%; AS EXPECTED
BRENT OIL PRICE MOVES ABOVE $100/BARREL (1st time since 2014)
(RU) US officials: Sanctions will shock Russian financial system, hit the markets and hobble industry and weigh on growth - US financial press
THRS 2/24
ABI.BE Reports Q4 $0.74 v $0.84e, adj EBITDA $4.88B v $4.80Be, Rev $14.2B v $13.7Be
(CN) China Foreign Ministry Spokesperson Hua Chunying: Russian forces in Ukraine is not an invasion as described by some foreign media
(RU) Reportedly UK PM Johnson is pushing for Russia to be removed from the SWIFT payment system – press
(RU) RUSSIAN PRES PUTIN: WHAT IS HAPPENING IS FORCED MEASURE; WEST REFUSED TO GIVE GROUND ON RUSSIA'S SECURITY DEMANDS - comments after meeting with Russian businessmen
(UK) UK to freeze VTB Bank assets, immediately; To impose sanctions on over 100 Russian individuals and entities; Confirms calling on expulsion from SWIFT payment system
(UR) Pres Biden tweets: G7 leaders agreed to move forward with devastating sanctions packages against Russia
(RU) Pres Biden: Russian military began brutal attack; Pres Putin is a the aggressor, rejected diplomacy - press conf on Ukraine-Russia conflict
(EU) European leaders to impose sanctions on Russian financial sectors, visa policy, energy, transport and impose export controls - statement
COIN Reports Q4 $3.32 v $1.95e, Rev $2.49B v $1.81Be
DELL Reports Q4 $1.72 v $1.95e, Rev $28.0B v $27.4Be; Declares initial quarterly div $0.33/shr, expects FY23 Dividends of ~$1.0B
FRI 2/25
BAS.DE Reports Q4 Net €898M v €1.06B y/y, adj EBIT €1.23B v €1.4Be, Rev €19.8B v €18.5Be
(RU) Russia govt said to be preparing its own sanctions list to hit back at the West - press
(UR) Adviser to Ukraine President Podolyak: If Moscow says they are ready to talk, including on neutral status, we are not afraid of this; We want peace
(RU) Russia govt spokesperson Peskov: Ukraine neutrality move is move 'toward positive'; Expectations of Kyiv remain the same; Russia does not change its position like a girlECB’s Lane (Ireland, chief economist) said to see ECB Staff Projection to significant raise the 2022 inflation outlook but would still see it below the ECB target in the medium term - press
(UR) UKRAINE PRESIDENT ZELENSKIY CALLS FOR NEGOTIATIONS WITH RUSSIAN PRES PUTIN - PRESS
ABC AmerisourceBergen, Cardinal Health and McKesson approve Opioid settlement agreement; Settlement will provide thousands of communities across US with up to ~$19.5B over 18 years
(RU) Russia President Putin said to be willing to conduct high-level negotiations with Ukraine - Chinese press
(EU) EU said to be planning to sanction personally Russia Pres Putin and Russia Foreign Min Lavrov; To freeze their assets - FT
(US) JAN PCE DEFLATOR M/M: 0.6% V 0.6%E; Y/Y: 6.1% V 6.0%E
(US) Nevada reports Jan casino gaming Rev $1.08B, +41.6% y/y; Las Vegas strip Rev $567.2M, +76.4% y/y
(US) JAN PENDING HOME SALES M/M: -5.7% V 0.2%E; Y/Y: -9.1% V -1.8%E
(RU) German Finance Minister: We are open to cutting Russia off SWIFT

Specter of Russian invasion continues to loom over markets

TradeTheNews.com 

Weekly Market Update: Specter of Russian invasion continues to loom over markets

2022-02-18T16:16:06.24

Trading this week was mired by headlines surrounding a mounting crisis on the Ukraine border. Risk appetite swung from on to off on several occasions depending on what was being reported. Sentiment would improve when both sides would allude to further diplomacy, only to about-face when Western leaders would repeat an invasion was still likely imminent, while separate Russian press reports of flare ups in Eastern Ukraine were viewed by Western officials as a potential pretext for Russian action. The US Secretary of State and Russian Foreign Minister agreed to meet late next week, but the situation remained tenuous heading into a weekend where both the Olympics and joint Russian/Belarus military drills are set to come to a close. Early in the week the price of crude oil surged on worries that war between Ukraine and Russia could prolong elevated inflation in developed economies by disrupting supplies of important commodities. Late in the week oil prices backed off on growing speculation that Iran and Western powers are nearing a nuclear accord that could bring Iranian barrels back onto the market.

Wednesday’s FOMC minutes reminded investors that officials at their January meeting discussed an accelerated timetable for raising interest rates amid greater discomfort with high inflation. Regardless investors appeared to lean dovish by default because the minutes did little to communicate the minority argument for a 50bps move that has been presented since the release of January CPI figures. Fed speak also moderated a bit as officials other than Bullard offered a bit more moderate view on frontloading rate hikes, while unanimously signaling they remained on board for a March liftoff. Futures markets saw the odds of a 50 bps hike shrink back below 50% while safe haven flows kept an underlying bid in US Treasury markets. Growth stocks continued to struggle with several high profile swoons seen in highly trafficked technology names after their earnings reports. For the week, the S&P lost 1.6%, the DJIA dropped 1.9%, and the Nasdaq fell 1.8%.

In corporate news this week, Deere raised its guidance after a strong Q1 and said it expects demand for farm and construction equipment to continue benefiting from strong fundamentals. Marriott reported above consensus on its top and bottom line, noting new bookings across customer segments have rebounded to pre-Omicron levels. AirBNB posted a beat on earnings and guidance, as the lodging company saw its third consecutive quarter of double-digit booking increases.

Intel agreed to acquire Tower Semiconductor in a $6B deal as the tech giants continues its effort to expand its manufacturing capacity. Monster Beverage and Constellation Brands were said to be near an $85B merger that could dramatically revamp the beverage landscape. PE firm Madison Dearborn said it would buy MoneyGram for $1.8B in all-cash deal. Blackstone announced a €21B recapitalization of its pan-European last mile logistics firm Mileway, with the large majority of capital for the move coming from existing investors. GM said it would resume production of Bolt EV and EUV models at its Orion Township facility in April.


