S&P CoreLogic Case-Shiller Home Price Index for November;
Conference Board - Consumer Confidence for January; results from
American Express, General Electric, Johnson & Johnson, Raytheon
Technologies, Canadian National Railway, Microsoft, Verizon
Stock futures fell Tuesday suggesting Wall Street could come
under fresh pressure after starting the week with a roller-coaster
Market volatility has picked up in recent sessions, as investors
have grown anxious about how rapidly the Federal Reserve will act
to combat inflation by raising interest rates and shrinking its
The turbulent trading "showed that investors are facing a
dilemma," said Tai Hui, Asia chief market strategist at J.P. Morgan
Investors are anxious about U.S. monetary policy and how that
could affect pricier stocks, he said, having moved quickly to price
in four or more interest rate increases this year. On the other
hand, the economic growth outlook for 2022 is still decent and
investors are aware that few assets offer the same long-term return
prospects as equities, Mr. Hui said.
U.S. markets are likely to remain volatile at least until the
Fed's first rate increase, which is widely expected to be in March,
said Jason Liu, the Asia head of the chief investment office at
Deutsche Bank's international private bank.
His team cut their stance on U.S. stocks, reflecting both their
own holdings and their investment recommendation to clients, to
neutral from overweight last week, after maintaining an overweight
position for more than a year.
Fed policy makers are meeting on Tuesday and Wednesday this week
and are set to resume discussions about how fast they will shrink
their nearly $9 trillion bond portfolio.
"Everyone will be watching the Fed's guidance this week," Mr.
In Europe, the pan-continental Stoxx Europe 600 rose 1%,
recovering some of Monday's steep losses, but stocks in Asia closed
deep in the red.
The Omicron wave, soaring food and energy prices, the sudden
drop in stock prices, and the jump in mortgage rates in recent
weeks are rattling U.S. consumers and reducing their ability and
willingness to spend in January, Pantheon Macroeconomics' chief
economist Ian Shepherdson said.
There are signs that Covid-19 cases could have peaked, so the
Omicron hit should fade soon, but the other factors dragging
sentiment and spending aren't likely to reverse as quickly, he
Still, U.S. households are likely to ride out pressures imposed
by higher inflation, though that will happen only when people are
confident that the danger from Covid-19 has passed, Shepherdson
The profitability of the global container-shipping segment looks
set to keep growing, helped by rising charter rates over the past
12 months, according to HSBC Research. It said an increasing number
of shippers are entering into contract negotiations earlier, which
should help lock in earnings for ship owners.
Earnings tailwinds include China opting to continue its
"zero-Covid" policy and any disruption to U.S. West Coast ports.
HSBC said that investor concern about longer-term stock valuations
are overblown and despite a likely decline in earnings in 2023, the
sector should still generate double-digit returns on equity.
Near-term dividends or buybacks offer additional cushion to
valuations, HSBC said.
Stocks to Watch:
The second union vote happening over mail in February and March
at an Amazon warehouse in Alabama would feature many new voters.
The Retail, Wholesale and Department Store Union estimated on
Monday that about half of the roughly 6,000 eligible voters weren't
employees at the facility during the first vote in 2021, when
workers overwhelmingly rejected joining the union.
One of the toughest challenges the RWDSU faces in organizing is
Amazon's reputation for high turnover. During the first vote, the
union estimates about 1,000 workers left around the time voting
took place. The second election is taking place after the National
Labor Relations Board found Amazon violated labor law during the
first vote, a charge Amazon has denied.
CSX named Sean Pelkey as its chief financial officer, elevating
its interim finance chief to the permanent role. The promotion
takes effect immediately, CSX said in a press release Monday.
Mr. Pelkey joined the company in 2005, and served as vice
president of finance for about four years before he was named
interim CFO in June. In his new role, succeeds Kevin Boone, who
currently serves as the company's executive vice president of sales
Delta Air Lines was upgraded to buy from hold by Berenberg
analysts, who see "a better value proposition than the European
The U.S. airlines' demand recovery is more advanced [partly due
to their domestic bias], valuations are more compelling relative to
history and balance sheets are generally in a better position; the
European carriers have been far more hampered by travel
restrictions over the past two years," said analysts Conor Dwyer
and William Fitzalan Howard, in a note to clients on Tuesday.
