January 15 – 22 2023
FEAR NOT Brave Investors
Where have we been and where are we going? Join our weekly market thread on Traders Community…
The Week That Was – What Lies Ahead?
Click on the links below to navigate to the relevant section.
- Part A: Stock markets
- Part B: Bonds
- Fed and Banks
- Part C: Commodities
- Energy – Oil and Gas
- Gold and Silver
- Part D: Foreign Exchange
- Geopolitics and Economics
- Economy Week ahead
It has been a confusing two weeks of 2023 for those calling the end of the world. In the first nine trading sessions of the year, the S&P500 gained 4.20%, The small cap Russell 2000 has gained 7.10%, and the S&P400 Midcap Index 6.20%. The “average stock” Value Line Arithmetic Index has surged a notable 7.50% and the Nasdaq100 is up 5.50%.
Not just the stock market, bonds, currencies and commodities have also taken out many macro positions from last year out with swift short covering. Despite all the gloomy recession chatter and rapidly waning inflation, Gold has gained a quick $96 (5.3%) to start the year. Copper has jumped 10.6%. Tin is up 16%, Zinc 12%, and Aluminum 9%.
JPMorgan Chase (JPM), America’s largest bank kicked off the banking sector’s fourth quarter earnings season on Friday before the market opened. Chief Executive Jamie Dimon warned the bank was preparing for what it now expects to be a mild recession, setting aside another $1.4 billion for potential worsening loan losses. Three of the largest U.S. lenders, Wells Fargo (WFC), Citigroup (C) and Bank of America (BAC) also reported Friday.
Bonds and currencies have some jitters. Friday saw relative weakness in shorter bond tenors, the four-week bill yield jumped nearly 25 bps to 4.45% amid a growing focus on the upcoming debt ceiling debate. Treasury Secretary Yellen said that the debt ceiling will be reached on January 19, prompting the Treasury to begin employing extraordinary measures that should prevent a technical default until early June.
This week was a good example of the market is always right. DoubleLine Founder. Gundlach reminds us; “My 40 plus years of experience in finance strongly recommends that investors should look at what the market says over what the Fed says.” and “There is no way the Fed is going to 5%. The Fed is not in control. The bond market is in control.”
The week saw three extremely strong treasury auctions. $18 bln 30-yr bond reopening, $32 bln 10-yr note reopening, and an impressive 3-yr note sale. Major banks reported mainly better than expected Q4 earnings Friday with increased loan loss provisions.
Running the gauntlet so far in the new year are, the Philadelphia Gold & Silver Index with a gain of 13.11%, the Philadelphia Semiconductor Index (SOX) 10.61%, the Philadelphia Oil Services Index 9.24%, the Nasdaq Transports 9.00%, the NYSE TMT Index 8.38%, and the Nasdaq Telcom Index 7.96%. The KBW Bank Index is up 6.72%, the NYSE Financial Index 6.75%, and the Bloomberg REIT Index 6.45%.
The move this week followed an as expected CPI report for December which was on top of last week’s release of the December jobs report average hourly earnings growth moderating to 4.6% year-over-year from 4.8% in November. These are key gauges for the Fed and front end led a broad-based rally fueled by short covering.
Some things never change, when you think Greed is Good
Swirling greed and know it all came home to roost. FOMO (fear of missing out) and TINA (there is no alternative) ended how they always do. The company made one of US banking world’s biggest bets on crypto. after the company’s announcement, Silvergate shares cratered a record 49%.
Where to from here? It’s also okay to acknowledge and process any difficult emotions or experiences that you may have had during the past year. Looking back on the past year with perspective can help you to gain a greater understanding of what you have been through and how you have coped. I hope that you are able to find ways to manage any challenges that come your way and that you continue to feel fine moving forward. Embrace the chaos that is headed your way in 2023!
The Credit cycle downturn is coming to the surface.