SUN 2/13
JGB (JP) Bank of Japan (BOJ): There were no takers in 5-10-year JGB Fixed-Rate buying operation
(CA) Ambassador Bridge has been fully reopened after police clear out protests - press
MON 2/14
(RU) Belarus Pres Lukashenko: Nobody plans to fight Ukraine
(RU) Russia reportedly continues to analyse US and NATO positions on security proposals; To continue a dialogue - Russian press
(RU) Russia govt spokesperson Peskov: President Putin to meet his Foreign and Defense Ministers on Monday (Feb 14th)
(US) Fed's George (FOMC voter, hawk): No need for Fed to raise rates outside of scheduled meetings
(RU) Russia Foreign Min Lavrov: Can see a way forward for talks with US and NATO; Will propose continuing our diplomatic work
DFS Reportedly to partner with Buy It Mobility Networks to allow consumers to pay directly from checking accounts without cards - press
TUES 2/15
(CN) China President Xi said to write that China will strengthen its legislation related to national security, to further improve anti-foreign sanction laws
BX Announces €21B recapitalization of pan-European last mile logistics firm Mileway; “Go-shop” process to commence immediately
(RU) Russian forces said to be conducting military drills across almost all military districts and fleets; Some drills said to be concluded - Russian press
(RU) Russia Central Bank (CBR) said to begin testing of the digital ruble; CBR and Finance Ministry failed to reach an agreement on crypto - press
TSEM Confirms to be acquired by Intel for $53/shr in ~$5.4B all-cash deal; Deal expected to be immediately accretive to Intel’s non-GAAP EPS
2330.TW Said to increase planned investment in Japanese plant to ~$8.7B (prior $7B) as Denso joined TSMC/Sony project - Nikkei
*(EU) EURO ZONE Q4 PRELIMINARY GDP Q/Q: 0.3% V 0.3%E; Y/Y: 4.6% V 4.6%E
(DE) GERMANY FEB ZEW CURRENT SITUATION SURVEY: -8.1 V -6.5E V -10.2 PRIOR; EXPECTATIONS SURVEY: 54.3 V 55.0E
MAR Reports Q4 $1.30 v $1.02e, Rev $4.45B v $3.86Be; Notes new bookings across customer segments have rebounded to pre-Omicron levels
(RU) Russian forces reportedly plan drills with hypersonic missiles in the Mediterranean Sea - Russian press
*(US) FEB EMPIRE MANUFACTURING: 3.1 V 12.0E
*(US) JAN PPI FINAL DEMAND M/M: 1.0% V 0.5%E; Y/Y: 9.7% V 9.1%E
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.2% v +4.1% prior
(US) Trucks reportedly now leave Alberta town and end US-Canada border blockage - press
(EU) ECB's Villeroy (France): Guidance should have a shorter horizon amid uncertainties
(US) Pres Biden: US will be prepared no matter what happens in Ukraine; US remains ready to engage in diplomacy with Russia; Will respond decisively to Russian invasion
ABNB Reports Q4 $0.08 v $0.05e, Rev $1.54B v $1.46Be; Impact of Omicron has quickly dissipated
WEDS 2/16
HEIA.NL CEO: I’ve never seen inflation like it, not even close; Across the board we are faced with crazy increases - post earnings comments
*(UK) JAN CPI M/M: -0.1% V -0.2%E; Y/Y: 5.5% V 5.4%E (6th month above target and highest annual pace since Mar 1992)
(RU) Russia govt spokesperson Peskov: Remain committed to Minsk peace agreements as the solution for Donbas; NATO claims that no Russia troop pullback yet are wrong
SHOP Reports Q4 $1.36 v $1.33e, Rev $1.38B v $1.34Be; To consolidate fulfillment network to larger facilitates, to operate more fulfillment centers themselves
(LT) ECB's Kazaks (Latvia, hawk): Interest rate hike is quite likely this year; March meeting is unlikely to offer policy blueprint
GOOGL Reportedly plans to adopt new privacy restrictions to curtail tracking across apps on Android smartphones - US financial press
*(US) JAN ADVANCE RETAIL SALES M/M: 3.8% V 2.0%E; RETAIL SALES (EX-AUTO) M/M: 3.3% V 0.9%E
(US) Sec of State Blinken: We see no evidence of a Russia pullback from Ukraine border; We continue to see units moving towards the border, not away from it
*(US) JAN INDUSTRIAL PRODUCTION M/M: 1.4% V 0.5%E; CAPACITY UTILIZATION: 77.6% V 76.8%E
DIS Launches new business to develop residential communities called 'Storyliving'
*(US) FEB NAHB HOUSING MARKET INDEX: 82 V 82E
(US) Fed’s Harker (voter): Wants 25bps in March hike not 50bps
(US) Association of American Railroads weekly rail traffic report for week ending Feb 12th: 504.5K total units, +5% y/y
(US) Atlanta Fed GDPNow: raises Q1 GDP forecast to 1.5% from 0.7%
(US) TREASURY $19B 20-YEAR BOND AUCTION DRAWS 2.396% v 2.065% prior, BID-TO-COVER 2.44 v 2.34 PRIOR AND 2.29 OVER LAST 4 AUCTIONS
NVDA Reports Q4 $1.32 v $1.22e, Rev $7.64B v $7.43Be; Guides Q1 very strong; Expects to announce many new products, applications and partners for NVIDIA computing
(UR) Ukraine forces said to have fired on Luhansk People’s Republic (Russian backed separatists) in several places with mortars, according to the separatists - press
THURS 2/17
AIR.FR Reports FY21 adj Net +€4.21B v -€1.13B y/y, Adj EBIT €4.87B v €1.71B y/y, Rev €52.1B v €49.4B y/y; raises 2021 dividend to €1.50/share v nil y/y
NESN.CH Reports FY21 (CHF) Net 16.9B v 12.3Be, Op 15.1B v 14.9B y/y, Rev 87.1B v 86.9Be; Confirms to buy back CHF10B in shares in 2022
KER.FR Reports FY21 Net €3.18B v €2.15B y/y, EBITDA €6.47B v €4.57B y/y, Rev €17.6B v €13.1B y/y; Sees momentum to continue in 2022
(UR) Ukrainian military official: Russian occupying forces fired on village in Luhansk region; No injuries were caused - press
(RU) Russia govt spokesperson Peskov: Situation in Donbas region is getting more tense; NATO waging information aggression
WMT Reports Q4 $1.53 v $1.50e, Rev $152.9B v $151.4Be; Announces share buyback of at least $10B in FY23 (2.7% of market cap); Notes navigated higher supply chain costs well
(RU) US envoy to UN Thomas-Greenfield: Evidence on the ground is that Russia is moving towards an 'imminent invasion'; This is a crucial moment
MU Reportedly notified customers that NAND flash chip contract prices to rise 17-18% v 15%e, as spot prices rose 25% - Taiwanese price
*(US) INITIAL JOBLESS CLAIMS: 248K V 218KE; CONTINUING CLAIMS: 1.593M V 1.60ME
*(US) JAN HOUSING STARTS: 1.638M V 1.695ME; BUILDING PERMITS: 1.9M V 1.750ME
*(US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: 16.0 V 20.0E
(US) Pres Biden: There is reason to believe Russia is involved in false flag operations; Probability of Russian invasion is very high
(US) Pres Biden reportedly to issue executive order on regulating crypto next week - Yahoo Finance
(RU) US said to accept holding talks with Russia Foreign Minister Lavrov late next week [specific day not disclosed] - US financial press
FRI 2/18
ENI.IT Reports Q4 adj Net €2.11B v €1.91Be, adj Op €3.81B v €3.55Be, Rev €26.8B v €11.9B y/y
(RU) Russia to conduct strategic deterrence drills on Sat, Feb 19th; President Putin to monitor - Russian press
(RU) Russia govt spokesperson Peskov: Breaches of cease-fire arrangement in Donbas is potentially very dangerous
DE Reports Q1 $2.92 v $2.28e, Rev (equipment ops) $8.53B v $8.09Be
OPEC+ reportedly would seek to bring Iran into oil supply agreement bringing 1.3M bpd onto market if nuclear deal is reached - financial press
(RU) Donbas separatists leader Pushilin announces evacuation of Eastern Ukraine residents to Russia; To commence as soon as today
(DE) Germany Foreign Min Baerbock: Germany is ready to pay high economic price for unprecedented sanctions on Russia
(US) JAN EXISTING HOME SALES: 6.50M V 6.10ME
F Said to have previously considered spinning off EV and or traditional business – press
GE Discloses supply chain headwinds may continue to partially mask the company's 'significant progress' across its businesses; May 'pressure' growth, profit and FCF through Q1 and H1 - investor letter
(EU) ECB officials reportedly are 'edging toward' rate hike in 2022 to address inflation – press
(US) Fed's Williams (FOMC voter): Does not see compelling argument for a big first rate increase - Q&A with reporters
(US) Weekly Baker Hughes Rig Count: 645 v 635 w/w (+1.6% w/w) (Rises for 8th straight week in a row)

Surging inflation and imminent threat of Ukraine invasion loom large over markets

TradeTheNews.com 

Weekly Market Update: Surging inflation and imminent threat of Ukraine invasion loom large over markets

2022-02-11T16:05:03.913

Investors went on another wild ride this week, but ultimately US stock indices finished modestly below where they started. Trading remained choppy as traders digested another slew of earnings reports around the release of key US inflation data. Even before the CPI print inflation worries percolated, copper, iron ore, timber and coffee prices surged garnering attention. Quarterly earnings conference calls were rife with commentary about the expectation that companies will continue to raise prices through the remainder 2022 to offset rising supply chain costs. Also, a protest by Canadian truckers over vaccine mandates shut down several key bridges on the US/Canada border resulting in significant down time at multiple US automobile OEM facilities. WTI crude hit a fresh 8-year high on Friday spurred by reports that the US government now believes Russian President Putin has made the decision to invade Ukraine.

Thursday’s January CPI release spooked markets yet again, after coming in substantially hotter than already-goosed market expectations, reaching the highest annual pace since 1982. The upside surprise in the core index was spread across a wide range of categories, including some that have been heavily influenced by bottlenecks and others where price pressures could be viewed as more likely to stick. Stock markets came under pressure and Treasury yields immediately shot up on the news, led by the 2-year yield which surged 25 basis points, the largest daily gain since 2009. The 10-year yield retook 2% for the first time since 2019, but investors were also quick to fret over the narrowing of spreads or the curve flattening and what it might signal about future growth prospects. Futures markets quickly saw the odds of a 50 basis point March rate hike rise above 50%. By Friday, investment houses were aggressively ratcheting up their Federal Reserve tightening expectations after FOMC voter Bullard called for a 50bps hike in March, while also indicating significant quantitative tightening (balance sheet reduction) and perhaps intra-meeting hikes may also be necessary to get inflation under control. For the week, the S&P lost 1.8%, the DJIA was off 1%, and the Nasdaq fell 2.2%

In corporate news this week, Disney shares rose after reporting strong quarterly results, boosted by robust theme park attendance and higher than anticipated streaming service subscriber growth. Pfizer dropped after issuing a weaker 2022 outlook than expected, and late in the week said it would delay its application to the FDA to expand its Covid vaccine to kids under 5 until April. On the supply chain front, Intel’s CEO said the company expects chip wafer supply to remain tight through 2023, while FMC Corp noted they have seen initial signs of packaging costs easing. Republic Services confirmed plans to buy US Ecology for $2.2B in cash, and Republic added it plans to pursue additional tuck-in acquisitions in the environmental solutions sector.


SUN 2/6
(EU) ECB’s Knot (Netherlands, hawk): Sees first interest rate hike early in Q4 2022, second rate hike would likely be during Q1 2023; tightening typically in 25bps increments, don't see a reason to do something different as of now – financial press
USD/CNH China PBOC yuan fix said to lead to some concerns related to devaluation - financial press
*(CN) CHINA JAN CAIXIN PMI SERVICES: 51.4 V 50.5E (lowest since Aug 2021)
(CN) China Industry Ministry (MIIT): China aiming to complete a revamp of >80% of the steel capacity so it complies with ultra low emissions standards by 2025

MON 2/7
(LT) ECB's Kazaks (Latvia, hawk): July hike would imply "extremely" fast tapering
ON Reports Q4 $1.09 v $0.94e, Rev $1.85B v $1.79Be; Guides Q1 strong
(US) NJ Gov Murphy reportedly expected to end mask mandates in schools for students and teachers in 30 days - press
(US) US Dept of Commerce added 33 parties based in China to its unverified list for receiving US exports
(US) US and Japan reportedly reach deal to end Trump administration steel tariffs - press
*(US) DEC CONSUMER CREDIT: $18.9B V $25.0BE
2269.HK Comments on being added to US Unverified List; has no impact on business, in compliance

