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.
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
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
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
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
However, some profit-taking against the safe-haven dollar might
emerge Friday after a rebound in Asian equity markets, they
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
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,"
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
"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%
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.
TODAY'S TOP HEADLINES
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
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
Google to Invest Up to $1 Billion in Deal With India's Bharti
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
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
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
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
Hennes & Mauritz to Focus on Growth Again After Posting 4Q
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
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
Robinhood Markets Inc.'s stock fell 14% in premarket trading
after the brokerage reported a loss of $423 million for the fourth
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
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
U.S. Employers Confront Highest Labor Costs in 20 Years, Fueling
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.
"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
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
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
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
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
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
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
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
U.S. Seeks to Confront Russia at U.N. Security Council Over
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
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.
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TODAY IN CANADA
Real Matters Inc. (REAL.T) 1Q
Economic Indicators (ET):
-Nothing major scheduled
Canada Optimistic U.S. Will Allow PEI Potato Shipments After
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
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
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
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
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 -
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
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
Caterpillar Inc (CAT) is expected to report $2.16 for 4Q.
Charter Communications Inc (CHTR) is expected to report $6.81
Chemung Financial (CHMG) is expected to report $1.26 for 4Q.
Chevron Corporation (CVX) is expected to report $3.09 for
ChoiceOne Financial Services Inc (COFS) is expected to report
Church & Dwight Inc (CHD) is expected to report $0.59 for
Colgate-Palmolive Co (CL) is expected to report $0.77 for
Dime Community Bancshares Inc (DCOM) is expected to report for
Diversey Holdings Ltd (DSEY) is expected to report for 4Q.
Eagle Financial Services (EFSI) is expected to report for
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
Moog Inc - Class A (MOGA,MOGB) is expected to report $1.18 for
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
Provident Financial Services Inc (PFS) is expected to report
$0.47 for 4Q.
Prudential Bancorp Inc (PBIP) is expected to report $0.22 for
RBC Bearings Inc (ROLL) is expected to report $0.41 for 3Q.
Real Matters Inc (REAL.T) is expected to report $0.05 for
Red River Bancshares Inc (RRBI) is expected to report for
Republic Bancorp Inc (RBCAA) is expected to report $0.80 for
SCI Engineered Materials Inc (SCIA) is expected to report for
Southside Bancshares (SBSI) is expected to report $0.76 for
Synchrony Financial (SYF) is expected to report $1.48 for
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
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
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
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
Interpublic Cut to Underperform From Neutral by B of A
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
Toll Brothers Cut to Underperform From Buy by B of A
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.