They like buy-rated Southwest Airlines for its revenue
visibility and balance sheet, the best within in their airlines
coverage, while Southwest's recently renegotiated credit card deal
with Chase has "the potential to offer a material profit
contribution," they said.
The analysts kept a hold rating on American Airlines and United
Walmart is looking for strategic alternatives for its businesses
in Honduras, El Salvador and Nicaragua, the most recent move by the
retailer to offload an international business.
"These alternatives could include, among others, possible joint
ventures, strategic partnerships or alliances, a sale or other
possible transactions," the company said in a release.
Company executives have said Walmart is focused on growing its
businesses in the U.S., Canada, Mexico, China and India.
The dollar could appreciate further in the near term as the Fed
is likely to confirm its monetary policy tightening plans at
Wednesday's meeting, said MUFG Bank.
"We would be surprised if the Fed provides any signal that it
will slow Fed tightening plans as early as this week in response to
recent equity market weakness," said MUFG Bank currency analyst Lee
"In these circumstances, we continue to favor further dollar
strength at the start of this year."
With inflation still well above target and the unemployment rate
now under estimates for the long-run level of maximum, Pimco
expects the Fed to use the upcoming meeting to reiterate its recent
"Officials now expect a March lift-off, three to four rate hikes
this year and an earlier and faster start to quantitative
tightening," said Tiffany Wilding, U.S. economist at Pimco.
Pimco expects QT to begin in June or September. Whether the Fed
announces the end of asset purchases in mid-February, one month
earlier than the widely expected mid-March date, is a close call,
The euro looks unappealing amid a stand-off between Russia and
the West over fears of a Russia attack against Ukraine, said
"Until events in Ukraine become clearer, we would presume the
much greater exposure of European economies to the crisis and the
fact that one is still charged for holding euros, does not make the
euro a particularly attractive vehicle to ride out the current
storm," said ING.
EUR/USD could fall to 1.1265 heading into the Federal Reserve's
policy meeting on Wednesday, unless there is a substantial
de-escalation of tensions over Ukraine, ING said.
Read Barrons.com: Bitcoin, Ether, Other Cryptos Claw Back Losses
but Remain Beaten Down
Yields for government bonds edged higher as investors awaited
the outcome of the first Fed meeting of the year.
"I think after ending [quantitative easing] and getting 50-75
bps of rate increases under their belt, the Fed will then see the
economic and market reactions, and where the yield curve lies,"
wrote Peter Boockvar, chief investment officer at Bleakley Advisory
"Then, if the curve has flattened, they'll start [quantitative
tightening] in an attempt to steepen it. If the curve still
steepens because the market doesn't think they are tightening
enough, they'll do more hikes."
BlackRock has slightly reduced its underweight of Treasuries
after the surprising yield surge this month, but it continues to
see the direction of travel for yields as higher.
"We see the sharp rise in government bond yields this year as
consistent with a fundamental asset reallocation driven by
investors wanting greater compensation for the risk of holding
BlackRock sees the swiftness of these moves as an example of
that the market is primed to overshoot amid confusion over the
macro backdrop. The reduction of the tactical underweight is a
result of that, but BlackRock keeps its strategic underweight
Read: 'No Signs of Panic' by Corporate America's Debt
Oil prices rallied in European trading on tensions in Eastern
Europe and the Middle East that pose a risk to supply in a tight
"The potential sources of geopolitical crisis such as the
Russia-Ukraine conflict and the tense security situation in the
Middle East, and the associated risks to supply, are likely to
preclude any more pronounced price slide," said Carsten Fritsch, an
analyst at Commerzbank.
European gas prices were steady as the continued tensions in
Ukraine balanced a moderate increase in gas supplies from
While the threat of conflict between Ukraine and Russia lingers,
flows of gas through the Velke Kapusany gas station on the
Ukrainian-Slovak border were expected at 454,175.179 MWh/day
Tuesday, the highest amount since Jan. 1, according to data from
Still, gas flows remain well below normal levels, and a smaller
gas metering station on the Polish-German border continues to
register gas supplies flowing eastward, rather than the usual
westward direction into Western Europe.