TUES 2/8
BP.UK Reports Q4 Adj Net $4.07B v $3.87Be, Rev $52.2B v $42.1Be; Announces further $1.5B share buyback
7201.JP Reports 9M Net +¥201.3B v -¥367.7B y/y, Op +¥191.3B v -¥131.6B y/y, Rev ¥6.15T v ¥5.32T y/y
(CN) China state funds said to buy Chinese stocks to slow market decline - press
(RU) Russia govt spokesperson Peskov: Reiterates stance that Russian troops to return to base after Belarus exercise; no precise date set
DD Reports Q4 $1.08 v $1.01e, Rev $4.27B v $3.95Be; Announces $1.0B share buyback; Raises Quarterly dividend 10% to $0.33 from $0.30 (indicated yield 1.75%)
PFE Reports Q4 $1.08 v $0.85e, Rev $23.8B v $23.9Be; Guides FY22 Rev short of expectations
MBUU Reports Q2 $1.50 v $1.36e, Rev $263.9M v $262Me; Demand has shown no sign of waning
FISV Reports Q4 $1.57 v $1.55e, Rev $4.26B v $4.02Be
(CN) China PBOC's official said to have reiterated view that cross-border trading apps remain illegal - press
SYY Reports Q2 $0.57 v $0.69e, Rev $16.3B v $16.0Be
*(US) DEC CPI M/M REVISED TO 0.6% V 0.5% PRIOR - PRESS
GAZP.RU Signs 30-year deal to supply up to 10B cm of additional gas per year to China and will be settled in euros
(US) Atlanta Fed GDPNow: raises Q1 GDP forecast to 0.7% from 0.1% prior
(DE) Germany Fin Min Lindner: European countries should not 'toy' with the 3% deficit and 60% debt limits as part of EU Stability Pact
MNDT Microsoft reportedly pursuing deal for Mandiant but bid is not assured - press
(US) Atlanta Fed's Wu-Xia Shadow Federal Funds Rate at -0.20 v -1.15 in Dec
(US) New York state is expected to announce it is removing its mask mandate Wednesday, unclear if it will apply to schools - press
7203.JP Reports 9M Net ¥2.32T v ¥1.47T y/y, Op ¥2.53T v ¥1.51T y/y, Rev ¥23.27T v ¥19.53T y/y; Cuts FY21/22 Global production outlook

WEDS 2/9
7267.JP Reports 9M Net ¥582.2B v ¥444.1B y/y, Op ¥671.7B v ¥447.0B y/y, Rev ¥10.68T v ¥9.55T y/y
GSK.UK Reports Q4 Core EPS 25.6p v 23.8pe, Rev £9.53B v £9.31Be; On track to demerge Consumer Healthcare unit in mid-2022
MAERSKB.DK Reports Q4 adj Net $6.11B v $6.1Be, EBITDA $7.99B v $8.0B prelim, Rev $18.5B v $18.5B prelim; Assumes ocean normalization early in H2
MAERSKB.DK CEO: our data indicates a very strong Q1 and Q2, supported by high volumes and freight rates - post earnings comments
(DE) German VDA Car Association forecasts domestic car market to grow 7% to 2.8M vehicles; Sees chip shortage to carry into 2023
(DE) German Bundesbank Gov Nagel (hawk): Expects domestic 2022 inflation significantly above 4.0%
CVS Reports Q4 $1.98 v $1.94e, Rev $76.6B v $76.0Be
CCJ Reports Q4 C$0.06 v C$0.12 y/y, Rev C$465M v C$550M y/y; Raises Annual dividend 50% to $0.12 from $0.08 (indicated yield 0.6%)
AVYA Reports Q1 $0.42 v $0.69e, Rev $713M v $737Me
(US) NY Gov Hochul expected to announce that she will let the mask mandate expire this week - financial press
(US) Fed's Bostic (non-voter, hawk): I have three rate hikes penciled in this year but leaning towards 4 potentially - CNBC
ECOL Republic Services confirms to acquire US Ecology at $48/shr in cash for $2.2B total
INTC CEO: Expects chip wafer supply to remain tight through 2023
FMC Exec: Have seen initial signs of packaging costs easing - earnings call comments
(US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
(US) Association of American Railroads weekly rail traffic report for week ending Feb 5th: 458K total units, -7.6% y/y
(US) White House Press Sec Psaki: Tomorrow's inflation data will show a high y/y increase
(US) Boston Fed names Susan M. Collins to succeed Rosengren as new Bank president - press
DIS Reports Q1 $1.06 v $0.57e, Rev $21.8B v $21.2Be
2282.HK Reports Q4 (HK$) adj EBITDA 89.0M v 367.2M y/y; Rev 2.45B v 2.36B y/y

THURS 2/10
2330.TW Reports Jan (NT$) Rev 172.2B v 126.8B y/y v 155.4B m/m
CSGN.CH Reports Q4 (CHF) Net -2.01B v -353M y/y, Pretax -522M v -88M y/y, Rev 4.58B v 5.2B y/y; 2022 to be a transition year for the company
SIE.DE Reports Q1 €2.05 v €1.57e, Industrial Business Net €2.5B v €2.2B y/y, Rev €16.5B v €15.9Be
TKA.DE Reports Q1 Net €203M v -€93M y/y, adj EBIT €298M v €20M y/y, Rev €9.02B v €7.32B y/y
UNA.NL Reports FY21 EPS €2.62 v €2.48 y/y, adj Op €9.64B v €9.37B y/y, Rev €52.4B v €51B y/y; Announces €3B share buyback
TTE.FR Reports Q4 adj Net $6.83B v $1.30B y/y, Rev $60.4B v $37.9B y/y
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO RATE UNCHANGED AT 3.50%; AS EXPECTED
(RU) Russia said to hold military drills in Black Sea - Russian press
(JP) BOJ to conduct fixed rate purchase operation on Monday, Feb 14th due to rise in recent yield; To purchase unlimited 10-year JGBs - press
PEP Reports Q4 $1.53 v $1.53e, Rev $25.3B v $24.3Be; Authorizes up to $10B share buyback till 2026; Raises annual dividend 7% to $4.60/shr
TWTR Reports Q4 $0.33 v $0.33e, Rev $1.57B v $1.57Be; Authorizes new $4.0B share buyback. including $2B accelerated share repurchase
LCII Reports Q4 $3.22 v $2.79e, Rev $1.21B v $1.13Be; Notes in Jan 2022, production increased significantly to meet elevated RV and marine retail demand
K Reports Q4 $0.83 v $0.79e, Rev $3.42B v $3.40Be
*(US) INITIAL JOBLESS CLAIMS: 223K V 230KE; CONTINUING CLAIMS: 1.621M V 1.62ME
*(US) JAN CPI M/M: 0.6% V 0.4%E; Y/Y: 7.5% V 7.2%E (highest annual pace since early 1982)
(US) 10-year Treasury yield touches 2% for first time since summer of 2019
(US) Fed's Bullard (2022 voter, hawk): Favors 50bps rate increase in March but defers to Powell on that; Should be open to inter-meeting increase; Favors 100bps increases by July 1st (Would be first 50bps rise since 2000)
*(US) JAN MONTHLY BUDGET STATEMENT: $118.7B V $23.0BE
(US) Overnight indexed swaps (OIS) are pricing in the US Fed to increase rates by 125bps by July 2022 [follows the release of US Jan CPI data and Fed speak]
(CN) Said that the China PBOC could ease policy again next week - Press
(US) Goldman Sachs expects seven 25bps rate hikes during 2022 [would bring Fed Funds Rate to 2.0%]; previously saw 5 rate hikes in 2022

FRI 2/11
*(UK) Q4 PRELIMINARY GDP Q/Q: 1.0% V 1.1%E; Y/Y: 6.5% V 6.4%E
(US) HSBC analysts now expect Fed to hike rates by 50bps at March's meeting; See in total 150bps increase in rates in 2022
VOW3.DE Reports Jan vehicle sales 699.5K, -15.2% y/y
(CA) Protesters on Ambassador Bridge in Canada reportedly agree to open one lane of traffic from the US – press
(US) Weekly Baker Hughes Rig Count: 635 v 613 w/w (+3.6% w/w)
PFE FDA and Pfizer postpone review of COVID-19 vaccine for kids under 5 to await three-dose data; FDA postpones advisory committee meeting
(US) PBS News reporter: "The US believes Russian President Vladimir Putin has decided to invade Ukraine, and communicated those plans to the Russian military"
(US) White House National Sec Adviser Sullivan: We are not saying a final decision has been taken by Pres Putin but allies are sending a firm message to Putin; US stance is Putin has not yet made a decision

Markets stew over how many Fed rate hikes to expect in 2022

TradeTheNews.com 

Weekly Market Update: Markets stew over how many Fed rate hikes to expect in 2022

2022-01-28T16:07:26.013

A wild trading week kicked off with a bang on Monday as stocks plunged along with most other risk assets including crypto. Investors continued to aggressively prune risk ahead of Wednesday’s FOMC meeting. Major US indices moved into correction territory (down 10%) intraday and the VIX surged near 39, taking out the December high. Volumes jumped and breadth was exceedingly poor, which had traders looking for clues of potential selling exhaustion and perhaps a bottom. Consternation around the Federal Reserve’s designs on pulling back the punch bowl this year were perhaps married with worries about economic growth after US Markit PMI services dropped to 50.9, the lowest levels since January 2020. Volatility was extreme every day this week, though Monday appeared to put in a near term bottom and equities edged higher for the week with the S&P adding 0.8%, the DJIA rising 1.4%, and the Nasdaq about flat.

The choppiness continued right into Wednesday’s FOMC meeting. As expected the Fed left rates unchanged and all but assured liftoff will begin in March. In his press conference Chairman Powell showed no inclination of flinching since his hawkish pivot in back in November. Futures markets quickly began to price in at least five Fed rate hikes in 2022 after he noted they would not rule out another hike in May and adding every meeting going forward would be ‘live’. The US Treasury curve fattened notably post-FOMC, with the 2-/10-year yield spread narrowing some 10+ basis points. The US dollar remained bid and gold was under modest pressure. WTI crude hit a fresh 7-year high which was probably not lost on Chairman Powell and his colleagues. On Thursday, Q4 GDP printed at a whopping 6.9%, but that was pre-Omicron data and was boosted by a large build in inventories. Weekly initial jobless claims continued to illustrate a tight labor market with low layoffs and plentiful job openings.