“Moody’s… raised its forecast for speculative-grade corporate defaults in 2023, warning they could more than quadruple under its most pessimistic scenario. The agency predicts the default rate will climb to 4.9% by November of next year under its baseline scenario, from a forecast of 2.9% for the end of 2022. Last month’s year-ahead projection was 4.5%.”December 16 – Bloomberg (Finbarr Flynn):
China; Behind the Iron Curtain
- “People in China worried… about spreading COVID-19 to aged relatives as they planned returns to their home towns for holidays that the World Health Organization warns could inflame a raging outbreak. The Lunar New Year holiday, which officially starts on Jan. 21, comes after China last month abandoned a strict anti-virus regime… That abrupt U-turn unleashed COVID on a population of 1.4 billion which lacks natural immunity, having been shielded from the virus since it first erupted in late 2019, and includes many elderly who are not fully vaccinated. The outbreak spreading from China’s mega-cities to rural areas with weaker medical resources is overwhelming some hospitals and crematoriums.” January 12 – Reuters (Bernard Orr and Eduardo Baptista):
- “China’s exports shrank sharply in December as global demand cooled, highlighting risks to the country’s economic recovery this year… Exports contracted 9.9% year-on-year in December, extending a 8.7% drop in November… The drop was the worst since February 2020. Reflecting faltering world demand, outbound shipments to the United States shrank 19.5% in December, while those to the EU fell 17.5%… Despite the sharp falloff in shipments in the last few months, China’s total exports rose 7% in 2022… Still, growth was a far cry from a 29.6% gain in 2021.” January 12 – Reuters (Ellen Zhang and Joe Cash):
The market rupture tripod of destruction.
- Firstly, financial asset overvaluation has swung way past any sound underlying economic wealth structure.
- Secondly over-leverage in crowded bets.
- Thirdly we have greed enthused, as always in these cycles, risk engineering, transfer and management that ignores or understands bifurcation and contagion outcomes.
Leverage has become toxic, a development that if not addressed will have deep and with far-reaching sequels. It’s not too farfetched to suggest that the markets are on the verge of a rupture that would be difficult to contain. Should the crisis of confidence dynamics that hit Britain feed into other markets a powerful global contagion could be unleashed. The markets are dislocated, and financial stability is at risk. A sobering thought is the UK is just the initial first world pension system in this cycle facing the harsh reality of a steep devaluation of assets and the prospect of widespread insolvencies and debilitating negative sentiment.
Inflation with Henry Kaufman
Kaufman is the legendary chief economist and head of bond market research at Salomon Brothers is someone who knows Inflation. Henry Kaufman in an interview with Bloomberg’s Erik Schatzker Jan 14, 2022:
“I don’t think this Federal Reserve and this leadership has the stamina to act decisively. They’ll act incrementally. In order to turn the market around to a more non-inflationary attitude, you have to shock the market. You can’t raise interest rates bit-by-bit.”
“The longer the Fed takes to tackle a high rate of inflation, the more inflationary psychology is embedded in the private sector — and the more it will have to shock the system.”
“‘It’s dangerous to use the word transitory,’ Kaufman said. ‘The minute you say transitory, it means you’re willing to tolerate some inflation.’ That, he said, undermines the Fed’s role of maintaining economic and financial stability to achieve ‘reasonable non-inflationary growth.’”
Ahead is Retail Sales, BOJ and WEF
For the US we get retail sales, producer price inflation, housing indicators, and week 2 of Q4 earnings. In the week ahead we get six central banks delivering policy decisions. The Bank of Japan, People’s Bank of China, Norges Bank, Bank Negara Malaysia Bank, Indonesia and Central Bank of Turkey all have monetary policy meetings. Fresh inflation data will be released for the UK, Japan, Canada, and South Africa. Commodity markets will be keen Q4 GDP growth, Industrial production, and retail sales for China.
The World Economic Forum in Davos, Switzerland will run all week. Chinese Vice Premier Liu He, U.S. Trade Representative Katherine Tai, BlackRock (BLK) CEO Larry Fink, Salesforce (CRM) Co-CEO Marc Benioff, and JPMorgan Chase (JPM) CEO Jamie Dimon some off planning to attend.
Earnings include Goldman Sachs, Morgan Stanley, Charles Schwab, Kinder Morgan, PNC, ProLogis, Netflix, P&G, Schlumberger and Truist Financial.