TODAY'S TOP HEADLINES
TSMC Overtakes Chinese Tech Giants to Become Asia's Most
Rising demand for semiconductors has helped lift Taiwan
Semiconductor Manufacturing Co. to a market capitalization of $600
billion, making it the most valuable company in Asia.
Globally, TSMC ranks ninth, according to S&P Global Market
Intelligence data based on the latest available closing prices,
behind Warren Buffett's Berkshire Hathaway Inc. The company it
displaced atop the Asia list is China's Tencent Holdings Ltd.,
which has suffered from Beijing's sustained regulatory scrutiny on
China's technology giants.
Hollywood Visual-Effects Studio DNEG Reaches $1.6 Billion SPAC
Merger to Go Public
Hollywood visual-effects studio DNEG is combining with a
special-purpose acquisition company to go public with a roughly
$1.6 billion valuation, the companies said.
Known for its Oscar-winning visuals work on movies such as
"Inception" and "Tenet," DNEG is merging with the SPAC Sports
Ventures Acquisition Corp., a blank-check firm focused on the media
and entertainment industries.
MicroStrategy to Continue Buying Bitcoin Despite Market Tumble,
MicroStrategy Inc. plans to continue investing in bitcoin
despite recent declines in the value of the cryptocurrency asset
and a call by U.S. securities regulators to revise its disclosure
in future filings.
The Tysons Corner, Va.-based software company is one of a
handful of companies with bitcoin holdings, alongside auto maker
Tesla Inc. and payment company Square, which recently renamed
itself Block Inc.
Credit Suisse Investment Bank Set for Loss after Legal Hit
Credit Suisse is set to post a loss for its investment bank for
the final three months of 2021, as a slow down in trading revenues
and a CHF500m (GBP405m) hit from legal costs prove to be another
blow to the Swiss bank after a series of crises.
The bank said that provisions for legal costs of CHF500m, more
"normal trading conditions" and the closure of its prime services
unit would hit profits in its investment bank in the fourth
quarter. Credit Suisse is due to report its results on 10
Twitter Plans to Expand Engineering Center in Singapore
Twitter Inc. plans to double the number of engineers it has in
Singapore to more than 100 by 2023, the U.S. social media giant
Twitter said in a blog post that the new roles at its
Asia-Pacific headquarters will be in engineering, data science,
machine learning and product management.
Treasury Wants Banks to Loop in Foreign Affiliates on Suspicious
The U.S. Treasury Department's Financial Crimes Enforcement
Network has proposed a new rule that would allow banks to share
so-called suspicious activity reports more readily with foreign
The proposed rule, which FinCEN announced Monday, would create a
pilot program to allow banks to share SARs with foreign branches
and affiliates, a bid to improve financial institutions' ability to
counter money laundering. The new program was mandated under the
Anti-Money Laundering Act, which came into force in January
Investors Lose Appetite for Stocks of Unprofitable Companies
The prospect of rising interest rates has been especially hard
on the Russell 2000 small-cap index, in large part because of the
high proportion of small-caps that aren't making money.
During the market selloff of recent weeks, investors have been
shedding speculative investments from tech stocks to
cryptocurrencies. Speculative investments with their promise of
higher returns thrived in the ultra-low-rate environment of 2021.
Now that the Federal Reserve may raise interest rates as soon as
March to combat inflation, investors are less comfortable with
Glynn's Take: RBA Set to Entertain Interest Rate Rise in 2022,
Exit QE in Feb
SYDNEY-In a significant rethink of the economic outlook, the
Reserve Bank of Australia is set to concede that an interest-rate
increase is now highly possible by late 2022, but reject
money-market bets that it will keep pace with U.S. interest rate
The RBA's first policy meeting for 2022 on Feb. 1 will also see
its program of government bond buying wound up entirely, as it
publishes revised economic forecasts that include the unemployment
rate soon falling below 4.0%, its lowest since the 1970s.
German Business Sentiment Rises After Half a Year of
German business sentiment has brightened at the beginning of the
year, despite inflation, supply bottlenecks and rising coronavirus
The Ifo business-climate index increased to 95.7 points in
January from 94.8 points in December, data from the Ifo Institute
showed Tuesday. This rise follows six consecutive decreases of the
indicator after it peaked at 101.8 in June.