By Friday, futures were under pressure once again heading into the opening bell. December PCE and Employment Cost Index data resulted in a brief respite of selling as the data met or came in softer than market expectations. Indices continued to vacillate widely, moving in and out of positive territory on several occasions. Traders remained focused on Monday's lows as a key technical gauge heading into the weekly close, while breadth remained decidedly negative, though improving some from the recent highly depressed levels.

In corporate news this week, Apple posted record quarterly profit and revenue, and CEO Cook noted he sees supply issues improving and services continuing to grow strongly. Microsoft’s results and outlook lifted tech stocks mid-week as its earnings continued to rise and its cloud division remained one of the industry’s fastest-growing. Visa shares rose after reporting a beat on profits, with management pointing out it doesn’t believe the current Omicron surge will curtail the economic recovery. Tesla shares fell despite announcing a record annual profit as CEO Musk cautioned that the supply chain issues were a negative factor this quarter and that those holdups are likely to continue through 2022.

Intel stock hit its lowest levels in a year after its revenue and margin outlook disappointed investors. Weak guidance and supply chain disruptions sent Western Digital shares plunging after the manufacturer reported results. Robinhood shares dipped to hit single digits after reporting a big net loss and a reduction in active users in Q4. Nvidia reportedly is preparing to ditch the planned takeover of Softbank’s Arm division as regulatory hurdles appear to be too formidable.


SUN 1/23
(DE) German Navy Chief Schönbach resigns after positive comments on Russian Pres Putin - press
RNO.FR Alliance of Renault, Nissan and Mitsubishi expected to announce plan to invest more than €20B over next five years on EV development - press

MON 1/24
*(FR) FRANCE JAN PRELIMINARY MANUFACTURING PMI: 55.5 V 55.3E (14th month of expansion)
*(DE) GERMANY JAN PRELIMINARY MANUFACTURING PMI: 60.5 V 57.0E (19th month of expansion and highest reading since Aug 2021)
*(EU) EURO ZONE JAN PRELIMINARY MANUFACTURING PMI: 59.0 V 57.5E (19th month of expansion)
6752.JP Said to start producing new Tesla batteries in 2023; New batteries will reportedly boost Tesla Model S range from ~650km to ~750km - Nikkei
*(UK) JAN PRELIMINARY MANUFACTURING PMI: 56.9 V 57.6E (20th straight expansion, but lowest reading since Feb 2021)
(RU) Russia govt spokesperson Peskov: Blames US and NATO for rising tensions in Ukraine; Sees very high risk of Ukraine offensive in Donbas region
*(US) JAN PRELIMINARY MARKIT MANUFACTURING PMI: 55.0 V 56.7E (Lowest since Oct 2020)
SON Increases prices for paperboard tubes and cores by at least 6% on US, Canadian shipments; Effective Mar 1, 2022
*(SG) SINGAPORE CENTRAL BANK (MAS): TO RAISE SLIGHTLY THE RATE OF APPRECIATION OF THE S$NEER POLICY BAND, Leaves width of band and level at which centered unchanged (intra-meeting move)
*(AU) AUSTRALIA Q4 CPI Q/Q: 1.3% V 1.0%E; Y/Y: 3.5% V 3.2%E
1112.HK Will not proceed with planned 5-year USD bond offering, cites market conditions

TUES 1/25
005380.KR Reports Q4 (KRW) Net 0.55T v 1.38T y/y; Op 1.53T v 1.64T y/y; Rev 31.0T v 29.2T y/y; Chip shortage situation will normalize by July 2022
ERICB.SE Reports Q4 (SEK) Net 10.1B v 7.2B y/y, Adj Op 12.3B v 10.0Be, Rev 71.3B v 68.1Be; Expects fundamentals to remain strong in our core mobile infrastructure business during 2022
*(DE) GERMANY JAN IFO BUSINESS CLIMATE SURVEY: 95.7 V 94.5E (1st improvement in 7 months)
NVDA Reportedly preparing to abandon takeover of Arm as it sees little to no progress in winning regulatory approval - press
GE Reports Q4 $0.92 adj v $0.83e, Rev $20.3B v $21.2Be; Guides FY22 adj EPS weak
JNJ Reports Q4 $2.13 adj v $2.12e, Rev $24.8B v $25.3Be
MMM Reports Q4 $2.31 v $2.03e, Rev $8.61B v $8.60Be
RTX Reports Q4 $1.08 v $1.01e, Rev $17.0B v $17.2Be; Guides initial FY22 short of consensus
VZ Reports Q4 $1.31 v $1.28e, Rev $34.1B v $33.8Be; Sees adj EBITDA growth in 2022 to be offset by headwinds from non-cash items
ADM Reports Q4 $1.50 v $1.36e, Rev $23.1B v $20.4Be; Raises dividend 8.1% to $0.40/shr from $0.37/shr (implied yield 2.3%e)
AXP Reports Q4 $2.18 v $1.78e, Rev $12.1B v $11.6Be
AJRD Lockheed believes it is highly likely that the FTC will vote to sue to block the transaction and expect they will make a decision before Jan. 27th; Lockheed could elect to fight the lawsuit or terminate the merger
*(HU) HUNGARY CENTRAL BANK (MNB) RAISES BASE RATE BY 50BPS TO 2.90%; MORE-THAN- EXPECTED
PCAR Reports Q4 $1.47 v $1.31e, Rev $6.69B v $5.38Be
(US) Jan Philadelphia Fed Non-Manufacturing Index: -16.2 v +27.3 prior
VTNR Reports voluntary termination of asset divestiture agreement with Safety-Kleen Systems from CLH unit
(HU) Hungary Central Bank Gov Matolcsy: To continue with rate hikes on a monthly basis until inflation outlook stabilizes and risks turn balanced - post rate decision statement
*(US) JAN RICHMOND FED MANUFACTURING INDEX: 8 V 14E
*(US) JAN CONSUMER CONFIDENCE: 113.8 V 111.1E
MSFT Reports Q2 $2.48 v $2.29e, Rev $51.7B v $50.1Be
TXN Reports Q4 $2.27 v $1.95e, Rev $4.83B v $4.44Be; Guides Q1 strong
(US) SEMI Dec North America-based Manufacturers of Semi Equipment Billings: $3.92B, -0.5% m/m (+5.0% prior) and +46.1% y/y (+50.6% prior)
MSFT Guides Q3 Rev $48.5-49.3B (implied) v $47.7Be
005930.KR Normalizes chip production operations in China Xi'an after COVID-19 measures ease

WEDS 1/26
066570.KR Reports final FY21 (KRW) Net 1.42T v 2.07T y/y, Op 3.86T v 3.91T y/y, Rev 74.7T v 58.1T y/y
ANTM Reports Q4 $5.14 v $5.11e, Rev $36.0B v $36.4Be; Raises quarterly dividend by 13% to $1.28/shr from $1.13/shr
T Reports Q4 $0.78 adj v $0.76e, Rev $41.0B v $40.4Be
ADP Reports Q2 $1.65 v $1.63e, Rev $4.03B v $3.98Be; Raises guidance
GD Reports Q4 $3.39 v $3.37e, Rev $10.3B v $10.7Be; Notes highest Gulfstream orders in more than a decade
GLW Reports Q4 $0.54 v $0.51e, Rev $3.68B v $3.61Be; Guides Q1 above estimates
BA Reports Q4 -$9.44** adj v -$0.09e, Rev $14.8B v $17.0Be; 787 program recorded $3.5B pre-tax non-cash charge; Raises 737 Max planned output to 26 from 19
ABT Reports Q4 $1.32 v $1.18e, Rev $11.5B v $10.6Be
BA Guides initial FY22 Rev 'to improve' y/y; Increasing 777/777X production rate to 3 per month in 2022 - earnings slides
3333.HK Said to have told investors Evergrande is actively in communication with creditors; Plans to have preliminary restructuring plan in 6 months - press
*(US) DEC PRELIMINARY WHOLESALE INVENTORIES M/M: 2.1% V 1.2%E
KNX Reports Q4 $1.61 v $1.43e, Rev $1.82B v $1.72Be
(US) Dec New Home Sales: 811K v 760Ke
(DE) Reportedly Nord Stream 2 operator formally registers a German subsidiary; Unable to say when certification process will be resumed - press
UBSG.CH To acquire automated investment co Wealthfront for $1.4B in cash
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast to 6.5% from 5.1%
(US) Association of American Railroads weekly rail traffic report for week ending Jan 22nd: 477.5K total units, -9.8% y/y
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25%; AS EXPECTED; SAYS 'IT WILL SOON BE APPROPRIATE' TO RAISE RATES
(US) Fed Chair Powell: With elevated inflation and strong labor market, Fed will continue to adapt policy; Policy has been adapting to an evolving environment - post rate decision statement
(US) Fed Chair Powell: It is not possible to predict the path of policy rates; Will be guided by data and evolving outlook - post rate decision Q&A
INTC Reports Q4 $1.09 adj v $0.90e, Rev $20.5B v $18.3Be; Raises Quarterly dividend 5% to $0.365 from $0.3475 (indicated yield 2.82%)
TSLA Reports Q4 $2.54 v $2.11e, Rev $17.7B v $16.1Be
STX Reports Q2 $2.41 v $2.36e, Rev $3.12B v $3.11Be
005930.KR Reports final Q4 (KRW) Net 10.8T v 6.6T y/y (v 11.1Te); Op 13.9T v 13.8T prelim (v 9.1T y/y) , Rev 76.6T v 76.0T prelim (v 61.6T y/y)