Click here to see the Full Week Ahead List Below
Independence – Never Take It for Granted Traders
“In aggregate, the market goes from order to disorder, and on that journey little pockets of order can form, including in commodities, bonds, stocks, currencies that circle back and reorder disorder. Then there is us the market player that reflects through order and disorder in an ever-evolving loop towards independence. It all starts with gravity and ends with equilibrium and back we go.” KnovaWave “The rules of market flux”
The Fed has kicked off its first real tightening campaign since 1994, with securities markets already at the brink of illiquidity and dislocation. Markets could soon be screaming for assurances of the Fed’s “buyer of last resort” liquidity backstop, while the Fed is prepared to begin withdrawing liquidity by selling Treasuries and MBS.
Another important aspect is the Fed doesn’t Control corporate pricing or wage decisions. Let us be clear geopolitical, climate change developments and what an out of depth, politically motivated administration are outside the Fed’s sphere of influence. There has been over $5.1 Trillion new “money” in 126 weeks, it’s a reasonable conclusion the Fed has lost control of Inflation.
The VOLX`s underlying instrument is the Mini VIX™ Future. The CBOE Volatility Index (VIX) is an up-to-the-minute market estimate of expected volatility. The VIX is calculated using a formula to derive expected volatility by averaging the weighted prices of out-of-the-money puts and calls (options) on the S&P 500.
When the VIX is highly reactive, VIX related products can serve as potentially effective hedging tools, when the VIX is not very reactive, traditional hedging techniques may be a better choice.
We need to grasp all the risks to be wary off and received plenty of flak from it. We always talk here about expect the unexpected and now that is front and center, gage the market’s reaction, the market is always right and that’s why we focused on the crowd psychology aspect over the past few weeks.
“We have a market trying to interpret the Fed who is trying to find out how they can interpret their long-only portfolio at a risk parity where rates cannot rise.”– MoneyNeverSleeps
Cboe Daily Market Statistics
Our weekly reminder for risk. The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out on fees. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off this continuous dip feed? At this point the Central Banks have kicked that answer down the road.
Part A – Stock Markets
Weekly Highlights – USA
- S&P500 rose 2.7% (up 4.2% y-t-d),
- Dow gained 2.0% (up 3.5%).
- S&P 400 Midcaps jumped 3.7% (up 6.2%),
- Small cap Russell 2000 surged 5.3% (up 7.1%).
- Nasdaq100 rose 4.5% (up 5.5%).
US Markets YTD
- Dow Jones Industrial Average: -8.8% YTD
- S&P Midcap 400: -14.5% YTD
- S&P 500: -19.4% YTD
- Russell 2000: -21.6% YTD
- Nasdaq Composite: -33.1% YTD
- Utilities added 0.3% (up 3.5%).
- Banks increased 2.2% (up 6.7%)
- Broker/Dealers jumped 4.0% (up 7.1%).
- Transports advanced 3.5% (up 7.3%).
- Semiconductors surged 6.2% (up 10.6%).
- Biotechs gained 2.4% (up 4.6%).
- With bullion surging $55, the HUI gold equities index rose 3.4% (up 13.3%).
Biggest SPX Stock Winners and Losers Last Week
Global Stock Market Highlights
Highlights – Europe Stocks
- U.K.’s FTSE 100: gained 1.9% for the week (up 5.3% y-o-y).
- France’s CAC40 gained 2.4% (up 8.5%).
- German DAX equities index rose 3.3% (up 8.4%).
- Spain’s IBEX 35 equities index advanced 2.1% (up 7.9%).
- Italy’s FTSE MIB index jumped 2.4% (up 8.8%).
Germany’s benchmark Blue Chip DAX 30 index (Deutscher Aktienindex) expanded to 40 companies on 20 September adding 10 new members to the German stock index from the MDAX which will be reduced from 60 to 50 members.
Highlights – Asia Stocks
- Japan’s Nikkei: +0.6% for the week
- Hong Kong’s Hang Seng: +3.6% for the week
- China’s Shanghai Composite: +1.2% for the week
- India’s Sensex: +0.6% for the week
- South Korea’s Kospi: +4.2% for the week
Highlights – Australian Stocks
- Australia’s S&P/ASX 200: All Ordinaries +3.2% for the week
- Friday seventh gain in eight days to reach a six-week high with rising commodity prices
- New Hope Coal gaining 5%, after Goldman Sachs updated its view on the sector; coal miners Whitehaven and Yancoal also gained.