Singapore Central Bank Tightens Policy in Surprise Move
Singapore's central bank on Tuesday unexpectedly tightened its
currency policy as a pre-emptive move to stem the inflationary
impact of supply-side constraints and rising commodity prices.
In an announcement before its scheduled policy meeting in April,
the Monetary Authority of Singapore said it would slightly raise
the rate of the Singapore dollar's appreciation against a basket of
North Korea Launches Suspected Cruise Missiles
SEOUL-North Korea launched two suspected cruise missiles on
Tuesday, South Korea's military said, in what would be the Kim Jong
Un regime's fifth weapons test of the month.
The missiles were believed to be launched from an unspecified
inland location, South Korea's military said, without providing
further details. North Korea's state media didn't immediately
New York Mask Mandate Struck Down by Judge
A Long Island judge struck down New York state's indoor mask
mandate Monday, saying health officials needed approval from the
legislature for a December rule requiring face coverings in
schools, transit hubs and other indoor settings.
State Supreme Court Justice Thomas Rademaker ruled in Nassau
County that Health Commissioner Mary Bassett didn't have the
authority to issue an emergency regulation last year requiring
masks in indoor settings. Dr. Bassett's masking rules were issued
after Gov. Kathy Hochul declared a state of emergency amid rising
Covid-19 infections on Nov. 26.
Grand Jury Approved to Examine Trump's Efforts to Overturn
Georgia's 2020 Election Results
Judges in Georgia's most populous county granted its top
prosecutor's request to impanel a special grand jury to investigate
efforts to overturn Georgia's 2020 election results, the next step
in a probe into the actions of former President Donald Trump and
supporters after his loss in the state.
Fulton County District Attorney Fani Willis, a Democrat, asked
for the grand jury, saying she needed one to issue subpoenas to
compel witnesses to testify and provide evidence.
Write to firstname.lastname@example.org TODAY IN CANADA
Canadian Natl Railway 4Q
Stocks to Watch:
Turquoise Hill Resources on Monday said its board unanimously
approved the commencement of the undercut at the Oyu Tolgoi
underground mine in Mongolia.
The company said the decision comes after it has reached a
mutual understanding for a renewed partnership with the Government
Turquoise Hill said it expects to begin caving operations in the
coming days, adding it expects the "underground mine will achieve
sustainable production for Panel 0 in the first half of 2023."
The company also said it agreed "to a comprehensive and binding,
amended funding arrangement" with Rio Tinto.
Expected Major Events for Tuesday
05:00/JPN: Dec Supermarket sales
05:30/JPN: Dec Tokyo area department store sales
05:30/JPN: Dec Nationwide department store sales
07:00/UK: Dec Public sector finances
08:59/JPN: Nov Final Labour Survey - Earnings, Employment &
09:00/GER: Jan Ifo Business Climate Index
11:00/FRA: 3Q OECD Quarterly Employment Situation
11:00/UK: Jan CBI Industrial Trends Survey
12:45/US: Weekly Chain Store Sales Index
13:55/US: 01/22 Johnson Redbook Retail Sales Index
14:00/US: Nov U.S. Monthly House Price Index
14:00/US: Nov S&P CoreLogic Case-Shiller Indices
15:00/US: Dec State Employment and Unemployment
15:00/US: Jan Richmond Fed Business Activity Survey
15:00/US: Jan Consumer Confidence Index
18:00/US: Dec Money Stock Measures
21:30/US: 01/21 API Weekly Statistical Bulletin
23:50/JPN: Dec Services Producer Price Index
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
3M Company (MMM) is expected to report $2.05 for 4Q.
AMCON Distributing Co (DIT) is expected to report for 1Q.
AmeriServ Financial Inc (ASRV) is expected to report for 4Q.
American Express Co (AXP) is expected to report $1.86 for
Archer Daniels Midland (ADM) is expected to report $1.35 for
Atlantic Union Bankshares Corp (AUB) is expected to report for
Banc Of California Inc (BANC) is expected to report $0.26 for
Cambridge Bancorp (CATC) is expected to report $1.94 for 4Q.
