Watch For:

U.S. Personal Income & Outlays for December; U.S. 4Q Employment Cost Index; U.S. U. Michigan Final Consumer Survey for January; Chevron Corp. 4Q results; Caterpillar Inc. 4Q results.

Opening Call:

Stocks were poised for a fourth consecutive weekly loss as investors awaited earnings from Chevron and Caterpillar, as well as the Federal Reserve's preferred inflation gauge.

In premarket trading, Apple shares rose 4.9% after the biggest U.S. company by market capitalization posted record revenue and profits.

Shares of brokerage Robinhood Markets, which reported a quarterly loss of $423 million, dropped 14% premarket. Tesla recovered 1.9% premarket after sliding 12% Thursday, highlighting the volatility wracking technology and growth stocks as investors prepare for the Fed to tighten monetary policy.

"Cheap money is like a comfort blanket for investors and for markets," said Jane Foley, senior foreign-exchange strategist at Rabobank. "Almost inevitably, you start to withdraw some of that cheap money and you're going to have more volatility in the markets."

Stocks have been choppy despite another solid round of earnings. Almost a third of the companies on the S&P 500 have reported fourth-quarter results and 78% of them have beaten analysts' estimates for earnings per share, according to FactSet. Companies due to report before the bell Friday include Chevron, Caterpillar and Colgate-Palmolive.

Investors will parse consumer-spending data from the Commerce Department at 8:30 a.m. ET. Economists expect the figures to show spending fell in December as rising coronavirus infections dented demand. Also due at 8:30 a.m., the Fed's preferred inflation gauge is forecast to show a continuation of the price pressures that have pushed the central bank to unwind stimulus.


Expectations for five interest rate rises by the Fed within the next year are priced in but the dollar still has scope to appreciate, UniCredit said.

"We think that there is still room for the USD to strengthen as the U.S. interest-rate advantage with respect to the rest of the world becomes more evident and there is no major incentive for investors to consider a trend reversal," UniCredit analysts said.

However, some profit-taking against the safe-haven dollar might emerge Friday after a rebound in Asian equity markets, they said.

The euro's recent depreciation against the dollar is likely to be on the European Central Bank's radar at its Feb. 3 meeting, Barclays said. EUR/USD has plummeted lately on the Fed's "notable hawkishness," Barclays analysts said, noting that the Fed indicated it would start raising interest rates in March.

The ECB might also turn "hawkish" as eurozone and global inflation continue to accelerate above forecasts, they said. "Indeed, euro-area flash inflation data for January will be released the day before the meeting: another upside surprise relative to consensus (following on from December's upside surprise) could potentially encourage a somewhat more hawkish tone."


Government-bond prices fell, pushing up prices. The yield on interest-rate sensitive two-year Treasury notes ticked up to 1.212% from 1.190% Thursday and 0.993% at the end of last week.

Yields on 10-year notes haven't risen as fast, which some analysts interpret as a sign investors think interest-rate rises by the Fed will squelch economic growth. They stood at 1.831% Friday, up from 1.747% a week ago.

Economic data over the coming quarters in the U.S. is likely to surprise to the downside, but it will be very difficult for the Fed to pivot back toward a more dovish stance given high inflation and its political ramifications, T. Rowe Price's chief international economist Nikolaj Schmidt said.

A tightening of the monetary policy stance of the central bank in a context of slowing growth is likely to present a challenge for growth-fuelled risk assets, he said.

"I see an environment of further yield curve flattening with higher yields in the front-end, driven by the changing stance of monetary policy, whilst yields in the longer-end of the curve will fall to reflect increasing uncertainty about the growth outlook," Schmidt said.

Investors may be forced to price in a higher peak for U.S. interest rates than 2%, UniCredit said. The Fed's statements and dot plot, a chart that summarizes the central bank's outlook for the federal funds rate due in mid-March, should shine a light on the issue, analysts at the bank said.

The focus remains the prospect of the first rate-rise in March "seemingly cast in stone," while Treasury yield curve movements are likely to be predominantly determined by shifts in views about the pace of rate hikes this year, they added.


Oil prices were on course for a sixth weekly rise amid tight supplies and geopolitical tensions in Eastern Europe and the Middle East. For the week, Brent is on course for a 0.7% gain while WTI is set for a 2.2% gain.

