Watch For:

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 Communications

Opening Call:

Stock futures fell Tuesday suggesting Wall Street could come under fresh pressure after starting the week with a roller-coaster session.

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 balance sheet.

The turbulent trading "showed that investors are facing a dilemma," said Tai Hui, Asia chief market strategist at J.P. Morgan Asset Management.

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. Liu said.

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.

Market Insight:

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 said.

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 added.


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 and marketing.


Delta Air Lines was upgraded to buy from hold by Berenberg analysts, who see "a better value proposition than the European flag carriers.

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 Airlines.


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 Hardman.

"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 guidance.

"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, she said.


The euro looks unappealing amid a stand-off between Russia and the West over fears of a Russia attack against Ukraine, said ING.

"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 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 Group.

"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 government bonds."

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 unchanged.

Read: 'No Signs of Panic' by Corporate America's Debt Investors


Oil prices rallied in European trading on tensions in Eastern Europe and the Middle East that pose a risk to supply in a tight market.

"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 Russia.

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 operator Eustream.

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.




TSMC Overtakes Chinese Tech Giants to Become Asia's Most Valuable Stock

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, CFO Says

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 February.


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 said Tuesday.

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 Transactions

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 affiliates.

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 2021.


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 risk.


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 increases.

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 Declines

German business sentiment has brightened at the beginning of the year, despite inflation, supply bottlenecks and rising coronavirus cases.

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 currencies.


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 comment.


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.




Canadian Natl Railway 4Q

Metro 1Q

Economic Indicators:


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 of Mongolia.

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 & Hours Worked

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 4Q.

Archer Daniels Midland (ADM) is expected to report $1.35 for 4Q.

Atlantic Union Bankshares Corp (AUB) is expected to report for 4Q.

Banc Of California Inc (BANC) is expected to report $0.26 for 4Q.

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 4Q.

Capital One Financial Corp (COF) is expected to report $5.28 for 4Q.

Citrix Systems Inc (CTXS) is expected to report $0.37 for 4Q.

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 4Q.

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 4Q.

Lakeland Financial (LKFN) is expected to report $0.96 for 4Q.

Lockheed Martin Corp (LMT) is expected to report $7.20 for 4Q.

Metro Inc (MRU.T,MTRAF) is expected to report $0.85 for 1Q.

Middlefield Banc Corp (MBCN) is expected to report $0.75 for 4Q.

NextEra Energy (NEE) is expected to report $0.85 for 4Q.

Nicolet Bankshares Inc (NCBS) is expected to report $1.61 for 4Q.

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 4Q.

Polaris Inc (PII) is expected to report $1.92 for 4Q.

Raytheon Technologies Corp (RTX) is expected to report for 4Q.

RenaissanceRe Holdings (RNR) is expected to report $4.29 for 4Q.

Silgan Holdings Inc (SLGN) is expected to report $0.73 for 4Q.

Southern First Bancshares Inc (SFST) is expected to report $1.19 for 4Q.

Summit State Bank (SSBI) is expected to report for 4Q.

Verizon Communications (VZ) is expected to report $1.28 for 4Q.

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.



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 Barclays

Charter Communications Raised to Outperform From Sector Perform by RBC Capital

Comcast Raised to Outperform From Sector Perform by RBC Capital

D&B Cut to Equal-Weight From Overweight by Barclays

Discover Financial Raised to Overweight From Neutral by Piper Sandler

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 James

Infinera Raised to Buy From Neutral by B. Riley Securities

M&T Bank Raised to Overweight From Neutral by Piper Sandler

Netflix Cut to Hold From Buy by Jefferies

Newmont Cut to Sector Perform From Sector Outperform by Scotiabank

OPKO Health Cut to Market Perform From Outperform by Barrington Research

Orchid Island Capital Raised to Buy From Hold by JonesTrading

PC Connection Raised to Buy From Neutral by Sidoti & Co.

PPG Industries Cut to Equal-Weight From Overweight by Wells Fargo

ResMed Raised to Neutral From Underperform by B of A Securities

ResMed Raised to Overweight From Neutral by JP Morgan

Science Applications Cut to Equal-Weight From Overweight by Barclays

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 Research

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)

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