THURS 1/27
SAP.DE Reports final Q4 EPS €1.86 v €1.64e, Op €2.47B v €2.77B y/y, Rev €7.98B v €7.91Be
DBK.DE Reports Q4 Net €145M v €51M y/y, Pretax €82M v €175M y/y, Net Rev €5.90B v €5.68Be
DGE.UK Reports H1 Net £2.09B v £1.66B y/y, Adj Op £2.74B v £2.24B y/y, Rev £7.96B v £6.87B y/y
(US) Money markets currently pricing 5 rate hikes of 25bps for Fed during 2022
(RU) Russia Foreign Min Lavrov: No positive reaction on main points from US on security proposals, but US response gives hope on starting serious dialogue on secondary issues; President Putin to decide next steps
DOW Reports Q4 $2.15 v $2.04e, Rev $14.4B v $14.3Be; In 2022, expects continued demand strength across its end markets
VLO Reports Q4 $2.47 v $1.79e, Rev $35.9B v $28.9Be; Remains optimistic on refining margins
MCD Reports Q4 $2.23 v $2.31e, Rev $6.01B v $6.03Be
CMCSA Reports Q4 $0.77 v $0.73e, Rev $30.3B v $29.6Be
*(US) INITIAL JOBLESS CLAIMS: 260K V 265KE; CONTINUING CLAIMS: 1.675M V 1.67ME
*(US) Q4 ADVANCE GDP ANNUALIZED Q/Q: 6.9% V 5.5%E; PERSONAL CONSUMPTION: 3.3% V 3.4%E
*(US) Q4 ADVANCE GDP PRICE INDEX: 6.9% V 6.0%E; CORE PCE Q/Q: 4.9% V 4.9%E
(US) Nevada reports Dec casino gaming Rev $1.15B, +68% y/y; Las Vegas strip Rev $650.8M, +123% y/y
*(US) DEC PENDING HOME SALES M/M: -3.8% V -0.4%E; Y/Y: -6.6% V -4.0%E
V Reports Q1 $1.81 v $1.69e, Rev $7.06B v $6.77Be; Do not believe the current surge in the pandemic will curtail the recovery
AAPL Reports Q1 $2.10 v $1.89e, Rev $124.0B v $118.1Be; Expect to reach record Q2 Rev this quarter; Sees less supply chain issues in current quarter, Rev loss expected to be less than $6B
(US) Pres Biden reportedly told Ukraine Pres Zelenskiy that a Russian invasion is now virtually certain once the ground freezes - CNN

FRI 1/28
*(FR) FRANCE Q4 PRELIMINARY GDP Q/Q: 0.7% V 0.5%E; Y/Y: 5.4% V 4.9%E
(RU) Russia Foreign Min Lavrov: Russia does not want war but will defend its interests
*(DE) GERMANY Q4 PRELIMINARY GDP Q/Q: -0.7% V -0.3%E; Y/Y: 1.4% V 1.8%E
CAT Reports Q4 $2.69 v $2.22e, Rev $13.8B v $13.3Be
CVX Reports Q4 $2.56 v $3.06e, Rev $48.2B v $45.0Be; Guides Q1 buybacks to top $3-5B annual guidance range
2866.HK Positive profit alert: Prelim FY21 (CNY) Net 5.8-6.8B +172-219% y/y
*(US) Q4 EMPLOYMENT COST INDEX (ECI): 1.0% V 1.2%E
*(US) DEC PCE DEFLATOR M/M: 0.4% V 0.4%E; Y/Y: 5.8% V 5.8%E

Market trepidation continues to rise over Fed rates, Ukraine, and earnings quality

TradeTheNews.com 

Weekly Market Update: Market trepidation continues to rise over Fed rates, Ukraine, and earnings quality

2022-01-21T16:04:31.753

2022’s rocky start for investors continued this week. Equities, bonds, and cryptocurrencies all fell as investors continued to de-risk portfolios ahead of next week’s FOMC meeting. The growing specter of four or more Fed rate hikes this year, along with continued high inflation exacerbated by pandemic effects on the global supply chain, and worries around the rising likelihood of a conflict between Russia and the West over Ukraine, all weighed on risk appetite. Global bond yields initially spiked in what turned out to be a wild ride for fixed income traders. The German 10-year Bund yield found its way into positive territory for the first time since April 2022, while the US 10-year topped 1.9% and looked on its way to 2%. Oil prices reached 7-year highs fanning inflation concerns along with European CPI readings.

By Friday the Dow and NASDAQ had moved below their 200-day moving averages and the S&P looked poised to follow. Bitcoin fell back below $40K testing a key technical level for the second time this month. The US 10-year retreated back below 1.75% and the BUND was at -8BPS once again. Volumes jumped along with the VIX into January options expiration. Potentially adding to the consternation, China’s PBOC was forced to cut key lending rates across several of their facilities. In some cases, like the 5-year LPR, it was the first rate cut since April of 2020 and viewed as another move to support the beleaguered property sector. Traders also prepared for what will be the busiest gauntlet of Q1 earnings season next week, following several high profile misses and preannouncements already. For the week, the S&P lost 5.7%, the DJIA was off 4.6%, and the Nasdaq ended down 7.6%.

In corporate news this week, big financial firms released more earnings from a lackluster quarter. Goldman Sachs stock fell by the most since mid-2020 amid higher expenses and provisions for credit losses. Schwab shares fell after its Q4 daily average trades missed estimates. Bank of America beat street consensus on profit and posted record investment banking and wealth management revenue.

Netflix stock sank on a disappointing subscriber outlook and a warning that competition is having an effect on its marginal growth. Peloton shares were tripped up on a report that the company plans to temporarily halt its production of connected fitness products due to waning consumer demand, though the company later said “rumors of halting all bike and tread production” were “false.” Procter and Gamble said it has informed retailers it plans to increase pricing on certain personal health care brands in US beginning mid-April. Microsoft announced it would buy Activision, the maker of ‘Call of Duty’ and ‘Warcraft’ video games, in a $68.7B all-cash deal, which would be the most expensive acquisition in the tech giant’s history.


SUN 1/16
WMT Trademarks filings from Dec 2021 show Walmart is preparing to create its own cryptocurrency and collection of virtual goods, such as NFTs - press
(HK) Hong Kong Monetary Authority (HKMA) issues proposal that will abolish the role of lawyers as middlemen in residential mortgage transactions, will go into effect in H2 after consultations and a trial period - SCMP

MON 1/17
UNA.NL Sets out the strategic direction in materially expanding its presence in Health, Beauty, and Hygien fields; Confirms GSK/Pfizer's Consumer Health is a highly complementary category for Unilever, with good potential for synergies and a number of routes to build scale
(DE) German day-ahead baseload power price at €251.0/MWh, +73.1% d/d
(AE) Explosions said to have occurred in 3 petroleum tanker trucks in Abu Dhabi's Mussafah; drones likely behind explosion - press
(AT) Austria said to have confirmed mandatory vaccination for everybody aged 18 and higher from Feb 1st - press
(DE) Germany Fin Min Lindner: it is time to build up fiscal buffers again; I am in favour of reducing debt - pre-Eurogroup meeting comments
(RU) Reportedly US and EU no longer considering unplugging Russia from SWIFT system - German press
RIO.AU Reports Q4 Pilbara Iron Ore production 84.1Mt v 86.0Mt y/y; Shipments: 84.1Mt v 88.9Mt y/y
BNTX According to Israeli study, some preliminary data shows 4th dose of COVID-19 vaccine Comirnaty raises antibodies but doesn't protect against Omicron variant - financial press
TSLA Said to be targeting 2022 deliveries of 1.5-2.0M units v 937K y/y v 1.35Me; Opened bidding for EV camera modules - press

TUES 1/18
BOSS.DE Reports prelim Q4 EBIT €100M v €13M y/y, Rev €906M v €862Me; Says benefitted from ongoing robust consumer sentiment in key markets
(UR) Russia said to have pulled people out of their embassies in Kyiv and Lviv inside the Ukraine - NYT
(EU) EU27 Dec New Car Registrations: -22.8% v -20.5% prior; EU sales of electric vehicles (EVs) surpassed diesel vehicle sales in Dec (1st time ever)
TM Confirms it targets to produce 700K vehicle units in Feb 2022 (prior had goal of 900K); Expects to miss FY21/22 production target of 9M units citing chip shortage; Notes current demand is very strong
BP Exec: strong and growing demand (incl. 45% increase in Q3 2021 v Q2 2021) has brought profit margins of electric fast chargers close to fuel pumps - press interview
*(DE) GERMANY JAN ZEW CURRENT SITUATION SURVEY: -10.2 V -8.8E; EXPECTATIONS SURVEY: 51.7 V 32.0E
BABA US said to be examining cloud unit for potential national security risks - press
SHOP Reportedly steps up China expansion through tie-up with JD.com - JD blog
GS Reports Q4 $10.81 v $12.10e, Rev $12.6B v $12.1Be
ATVI Confirms to be acquired by Microsoft for $95.00/shr valued at $68.7B all-cash deal; Microsoft sees deal will be accretive to non-GAAP earnings per share upon close, planned during FY23
*(US) JAN EMPIRE MANUFACTURING: -0.7 V +25.0E (1st negative reading since June 2020)
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.6% v +0.3% prior
*(US) JAN NAHB HOUSING MARKET INDEX: 83 V 84E
VZ Confirms launch of its 5G Ultra Wideband network tomorrow; Voluntarily decided to limit our 5G network around airports
JBHT Reports Q4 $2.28 v $1.99e, Rev $3.50B v $3.29Be