Tensions between Russia--a major oil producer--and Ukraine--a major conduit for natural gas supplies--have helped drive prices higher this week. At the same time, producing nations in OPEC are struggling to keep pace with their own supply targets.

"In effect, spare capacity is at a level which may not be enough to cover any geopolitical disruptions," said ANZ.

As tensions between Ukraine and Russia mount, energy prices are likely to push higher. The situation in Eastern Europe increases geopolitical premium in oil prices, causing more inflation, Rob Thummel from TortoiseEcofin said.

However, the biggest concern for Europe at the moment could be regarding natural gas supply security, as the continent is highly dependent on Russia.

"Given that there's a lot of winter left, I think there are scenarios where it could become really challenging, and inventories could go really low," Thummel said.

Conversely, the U.S. has a large supply of gas and exports LNG to Europe.

"Post conflict between Russia and Ukraine, post winter and when Covid cases have lessened, I think there's potential for [U.S.] gas prices to fall to around $3.00 [per million British thermal units] by the end of 2022," Thummel said.

Gold fell and while Oanda said gold is vulnerable to further technical selling now that the $1,800 level has been breached, risk aversion should provide price support for the safe-haven asset. Oanda puts support for the precious metal at $1,760 an ounce.

Most base metals are on course for a weekly loss as a stronger dollar and equity market jitters have weighed on prices. Three-month copper is down 0.9% Friday and set for a nearly 3% weekly loss.

All other base metals with the exception of aluminum are also set for weekly losses, with the largest being nickel at more than 7%. "A stronger dollar, high energy prices and wobbly equity markets--all occurring against a backdrop of a hawkish Fed and lingering geopolitical tensions--are creating a feeling of unease," said Ed Meir, a metals consultant for ED&F Man.

Chinese manufacturing PMI data is due Sunday, while Tuesday is the start of China's Lunar New Year holidays, which could sap liquidity from the market and heighten volatility.




Citigroup to Sell Taiwan Consumer-Banking Business to DBS

Citigroup Inc. agreed to sell its consumer-banking business in Taiwan to Singapore-based DBS Group Holdings Ltd., the latest in a series of divestitures as it shrinks its international retail footprint to focus more on serving businesses and affluent clients.

The deal, which includes a premium for Citigroup of more than $700 million, means it has now found buyers for seven of the 10 consumer markets in the Asia-Pacific region that it had wanted to exit.


Google to Invest Up to $1 Billion in Deal With India's Bharti Airtel

Alphabet Inc.'s Google will invest up to $1 billion in partnership with Indian telecommunications company Bharti Airtel Ltd., part of efforts to build its presence in one of the world's last great untapped digital markets.

Google will pay $700 million for a 1.28% stake in New Delhi-based Bharti Airtel and invest up to $300 million in multiyear commercial deals, the companies said Friday. The partnership will focus on enabling affordable access to smartphones and growing the cloud ecosystem for businesses across India, among other pursuits, they said.


Mondelez Mulls More Price Hikes for Snacks as Inflation Eats Into Profits

Mondelez International Inc. said higher prices for its snacks weren't enough to make up for the rising ingredient and transportation costs it faced in the latest quarter.

The global food giant said it would likely raise prices further around the world this year, while also negotiating with its suppliers and hedging to reduce costs. Mondelez's profitability continues to get squeezed as issues like commodity inflation, trucking shortages and labor challenges persist, especially in the U.S., executives said.


Biogen to Sell Biosimilar-Venture Stake to Partner Samsung Biologics

Biogen Inc. is selling its share in biosimilar joint venture Samsung Bioepis for at least $2.25 billion to partner Samsung Biologics, adding to its cash pile after the disappointing launch of its Alzheimer's disease drug Aduhelm.

Biogen and Samsung Biologics created Samsung Bioepis in 2012 to develop, manufacture and market biosimilar drugs, lower-priced copies of drugs made from living cells, including the rheumatoid-arthritis treatments Enbrel and Humira.


SoftBank COO Marcelo Claure to Leave as Stock Hits a Rough Patch

SoftBank Group Corp. said Chief Operating Officer Marcelo Claure, who helped clean up problems at the firm's investments including WeWork Inc. and Sprint Corp., is leaving the company.

Mr. Claure is the latest lieutenant of SoftBank founder and Chief Executive Masayoshi Son to depart the Tokyo-based investment company, which runs the technology-focused Vision Fund and owns a large stake in Chinese e-commerce company Alibaba Group Holding Ltd.