- Iron ore miner Fortescue Metals 52-week high of $23.12.
Highlights – Emerging Markets Stocks
EM equities mixed
- Brazil’s Bovespa index rallied 1.8% (up 1.8% YTD)
- Mexico’s Bolsa index surged 3.5% (up 10.5%).
- Turkey’s Borsa Istanbul National 100 index sank 6.7% (down 9.5%).
- Russia’s MICEX equities index rose 2.0% (up 2.1%).
Daily: The daily SPX on Friday closed out the year right in the sphere of interest at the cloud twist. The market after spitting the 4100 and 38.2% retracement broke through all near support., though managing to capture the Tenkan on the last day of the year. This underscores the power from the SPX spat of June & October lows with impulse through the tenkan and Kijun energized by the daily cloud twist that fueled this rally. The completive wave came off extreme fear and bear that ended with relief. Now we have sated much of the greed phase and short fear phase. We have completed that cycle and from here we measure the alternatives.
Tracing back from highs the fuel from the top of the channel after completing 3 waves off ATH, accelerated after broke the Tenkan through to the 4600 OI where it reversed with impulse back to Tenkan. Bulls, this is likely a (ii) of a 5. Bears this is 1-2 of (i) completive V of degree. We watch if this low was a (iii), (a) or C. We have to respect the number of alternatives of degree of 5. With such trends keep it simple resistance is Tenkan and Kijun and watch for ABC. From no fear to panic is the driving element.
On the downside the Kijun and those June lows now critical and is our trading Bear/Bull pivot in a high vol scenario. Watch each measured 3 wave move on the 240 & Murrey Math highlighted in the podcast. The prices pulled through the downward cloud pulled by the twist ‘helium contusion’ on the completive.
For fractal purposes, SPX completed 5 waves up where it reversed with impulse. Energy fueled from the power impulse down from +1/8 ATH spit of a spit fail. On the way down (just like up) it accelerated after it broke the Tenkan through the rejected Kijun and then through the median after tapping 8/8.
Weekly: In the last week of 2022 we again closed under the Tenkan and 8/8 after the failed rally was rejected at the 50wma and +1/8. Key support is the 38% correction and the previous low. Power came from rejecting the cloud as one would expect in a 3 or C. We have Kijun. the Tenkan and 50wma all above i.e impulse right to the weekly cloud is needed for cycle switching. For that you would have to break the Kijun and 50wma.
We are playing out S&P 500 energy after it held the sphere of influence from Nov 2020 reversed higher after spitting the 38% and key lows. At the time we opined “We do have a weekly cloud twist; however, the energy is waning without sharp impulse.” We got the sharp impulse right to weekly Kijun. For major cycles we watch the S&P 500 over 4,231, the 50% retracement of losses from the Jan. 3 & June 16 close. Since 1950 there has never been a bear market rally that exceeded the 50% retracement then gone on to make new cycle lows. Is this time different, as we tested and spat those June lows?
On the way up each new high evolved after testing Tenkan key support on the way and we are now getting a retest as resistance. We reiterate this needs to be recovered for a resumption of the uptrend meanwhile the bear market plays out. Watch Tenkan this week and watch for Kijun reaction. Extensions are difficult to time, keep it simple.
THE KEY: Key for the impulse higher was the spit or retest of MM 8/8 and Tenkan San, which held with the previous highs and Tenkan. To repeat “We look for 3 waves down and reactions to keep it simple with the alternatives in the daily.” Keep an eye on the put/call ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as Chikou rebalances
A reminder that Apple Inc $AAPL, Microsoft Corp $MSFT, Amazon.com Inc $AMZN, Facebook Inc $FB, and Google-parent Alphabet Inc $GOOGL make up approximately 23% of the total weight of the S&P 500. With that comes gyrations that are an outsized impact on broader markets
The down move saw Nasdaq spit the weekly Kijun and a 1-2 off tenkan we spat MM 5/8 after holding the key 61.8% Fib. We watch the Tenkan & Kijun confluence above, the breakup level and between the 38/50 Fibs. The Nasdaq is well behind the S&P pace with the weekly cloud and 50wma well above. Support the 61.8% retest.