WEDS 1/19
ASML.NL Reports Q4 Net €4.39 v €3.78e, Rev €4.99B v €5.14Be; Expected impact of the fire in part of a building at our Berlin site is included into FY22 outlook; Sees significant growth opportunities beyond 2025
(CN) China Cyberspace Regulator said to want platform companies with >100M users or >CNY10B Rev to obtain approval for investments or fundraising
*(UK) DEC CPI M/M: 0.5% V 0.3%E; Y/Y: 5.4% V 5.2%E (5th month above target and highest annual pace since Mar 1992)
*GERMAN 10-YEAR YIELD TURNS POSITIVE FOR THE 1ST TIME SINCE APR 2019
ASML CEO: demand in 40-50% above maximum capacity; May take 2-3 years to achieve balance between demand and supply - post earnings comments
IEA Monthly Oil Report (OMR): steady rise in supply could see a significant surplus materialize in Q1 2022 and going forward; Saudi Arabia and Russia could break their output records
UNH Reports Q4 $4.48 v $4.30e, Rev $73.7B v $73.0Be; Affirms FY22 outlook
BAC Reports Q4 $0.82 v $0.76e, Rev $22.1B v $22.1Be
FAST Reports Dec net sales $476.0M +11.0% y/y
PG Reports Q2 $1.66 v $1.65e, Rev $21.0B v $20.3Be; Sees paying more than $8B in dividends in FY22; Says price increases accounted for roughly half of Q2 Rev growth
PLD Reports FFO Q4 $1.12 v $1.10e, Rev $1.28B v $1.06Be; Guides init FY22 strong; "Demand shows no signs of slowing"
*(US) DEC HOUSING STARTS: 1.702M V 1.650ME; BUILDING PERMITS: 1.873M V 1.703ME
(US) FTC Chair Khan: We need to make sure merger laws are in line with realities; Merger guidelines review will go beyond technology sector - CNBC
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast to 5.1% from 5.0%
(US) Association of American Railroads weekly rail traffic report for week ending Jan 15th: 494K total units, -6.6% y/y
*(US) TREASURY $20B 20-YEAR BOND REOPENING DRAWS 2.210% V 1.942% PRIOR, BID-TO-COVER 2.48 V 2.59 PRIOR AND 2.39 OVER LAST 8 REOPENINGS
AA Reports Q4 $2.50 v $2.04e, Rev $3.34B v $3.29Be
GEF To implement a $50/ton price increase on all uncoated recycled paperboard (URB) grades and a minimum 6% increase on tube and core and protective packaging products
*(CN) CHINA PBOC MONTHLY LOAN PRIME RATE (LPR) SETTING: CUTS BOTH 1-YEAR AND 5-YEAR RATES

THURS 1/20
ALO.FR Reports Q3 Rev €3.92B v €3.73B y/y; Affirms FY21/22 and medium-term objectives
(DE) Germany Dec PPI M/M: 5.0% v 0.8%e; Y/Y: 24.2% v 19.3%e
3333.HK Ad-hoc bondholders group said to hire Harneys [law firm], considers enforcement action
*(ID) INDONESIA CENTRAL BANK (BI) LEAVES 7-DAY REVERSE REPO RATE UNCHANGED AT 3.50%; AS EXPECTED; To raise RRR
*(NO) NORWAY CENTRAL BANK (NORGES) LEAVES DEPOSIT RATES UNCHANGED AT 0.50%; AS EXPECTED; Reiterates forward guidance that interest rate is likely to be raised in Mar 2022
*(EU) EURO ZONE DEC FINAL CPI Y/Y: 5.0% V 5.0%E; CPI CORE Y/Y: 2.6% V 2.6%E (record high for annual pace)
TRV Reports Q4 $5.20 v $3.86e, Rev $9.01B v $8.71Be
(RU) Russia Central bank confirms to propose banning crypto mining and circulation; Proposals still up for discussions - press
*(US) INITIAL JOBLESS CLAIMS: 286K V 225KE; CONTINUING CLAIMS: 1.635M V 1.56ME
*(US) JAN PHILADELPHIA FED BUSINESS OUTLOOK: 23.2 V 19.0E
*(US) DEC EXISTING HOME SALES: 6.18M V 6.43ME
(US) Sen Manchin (D-WV) indicates he is open to reengaging on revised Build Back Better plan; 'We’ll be talking to everybody who wants to talk' - NBC reporter
PTON Reportedly to temporarily halt production of connected fitness products amid waning consumer demand - CNBC
US reportedly gives Baltic states approval to send weapons to Ukraine - press
(US) Fed seeks public comment on Central Bank Digital Currency; Outlines potential benefits of CBDC
NFLX Reports Q4 $1.33 v $0.82e, Rev $7.71B v $7.70Be; Acknowledges competition is affecting marginal growth; Expects being FCF positive for FY22 and beyond; In 2022 will expand its portfolio of games; Notes US dollar appreciation will cost ~$1B in FY22 Rev
CSX Reports Q4 $0.42 v $0.41e, Rev $3.43B v $3.30Be
SON Implementing additional $50/ton price increase for uncoated recycled paperboard; Effective Feb 18th
PPG Reports Q4 $1.26 v $1.19e, Rev $4.19B v $4.03Be; Guides Q1 well below ests
3333.HK Says risk management committee is actively looking for solutions and communicating with creditors; proposes to engage additional professionals, including China International Capital Corporation Limited and BOCI Asia Limited as financial advisors; to engage Zhong Lun Law Firm LLP as legal advisor
PTON CEO: Confirms Peloton is mulling layoffs; rumors of halting all bike and tread production false

FRI 1/21
(RU) Russia Foreign Min Lavrov: Russia wants NATO to leave Romania and Bulgaria as part of security proposals to US
INTC Confirms to invest more than $20B to build two new factories in Ohio, US; Construction expected to begin late in 2022, production to come online in 2025
*(CN) CHINA PBOC CUTS RATE ON STANDING LENDING FACILITY (SLF) BY 10BPS); Effective Jan 17th
SLB Reports Q4 $0.41 v $0.39e, Rev $6.22B v $6.09Be; Expects oil demand to exceed prepandemic levels before end-2022 and to further strengthen in 2023
(UK) Daily Baltic Dry Bulk Index -4.0% at 1,415 points (lowest since Feb 2021)
(UA) Lithuania and Latvia plan to send Ukraine Stinger air defense missiles - press
(DE) Germany Chancellor Scholz: Germany will not send weapons to Ukraine
GM Reportedly plans to invest $6.5B into two Michigan production sites; Aims to create 4K jobs - local press

Markets continue to recalibrate around shrinking accommodation and stubborn inflation

TradeTheNews.com 

Weekly Market Update: Markets continue to recalibrate around shrinking accommodation and stubborn inflation

2022-01-14T16:03:16.917

US stock markets, in particular growth and tech, remained under pressure this week amid rising expectations of a more aggressive US Federal Reserve in 2022. Chairman Powell and Vice Chair nominee Brainard appeared on Capitol Hill for their confirmation hearings and presented a united front in their belief the Fed’s key task is now to bring down inflation. Those hearings were sandwiched around a loud chorus of Fed officials who underscored views that it will in all likelihood be appropriate to raise rates 3-4 times this year beginning in March, while simultaneously allowing the balance sheet to start shrinking later this year. December CPI and PPI only reinforced those expectations remaining at multi-decade highs. Also, concerns around the pandemic lingered, particularly with respect to new government mandated shutdowns across portions of China. Reports surfaced of elevated congestion at key Chinese ports adding to jitters surrounding the global supply chain and its potential effects on future inflation.

Another source of uncertainly for investors was growing worries about Russia’s designs on Ukraine. Talks between the US, Russia, and NATO appeared to gain little if any traction towards de-escalation amid reports of a major cyberattack in the former Soviet territory. Earnings season kicked off on Friday as commentary from a few key banks failed to live up to the early 2022 hype seen in their stock prices. Crude prices rose back towards the highs of last fall, fanning inflation worries while the US dollar index fell to a 2-month low. Short rates moved up amid futures markets nearly fully pricing in a fourth Fed rate hike in December. The US 10-year Treasury yield looked to gain a foothold above 1.75%. For the week, the S&P lost 0.3%, the DJIA was off 0.9%, and the Nasdaq dropped 0.3%.

In corporate news this week, bank names kicked off earnings season to mixed reaction. Results from JPMorgan, Citi, and Wells Fargo all topped Q4 EPS estimates, but the magnitudes of all three beats were the smallest of 2021. Citi saw a steep profit drop and reported a trading revenue miss, sending the stock lower on Friday. JPMorgan shares also fell as its expense guidance caused some consternation. Wells Fargo rose after reporting that profit rose 86% in Q4 and revenue beat consensus.

Sherwin Williams cut its outlook again, citing supply side effects and labor headwinds. Delta Airlines reported results above consensus and management said they expect Omicron to temporarily delay demand recovery by 60 days, but remained confident in a strong spring and summer travel season. Taiwan Semiconductor was a bright spot, reporting a strong improvement in year over year metrics and announcing plans for record capex spending in FY22, as much as 10% higher than analysts predicted. A judge rejected Facebook’s effort to dismiss an FTC antitrust lawsuit which if successful could ultimately force the social media giant to sell Instagram and WhatsApp. Take-Two Interactive acquired Farmville developer Zynga for $13B as part of a move into the mobile gaming space. In the latest inflationary sign, it was reported that Netflix will raise subscription prices by about 10% in the US and Canada.