Hennes & Mauritz to Focus on Growth Again After Posting 4Q Earnings Beat

Sweden's Hennes & Mauritz AB said Friday it will now focus on growth again, after posting a forecast-beating rise in fourth-quarter net profit as sales returned to pre-pandemic levels.

The fashion retailer posted a net profit of 4.62 billion Swedish kronor ($493.6 million) for the fiscal quarter ended Nov. 30, compared with SEK2.49 billion a year earlier. Analysts polled by FactSet had expected a profit of SEK3.99 billion.


Home Depot Names Ted Decker as CEO

Home Depot Inc. is tapping its operating chief to replace Craig Menear as chief executive, as the home-improvement retailer looks to enter its next phase of growth in the Covid-19 pandemic.

Ted Decker, who also serves as president, will assume the CEO post March 1, Home Depot said Thursday. Mr. Decker, 58 years old, will also join the board of directors at that time. Mr. Menear will continue to serve as chairman following the transition.


Robinhood Shares Fall Premarket After Bigger-Than-Expected Loss

Robinhood Markets Inc.'s stock fell 14% in premarket trading after the brokerage reported a loss of $423 million for the fourth quarter.

The company had an increase in technology and administrative expenses that ate into its results.


Western Digital Taps Semiconductor Veteran for CFO Job

Western Digital Corp. recruited a chip-industry veteran as its new finance chief, a move that comes as the hard-drive manufacturer looks to expand its memory-chip business.


Consumer Spending Could Be Slowed by Inflation, Omicron

Consumer spending, a key engine of economic growth, has shown signs of stalling heading into 2022, amid rising prices and the Omicron wave.

Economists surveyed by The Wall Street Journal estimate that consumer outlays declined by 0.7% in December from the prior month, as prices rose at their fastest pace in nearly four decades. The Commerce Department will release a report on consumption and inflation in December at 8:30 a.m. ET Friday. The report comes on the heels of separate data showing retail sales declined last month.


U.S. Employers Confront Highest Labor Costs in 20 Years, Fueling Inflation

The cost of hiring new employees and retaining existing ones in the nation's tight labor market is growing at nearly its fastest pace in a generation. That is helping to fuel inflation as employers pass labor costs to customers.

The U.S. employment-cost index-a quarterly measure of wages and benefits paid by employers-is expected to show that costs continued to rise at the highest rate in two decades of available records. Economists surveyed by The Wall Street Journal expect a seasonally adjusted increase of 1.2% in the fourth quarter of 2021 over the prior three months, which experienced a similar increase. The third-quarter gain, when compared with the same quarter from a year earlier, rose 3.7% on a nonseasonally adjusted basis.


Derby's Take: Pandemic Stimulus Was Just Right, Powell Says

Federal Reserve leader Jerome Powell isn't buying the argument made by some critics that massive government aid and monetary-policy stimulus overdid it, creating a huge surge in U.S. inflation.

"It's too soon to write that history," Mr. Powell told reporters Wednesday after a Federal Open Market Committee meeting. As the second anniversary of the Covid-19 pandemic approached, he cautioned armchair quarterbacks who see the stimulus as overly abundant to think back to how dire things looked when the health crisis struck, and said "there was a real risk of lasting damage" to the economy that called for a very aggressive response.


The Real Brake on America's Electric-Vehicle Revolution

Electric vehicles won't get a "100% Made in U.S.A." stamp for a good while yet.

U.S. auto makers are pouring billions of dollars into domestic EV factories and lithium-ion battery plants to supply them. General Motors this week announced $6.6 billion of EV investments into two Michigan plants, including $1.3 billion from its South Korean battery partner, LG Energy Solution. Ford announced similar projects in Tennessee and Kentucky last September alongside LG's archrival, SK Innovation.


China's Property Crisis Has Investors in Green Bonds Seeing Red

Before the Chinese property sector ran into trouble, developers had rushed to issue green bonds, making them among the most prolific corporate issuers in this fast-growing corner of global finance.

But the selloff in China's property-bond market in recent months, and a string of defaults, have hammered prices for many of these dollar-denominated green or sustainable bonds, which finance environmentally friendly or social projects. Creditors have suffered hefty losses. Several of the securities now trade at less than 30 cents on the dollar, indicating deep skepticism among investors that they will get back anything close to the original value.