Camden National (CAC) is expected to report $1.04 for 4Q.
Canadian National Railway Co (CNI,CNR.T) is expected to report
$1.53 for 4Q.
Capital City Bank Group (CCBG) is expected to report $0.44 for
Capital One Financial Corp (COF) is expected to report $5.28 for
Citrix Systems Inc (CTXS) is expected to report $0.37 for
CommVault (CVLT) is expected to report $0.25 for 3Q.
Daseke Inc (DSKE) is expected to report $0.07 for 4Q.
FTI Consulting (FCN) is expected to report $1.20 for 4Q.
Gatx Corp (GATX) is expected to report $1.01 for 4Q.
General Electric Co (GE) is expected to report for 4Q.
Hingham Institution for Savings (HIFS) is expected to report for
Home Bancorp (HBCP) is expected to report $1.20 for 4Q.
Invesco Ltd (IVZ,IVZ-LN) is expected to report $0.70 for 4Q.
Johnson & Johnson (JNJ) is expected to report $2.02 for
Lakeland Financial (LKFN) is expected to report $0.96 for
Lockheed Martin Corp (LMT) is expected to report $7.20 for
Metro Inc (MRU.T,MTRAF) is expected to report $0.85 for 1Q.
Middlefield Banc Corp (MBCN) is expected to report $0.75 for
NextEra Energy (NEE) is expected to report $0.85 for 4Q.
Nicolet Bankshares Inc (NCBS) is expected to report $1.61 for
PACCAR Inc (PCAR) is expected to report $1.33 for 4Q.
Pacific Financial (PFLC) is expected to report for 4Q.
Peoples Bancorp (Ohio) (PEBO) is expected to report $0.70 for
Polaris Inc (PII) is expected to report $1.92 for 4Q.
Raytheon Technologies Corp (RTX) is expected to report for
RenaissanceRe Holdings (RNR) is expected to report $4.29 for
Silgan Holdings Inc (SLGN) is expected to report $0.73 for
Southern First Bancshares Inc (SFST) is expected to report $1.19
Summit State Bank (SSBI) is expected to report for 4Q.
Verizon Communications (VZ) is expected to report $1.28 for
World Acceptance (WRLD) is expected to report $1.80 for 3Q.
Xerox Holdings Corp (XRX) is expected to report for 4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Affirm Holdings Raised to Equal-Weight From Underweight by
Stephens & Co.
Arista Networks Raised to Buy From Neutral by Citigroup
Booz Allen Hamilton Raised to Overweight From Equal-Weight by
Charter Communications Raised to Outperform From Sector Perform
by RBC Capital
Comcast Raised to Outperform From Sector Perform by RBC
D&B Cut to Equal-Weight From Overweight by Barclays
Discover Financial Raised to Overweight From Neutral by Piper
Equifax Raised to Outperform From Neutral by Baird
Evertec Cut to Neutral From Positive by Susquehanna
First Hawaiian Cut to Neutral From Buy by Compass Point
Fox Corp. Raised to Buy From Neutral by UBS
FVCBankcorp Raised to Strong Buy From Outperform by Raymond
Infinera Raised to Buy From Neutral by B. Riley Securities
M&T Bank Raised to Overweight From Neutral by Piper
Netflix Cut to Hold From Buy by Jefferies
Newmont Cut to Sector Perform From Sector Outperform by
OPKO Health Cut to Market Perform From Outperform by Barrington
Orchid Island Capital Raised to Buy From Hold by
PC Connection Raised to Buy From Neutral by Sidoti & Co.
PPG Industries Cut to Equal-Weight From Overweight by Wells
ResMed Raised to Neutral From Underperform by B of A
ResMed Raised to Overweight From Neutral by JP Morgan
Science Applications Cut to Equal-Weight From Overweight by
Snap Cut to Neutral From Outperform by Wedbush
South Atlantic Bancshares Raised to Overweight From Equal-Weight
by Stephens & Co.
Splunk Raised to Buy From Neutral by BTIG
WEC Energy Group Cut to Underperform From Peer Perform by Wolfe
Yum China Holdings Cut to Mixed From Positive by OTR Global
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 25, 2022 05:56 ET (10:56 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.