SUN 1/9
(US) Sen Manchin (D-WV) appears to be pulling back support for Build Back Better, thought to have privately said he is not interested in approving the legislation - US press
(CN) China will make it easier for state backed property developers to buy up distressed assets of property developers

MON 1/10
(UK) Brexit negotiator Truss: I will trigger Article 16 if the EU does not cooperate - financial press
(US) Goldman Sachs analysts: Fed will likely raise interest rates four times (Mar/Jun/Sep/Dec) this year and will start its balance sheet runoff process in July, if not earlier
CSGN.CH Recent strength being attributed to press report that Credit Suisse may be looking for merger with other European bank, likely Italian or French
(UA) Ukraine Dep PM Stefanishyna: Have the right to choose our own security arrangements
*(EU) EURO ZONE NOV UNEMPLOYMENT RATE: 7.2% V 7.2%E
(US) Reportedly Washington University's scientific modelling shows Omicron's fatality rate is 97-99% less than for Delta variant, being less deadly than seasonal flu - press
CAH Cuts FY22 Medical segment guidance due to expected additional INFLX impacts and lower volumes & Px hike fails; Sees $0.40-0.45/shr impact to FY22 results vs $5.69e or ~8% cut
ZNGA To be acquired by Take-Two for $9.861/shr in ~$12.7B cash-stock deal
MRNA Reports prelim FY21 Product Sales $17.5B v $17.6Be, Covid-19 Vaccines shipped 807M
(US) Dec NY Fed Survey of Consumer Expectations: Short- and medium-term inflation expectations are unchanged
(US) Atlanta Fed GDPNow: Raises Q4 GDP forecast to 6.8% from 6.7%
ILMN Reports prelim Q4 Rev $1.19B v $1.09Be; Guides initial FY22 Rev $5.15-5.24B v $4.88Be
*(US) FED CHAIR POWELL: FED WILL STOP HIGHER INFLATION FROM GETTING ENTRENCHED - PRE-RELEASED CONGRESSIONAL TESTIMONY
(CN) China Housing Ministry official Pan: China to build ~6.5M new low cost homes by the end of 2025
(US) Puerto Rico judge approves modified debt plan, will approve quickly once board refiles (ahead of Friday deadline)

TUES 1/11
NOKIA.FI Reports prelim FY21 Rev €22.2B (prior guided €21.7-22.7B), comparable Op margin 12.4-12.6% (prior guided 10-12%) citing one-off items related to venture fund investments etc.
(DE) Germany said to miss the 2030 climate target of reducing CO2 level by 65% from 1990 level - financial press
CVS Raises FY21 $8.33-8.38 v $8.03e (prior $8.00), Affirms FY22 $8.10-8.30 v $8.23e - filing
AAL Reports prelim Q4 Pretax -$1.23B to -$1.16B, -13% to -12% y/y, Rev $9.42B v $9.12Be, -17% v 2019 levels (prior guided -20%) - slides
(LT) ECB's Kazaks (Latvia): Reiterates that ECB will act if necessary to address inflation
(US) Fed's George (FOMC voter, hawk): Favors running down Fed balance sheet earlier versus later; It's time to transition policy to more normal posture
(US) Fed Chair Powell: If we have to raise rates more over time, we will - comments to Senate
FB Judge rejects Facebook effort to dismiss FTC antitrust lawsuit; FTC's lawsuit may potentially make Facebook sell Instagram and WhatsApp - press
(HK) Fitch: Gaming operators that have Macau exposure are facing uncertainty

WEDS 1/12
BMW.DE Reports Q4 global deliveries 589.3K -14% y/y; FY21 global deliveries 2.52M +8.4% y/y
VOW3.DE Reports Dec Group deliveries 713.2K -28.5% y/y, cites chip shortage
*(US) DEC CPI M/M: 0.5% V 0.4%E; Y/Y: 7.0% V 7.0%E (highest annual pace since 1982)
*(US) DOE CRUDE: -4.6M V -2ME; GASOLINE: +8.0M V +2.5ME; DISTILLATE: +2.5M V +1ME (Crude oil inventory level lowest since Oct 2018)
(US) Fed's Mester (FOMC voter, hawk): We have moved from pandemic driven inflation pressures to something broader; Would support raising rates in March if the outlook stays the same - press interview
(US) Association of American Railroads weekly rail traffic report for week ending Jan 8th: 441K total units, -16% y/y
*(US) TREASURY'S $36B 10-YEAR NOTE REOPENING DRAWS 1.723% v 1.52% prior; BID-TO-COVER RATIO: 2.51 V 2.58 PRIOR AND 2.47 OVER THE LAST 8 REOPENINGS
*(US) DEC MONTHLY BUDGET STATEMENT: -$21.3B V -$5.0BE
(US) Fed Vice Chair nominee Brainard: Pandemic continues to pose challenges; Slowing too high inflation is Feds most important task; Policy is focused on getting inflation back down to 2% - prepared remarks ahead of confirmation hearings

THRS 1/13
2330.TW Reports Q4 (NT$) Net 166.2B v 142.8B y/y; Op 182.8B v 157.1B y/y; Rev 438.2B v 361.5B y/y; Targets long term Rev CAGR target 10-15% over next few years
(RU) Russia govt spokesperson Peskov: Talks with US and NATO this week were unsuccessful, disagreements on fundamental issues
MAERSKB.DK Exec: 2022 has not started off as we had hoped; At Los Angeles and Long Beach ports, delays for vessel berthing ranged from 28 to 45 days, with all North American west coast ports being either challenging or critical - press interview
BA Reportedly 737 Max to resume service in China as soon as in Jan - press
DAL Reports Q4 $0.22 v $0.14e, Rev $9.47B v $9.24Be; Expects Omicron to temporarily delay the demand recovery 60 days, but confident in strong spring, summer travel season
RNO.FR CEO: Sees chip issues to persist through 2022, but no worse than 2021; Profitability and pricing improving now, met cost goal; To become fully electric by 2030
EMA announces global regulators discuss path towards regulatory alignment on response to Omicron variant; Broad agreement that clinical data are needed for approving a new updated vaccine
(US) INITIAL JOBLESS CLAIMS: 230K V 200KE; CONTINUING CLAIMS: 1.56M V 1.73ME
*(US) DEC PPI FINAL DEMAND M/M: 0.2% V 0.4%E; Y/Y: 9.7% V 9.8%E
(US) Fed Vice Chair nominee Brainard: I supported all the Fed's actions during the pandemic; Our actions will bring inflation down
*(US) TREASURY $22B 30-YEAR BOND REOPENING DRAWS 2.075% V 1.895% PRIOR; BID TO COVER 2.35 V 2.22 PRIOR AND 2.36 OVER LAST 8 REOPENINGS
(US) Supreme Court blocks Pres Biden's workplace vaccine-or-test mandate for larger employers in 6-3 decision; Rule had covered 84M American workers - press
SAP.DE Reports prelim Q4 non-IFRS EPS €1.86 v €1.70 y/y; Rev €8.0B v €7.5B y/y; Expects its cloud growth to continue to accelerate in 2022
(JP) Bank of Japan (BOJ) policy makers said to be debating when to 'telegraph' a rate hike that can come before hitting 2.0% CPI target; notes an actual rate hike is not imminent - financial press
*(KR) BANK OF KOREA (BOK) RAISES 7-DAY REPO RATE 25BPS TO 1.25%; AS EXPECTED
*(CN) CHINA DEC TRADE BALANCE: $94.5B V $74.0BE; 2021 EXPORTS +29.9% Y/Y

FRI 1/14
*(UK) NOV GDP M/M: 0.9% V 0.4%E
EDF.FR Cuts FY22 nuclear output 300-330TWh (prior 330-360TWh), as a result of the extension of the outage period for 5 of EDF's French nuclear reactors; To impact FY22 EBITDA by around €8.4B
(RU) Russia Foreign Min Lavrov: All communications channels with EU are closed; Believes can have a security agreement with US with good will
MAERSKB.DK Reports prelim Q4 underlying EBITDA $8.0B v $7.0Be, Rev $18.5B v $17.5Be; To exceed FY21 guidance
(UK) Brexit negotiator Truss: there is a deal to be done with EU over post-Brexit trade issues
JPM Reports Q4 $2.86 (ex Net credit reserve release) v $2.98e, Adj overhead ratio 61% v 55% y/y; Managed Rev $30.4B v $29.9Be
JPM Guides initial FY22 NII $50B v $52.5B guided for FY21; Adj expense $77B v $71B guided for FY21 - earnings slides
SHW Reports prelim Q4 $1.35 adj v $1.70e, Rev $4.76B v $4.79Be; Increasing prices 12% FEB 1 2022; Raw materials supply challenges to persist
C Reports Q4 $1.46 v $1.39e, Rev $17.0B v $17.1Be
(US) Senate bill said to block defense contractors from using China rare earths in weapons for Pentagon - press
*(US) DEC ADVANCE RETAIL SALES M/M: -1.9% V -0.1%E; RETAIL SALES (EX-AUTO) M/M: -2.3% V 0.1%E
*(US) DEC INDUSTRIAL PRODUCTION M/M: -0.1% V +0.2%E; CAPACITY UTILIZATION: 76.5% V 77.0%E
(US) Fed's Williams (FOMC voter):Expects inflation to drop to around 2.5% this year; Omicron wave to slow growth in next few months
(US) Fed's Kashkari (dove, non-voter): We are seeing very high inflation right now; Surprised by how high and persistent it is
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 5.0% from 6.8%
Raises monthly prices in US and Canada beginning today; US standard price raised to $15.49/mo (from $13.99/mo); First price hike since Oct 2020 - press

Markets reset expectations with higher rates and less stimulus ahead

TradeTheNews.com 

Weekly Market Update: Markets reset expectations with higher rates and less stimulus ahead

Fri, 07 Jan 04:03 PM EST/09:03 PM GMT

2022 trading started off volatile, with large swings across stock and bond markets. Investors fled some of the most popular trades of the past year as the Fed looked poised to begin raising rates as soon as March. The December FOMC minutes underscored the Fed was even closer to liftoff than previously thought, and that the balance sheet will in all likelihood shrink at a much faster pace than during the last cycle once tapering is finished and rates start to rise. Bonds and other long duration assets, notably US technology shares came under significant pressure as traders aggressively rotated into banks and other traditionally defensive sectors that offered exposure to yield. Omicron infections continued to explode, increasing workforce absenteeism and stretching health care facilities in many nations around the world. Federal, state and local governments were forced to adopt new measures while dealing with modest additional closures, but the overall narrative that this current wave is less severe and will likely be shorter lived largely held.