IMF Says China's Economic Imbalances Have Worsened

Imbalances in the Chinese economy have worsened and delayed China's transition to consumption-led growth, the International Monetary Fund said in an annual review on Friday, slashing its outlook for the country this year.

The IMF assessment, in its Article IV review, reflects growing concern among some economists and officials that greater state intervention in the economy could be hindering China's long-held goal of "high-quality" growth-one driven by consumption rather than investment.


German Economy Contracted in 4Q

Germany's economy contracted in the fourth quarter due to a rise in coronavirus cases and the related re-imposition of restrictions, according to a first estimate published Friday by the German Federal Statistical Office.

Gross domestic product fell by an adjusted 0.7% from the previous quarter, Destatis said. This contraction was larger than economists' expectations of a 0.5% drop in a Wall Street Journal survey.


Natural-Gas Futures Spike in Latest Market Turmoil

A wild spike in expiring natural-gas futures contracts on Thursday afternoon was the latest bout of extraordinary volatility that has whipsawed financial markets to start the year.

Natural-gas futures for February delivery settled 46% higher, at $6.256 per million British thermal units, the largest one-day gain on record. More heavily traded futures for March delivery ended the day up 8.1% at $4.363.


Federal Judge Blocks Gulf of Mexico Drilling Leases, Citing Environmental Concerns

A federal judge invalidated the lease sale of 80 million acres in the Gulf of Mexico that the U.S. Department of Interior had made available for oil and gas drilling, saying regulators used flawed environmental analysis.

In a 68-page ruling on Thursday, Judge Rudolph Contreras of the U.S. District Court in Washington, D.C., called the federal agency's error in its environmental-impact determination "a serious failing."


U.S. Seeks to Confront Russia at U.N. Security Council Over Ukraine

The U.S. called for a meeting of the United Nations Security Council to discuss the standoff over Ukraine, seeking to apply international pressure on Russia to negotiate its concerns about European security among diplomats rather than on the battlefield.

The meeting would be a rare opportunity for Washington and its allies to discuss the actions of another permanent Security Council member-Russia-on the world stage. Set for Monday, the meeting would occur just one day before Moscow takes over the rotating presidency of the council.


Write to



Real Matters Inc. (REAL.T) 1Q

Economic Indicators (ET):

-Nothing major scheduled

Other News:

Canada Optimistic U.S. Will Allow PEI Potato Shipments After Fungus Scare

Canada's agriculture minister said Thursday that she is optimistic about a breakthrough with the Biden administration on resuming shipments to the U.S. of fresh potatoes from the province of Prince Edward Island.

Canada in late November suspended all U.S.-bound exports of these potatoes over concerns the U.S. Department of Agriculture raised about the discovery of a potato fungus in the Atlantic Coast province.

Canadian officials said the suspension was the result of pressure from the U.S. government. The Biden administration relayed to Ottawa it intended to stop imports of fresh potatoes from Prince Edward Island if Canada didn't halt the shipments first, officials said.

The fungus, known as potato wart, isn't harmful to human health but can reduce crop production. The island's potato board has said the potato wart was discovered in fields under surveillance by Canadian food-inspection officials, and any potatoes from those properties were never destined for the U.S.

Canadian Agriculture Minister Marie-Claude Bibeau met with U.S. Agriculture Secretary Tom Vilsack in Washington on Thursday, and she told The Wall Street Journal she's confident some Prince Edward Island potatoes could be headed back to the U.S. in the next couple of weeks.


Expected Major Events for Friday

00:01/UK: 4Q BRC-LDC Vacancy Monitor

00:30/JPN: Dec Detailed Import & Export Statistics

06:30/FRA: Dec Household consumption expenditure in manufactured goods

06:30/FRA: 4Q GDP - first estimate

07:00/GER: Dec Foreign trade price indices

07:45/FRA: Dec Housing starts

07:45/FRA: Dec PPI

09:00/ITA: Jan Business Confidence Survey

09:00/ITA: Jan Consumer Confidence Survey

09:00/GER: 4Q GDP - 1st release

09:30/UK: Dec Capital issuance

09:30/UK: 4Q Insolvency statistics

10:00/ITA: Dec PPI

13:30/US: Dec Personal Income & Outlays

13:30/US: 4Q Employment Cost Index

15:00/US: Jan University of Michigan Survey of Consumers - final

All times in GMT. Powered by Kantar Media and Dow Jones.