On Friday, the December jobs report highlighted the pressure the Fed faces. Rates remained on an upward trajectory while futures markets saw expectations for a March Fed liftoff cemented after the unemployment rate dropped below 4% and wage gains easily surpassed expectations. Despite missing December non-farm payroll expectations, the monthly employment report continued to suggest that labor shortages have added to sustained cost pressures in the economy. Also, the Euro rose on Friday after Euro Zone December Preliminary CPI hit a fresh record high. Bitcoin dropped 10% this week, falling back towards $40K for first time since October, as investors began to question its ability to offer a true store of value amid a drawdown in assets correlated to rising interest rates. Oil prices rose after OPEC+ producers agreed to continue pumping more crude, betting that Omicron won't have the sort of devastating effect on demand as previous Covid waves. For the week, the S&P fell 1.9%, the DJIA was off 0.3%, and the Nasdaq tumbled 4.5%.

In corporate news this week, Walmart announced plans to hire over 3,000 delivery drivers in order to expand its home delivery service to reach 30M households. Humana shares took a deep drop after the health insurer cut its Medicare Advantage enrollment guidance, despite affirming FY21 and FY22 earnings outlook.

Ford management doubled its all-electric F-150 Lightning production estimates to 150K units annually amid high demand. GM began taking orders for its Silverado EV pickup truck this week, with sales expected to start in spring 2023. Stellantis announced its Chrysler brand would launch its first battery EV by 2025, and aimed to have an all-EV lineup by 2028.

On the COVID front, a CDC advisory panel voted nearly unanimously to recommend 12- to 17-year-olds should get the Pfizer booster shot at least five months after their second dose. The FDA shortened the interval for a booster dose of Moderna’s vaccine to five months for those 18 and older.


SUN 1/2
TSLA Reports Q4 deliveries 308.6K v 266Ke v 241.3K q/q; FY21 deliveries 936.0K v 499.6K y/y
(HK) Macau Dec Casino Rev (MOP) 7.96B v 6.75B prior; Y/Y +1.8% v 0.0% prior (-5.5%e)
T AT&T and Verizon have rejected FAA request to delay rollout of 5G, they offered a counter proposal that would allow limited deployments to go ahead this week - letter to USDOT
005930.KR May invest >KRW35.0T into chip business in 2022; invested KRW32.9T in chip facilities in 2020 - Korean press
(CN) China property developers have a combined $197B in debt coming due in January [relates to various types of payments (including bond, trust product and wage costs)] - financial press

MON 1/3
(TR) Turkey Dec CPI M/M: 13.6% v 8.5%e; Y/Y: 36.1% v 27.4%e (inflation accelerated for a 7th straight month and highest annual pace since Sept 2002)
*(IT) ITALY DEC MANUFACTURING PMI: 62.0 V 61.5E (18th month of expansion)
OPEC reportedly sees tighter Q1 as it considers next oil-production hike; Now estimates Q1 oversupply ~25% smaller - press
PFE FDA takes multiple actions to expand use of PFE-BNTX COVID-19 Vaccine; Amends EUA to expand use of a single booster dose to include children aged 12-15 years; Shorten time between primary vaccine and booster to at least 5 months (prior 6 months); and allow for a third primary dose for certain immunocompromised children 5 through 11 years of age
*(US) DEC FINAL MARKIT MANUFACTURING PMI: 57.7 V 57.7E (confirms 18th consecutive month of expansion; Lowest since Dec 2020)
(CN) China Cyberspace Administration has released a revised set of internet security rules to go into effect on Feb 15th

TUES 1/4
*(DE) GERMANY NOV RETAIL SALES M/M: +0.6% V -0.3%E; Y/Y: -0.2% V -3.1%E
(FR) French IHU Mediterranee Infection Institute scientists reportedly discovered new COVID-19 variant B.1.640.2, probably of Cameroonian origin - press
*(DE) GERMANY DEC NET UNEMPLOYMENT CHANGE: -23.0K V -15.0KE; UNEMPLOYMENT CLAIMS RATE: 5.2% V 5.3%E
F Planning to nearly double all-electric F-150 Lightning production to 150,000 units annually
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.3% v -1.5% prior
*(US) NOV JOLTS JOB OPENINGS: 10.6M V 11.1ME
GM Reports Q4 sales 440.7K vehicles, -43% y/y
(US) Fed's Kashkari (dove, non-voter): Expects two rate hikes in 2022
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 7.4% from 7.6%
(HK) Hong Kong has discovered its first untraceable case of covid (within the last 3 months)

WEDS 1/5
WMT To expand in home delivery to reach 30M households and will hire >3.0K delivery drivers
STLA.NL Chrysler brand to launch first battery EV by 2025; The brand will also seek to have an ALL EV lineup by 2028
(KZ) Kazakhstan President Kassym-Jomart Tokayev said to accept govt resignation - Russian press
(HK) Hong Kong confirms to tighten COVID-19 restrictions for 2 weeks from Jan 8th; To tighten social distancing measures until Jan 20th - press
(US) US lawmakers said to have started early talks on another round of COVID-19 relief for businesses; Relief might be valued at $68B and focused on restaurants, gyms, venues - WaPo
RPM Reports Q2 $0.79 v $0.86e, Rev $1.64B v $1.58Be
(LT) ECB's Kazaks (Latvia): ECB will take action if inflation outlook picks up, early 2023 rate hike is possible scenario
*(US) DEC ADP EMPLOYMENT CHANGE: +807K V +410KE (largest increase since May 2021); Notes private sector payrolls are still ~4M jobs short of pre-COVID-19 levels
FB Reportedly has halted development of new software OS that would power its VR devices and upcoming AR glasses; Company denies the story - The Information
(US) Association of American Railroads weekly rail traffic report for week ending Jan 1st: 395K total units, -6.3% y/y
*(US) FOMC DEC MINUTES: BALANCE SHEET COULD SHRINK FASTER THAN LAST CYCLE; SOME PARTICIPANTS SAY RATES COULD RISE BEFORE MAXIMUM EMPLOYMENT IS REACHED
COST Reports Dec total SSS +11.5% y/y (ex-gas and FX)
PFE CDC advisory panel votes 13-1 to recommend 12- to 17-year-olds should get COVID booster at least 5 months after 2nd dose - press
(HK) Macau to ban all flights from outside China, from Jan 9th to Jan 23rd; as part of COVID protection measures
*(CN) CHINA DEC CAIXIN PMI SERVICES: 53.1 V 51.9E (4th month of expansion)
(CN) China has launched its digital Yuan (DCNY) wallet in the Android and Apple app stores - Press

THURS 1/6
*(DE) GERMANY DEC CPI NORTH RHINE WESTPHALIA M/M: +0.5% V -0.3% PRIOR; Y/Y: 5.2% V 5.1% PRIOR
WBA Reports Q1 $1.68 v $1.35e, Rev $33.9B v $32.9Be; Raises FY22 outlook
CAG Reports Q2 $0.64 v $0.68e, Rev $3.06B v $3.06Be
BBBY Reports Q3 -$0.25 v $0.00e, Rev $1.88B v $1.96Be; Announces further SG&A and expense optimization of ~$100M annualized; Cuts FY21 outlook and guides Q4 weak
STLC.CA Discloses Q4 shipments lower than expected due to unplanned outages and covid-related impacts
HUM Affirms FY21 $20.50 v $20.65e; Affirms FY22 $21.50 v $24.50e, but cuts FY22 membership growth outlook; Expects COVID will be net neutral to the Medicare Advantage business in 2022 - ahead of investor conf
DKS Raises again FY21 $15.50-15.60 (prior $14.60-14.80) v $14.82e, SSS +25.8-26.1% (prior 24-25%) - filing
*(US) INITIAL JOBLESS CLAIMS: 207K V 195KE; CONTINUING CLAIMS: 1.75M V 1.68ME
(US) Pres Biden: One year ago today a President tried to prevent the peaceful transfer of power; Have to make sure another attack never happens again
*(US) DEC ISM SERVICES INDEX: 62.0 V 67.0E
(US) New York allows mobile sports betting to begin this Saturday, Jan 8th; DraftKings, FanDuel, Rush Street & Caesars are approved to open NY state mobile sites - press
(US) Atlanta Fed GDPNow: Cuts Q4 GDP forecast to 6.7% from 7.4%
QDEL Reports prelim Q4 Rev $633-637M v $502Me
005930.KR Reports Q4 prelim (KRW) Op 13.8T v 15.2Te (v 9.1T y/y) , Rev 76.0T v 75.6Te (v 61.6T y/y)

FRI 1/7
066570.KR Reports Q4 prelim (KRW) Op 681.6B v 647.0B y/y; Rev 21.0T v 18.8T y/y
*(EU) EURO ZONE DEC ADVANCE CPI ESTIMATE Y/Y: 5.0% V 4.8%E (record high); CPI CORE Y/Y: 2.6% V 2.5%E
*(US) DEC CHANGE IN NONFARM PAYROLLS: +199K V +447KE (below lower-end of all analysts' expectations)
*(US) DEC UNEMPLOYMENT RATE: 3.9% V 4.1%E
*(US) DEC AVERAGE HOURLY EARNINGS M/M: 0.6% V 0.4%E; Y/Y: 4.7% V 4.2%E