Expected Earnings for Friday

Allegiance Bancshares Inc (ABTX) is expected to report $0.95 for 4Q.

Badger Meter Inc (BMI) is expected to report $0.47 for 4Q.

Bank of the James Financial Group Inc (BOTJ) is expected to report for 4Q.

Bank7 Corp (BSVN) is expected to report $0.64 for 4Q.

Booz Allen Hamilton Holding Corp (BAH) is expected to report $0.93 for 3Q.

Bridgford Foods Corp (BRID) is expected to report for 4Q.

Capitol Federal Financial (CFFN) is expected to report $0.14 for 1Q.

Caterpillar Inc (CAT) is expected to report $2.16 for 4Q.

Charter Communications Inc (CHTR) is expected to report $6.81 for 4Q.

Chemung Financial (CHMG) is expected to report $1.26 for 4Q.

Chevron Corporation (CVX) is expected to report $3.09 for 4Q.

ChoiceOne Financial Services Inc (COFS) is expected to report for 4Q.

Church & Dwight Inc (CHD) is expected to report $0.59 for 4Q.

Colgate-Palmolive Co (CL) is expected to report $0.77 for 4Q.

Dime Community Bancshares Inc (DCOM) is expected to report for 4Q.

Diversey Holdings Ltd (DSEY) is expected to report for 4Q.

Eagle Financial Services (EFSI) is expected to report for 4Q.

Gentex Corp (GNTX) is expected to report $0.34 for 4Q.

Instil Bio Inc (TIL) is expected to report for 4Q.

Kentucky First Federal (KFFB) is expected to report for 2Q.

Lake Shore Bancorp (LSBK) is expected to report for 4Q.

Level One Bancorp Inc (LEVL) is expected to report $1.09 for 4Q.

Moog Inc - Class A (MOGA,MOGB) is expected to report $1.18 for 1Q.

Oppenheimer Holdings (OPY) is expected to report for 4Q.

Penns Woods Bancorp (PWOD) is expected to report for 4Q.

Phillips 66 (PSX) is expected to report $2.05 for 4Q.

Phillips 66 Partners LP (PSXP) is expected to report $1.02 for 4Q.

Provident Financial Services Inc (PFS) is expected to report $0.47 for 4Q.

Prudential Bancorp Inc (PBIP) is expected to report $0.22 for 1Q.

RBC Bearings Inc (ROLL) is expected to report $0.41 for 3Q.

Real Matters Inc (REAL.T) is expected to report $0.05 for 1Q.

Red River Bancshares Inc (RRBI) is expected to report for 4Q.

Republic Bancorp Inc (RBCAA) is expected to report $0.80 for 4Q.

SCI Engineered Materials Inc (SCIA) is expected to report for 4Q.

Southside Bancshares (SBSI) is expected to report $0.76 for 4Q.

Synchrony Financial (SYF) is expected to report $1.48 for 4Q.

Tompkins Financial (TMP) is expected to report $1.51 for 4Q.

VF Corp (VFC) is expected to report $1.21 for 3Q.

Weyerhaeuser Co (WY) is expected to report $0.44 for 4Q.

WisdomTree Investments Inc (WETF) is expected to report $0.09 for 4Q.

Powered by Kantar Media and Dow Jones.



Albemarle Raised to Buy From Hold by HSBC

CarMax Raised to Buy From Neutral by Seaport Global

Corning Raised to Buy From Neutral by Goldman Sachs

Cortexyme Cut to Market Perform From Market Outperform by JMP Securities

Equifax Raised to Buy From Hold by Truist Securities

Gatos Silver Cut to Hold From Buy by Canaccord Genuity

GitLab Raised to Overweight From Neutral by JP Morgan

Haemonetics Cut to Hold From Buy by Needham

Hayward Holdings Cut to Neutral From Buy by B of A Securities

Interpublic Cut to Underperform From Neutral by B of A Securities

KB Home Raised to Buy From Neutral by B of A Securities

Lennar Cut to Neutral From Buy by B of A Securities

Luther Burbank Cut to Neutral From Buy by DA Davidson

Randolph Bancorp Cut to Neutral From Buy by Compass Point

ServiceNow Raised to Overweight From Neutral by Piper Sandler

Toll Brothers Cut to Underperform From Buy by B of A Securities

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

January 28, 2022 06:10 ET (11:10 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.