Recall ATH was after it broke and held the weekly Tenkan to see a spit of a spit fail which is completive of 5 of some degree with Chikou rebalancing. Watch Chikou for divergence for continuation or failure. Divergence with Russell also a clue.
The Dow led the indices and closed above the weekly Tenkan after closing and testing last week. Prior test after the reaction off the June lows and sphere of influence. Support is the channel and Fibs. Tenkan and Kijun after the reaction empowered. Support is the channel and Fibs.
The small cap Russell RUT bounced in double bottom off 1600 5/8 confluence which was the Nov 2020 breakup. Russell 2000 Resistance Tenkan and Kijun, note previous rejections. This is the index showing more of the fast money crowd and is trading like it. Needs to get traction in here for bulls. 7/8 & 8/8 support collapsed on the way down and is now major resistance.
Semiconductors SMH clean with reaction from above reverted with retest & break of the triple top patterning in a pennant. From there been a fractal on each exhaustion. Pull from Chip players $ON $TSM $NVDA $ASML $AMD $QCOM $AVGO $TXN $INTC $AMAT $LRCX $XLNX
NVidia’s latest slide was off earnings, back to lows at 4/8 after a failed breakup retest from May 2021. NVidia is a clear leader of #SOX #SMH look for cues there and ABC failures for changes. Above is the Key Break (mauve) and Tenkan to a flat cloud. Support the recent low at the 61.8% extension.
Heading into another Earnings Apple held the sphere of influence after retesting 7/8 & break up. Kijun and Tenkan are about to touch, with earnings we watch for a kiss of death at the cloud as the story. Apple & other mega-cap names dominant the major indices, and a plethora of funds that hold it as a core position. The Vanguard Mega-Cap Growth ETF (MGK) delta is important to watch.
A firm rejection at $175 at +2/8 triggered a waterfall down for Apple. On the way up Apple gently motored up to new ATH over the massive $160 then $170 thru to $180 gamma level on the way down these levels became key energy levels all the way to $132. Support held at the May break (just like NVDA) where from there it spat the cloud pulled by a flat Tenkan and Kijun as it rebalanced Chikou. The old channel break and MM 8/8 is now key. Remember the impact $AAPL has, at least short term on all the major indices.
The ARK Innovation ETF (ARKK) finally found some support at -1/8, 78% off highs and the 423.6% extension! The fund is filled with growth stocks and was the top-performing U.S. equity fund tracked by Morningstar in 2020, it has not been a pretty slide.
The ARKK ETF trading clinically, tested triangle breakdown and failed off 50 WMA. Some work at support at 61.8% of whole move and then wrecked again. Clear crowd behavior, we saw ATH in NASDAQ & SPX, yet this couldn’t raise a bid – very telling negative divergence. $ARKK rebalanced Chikou at week’s end
Part B: Bond Markets
The Treasury market had a flying start to the new year, highlighted by a 32 basis points decline in the 10-yr note yield to 3.56%. The 2s10s inversion had widened to 71 basis points (from 54 basis points at the start of the year) while the 3mo10yr inversion widened to 105 basis points (from 53 basis points at the start of the year). Friday’s dollar index told us much of the story. The U.S. Dollar Index, up 0.5% just before the employment report was released, was down 1.1% to 103.90 by the close.
The soft wages data had some kindling thrown on from ISM services and factory orders. The December ISM Non-Manufacturing Index also registered its first contraction reading (49.6%) since May 2020, and November factory orders (-1.8% m/m) were much weaker than expected with declines both durable goods and nondurable goods orders.
Treasury Yield Watch
- 2-yr: -18 bps to 4.27% (-15 bps for the week)
- 3-yr: -24 bps to 3.98% (-25 bps for the week)
- 5-yr: -20 bps to 3.71% (-30 bps for the week)
- 10-yr: -16 bps to 3.56% (-32 bps for the week)
- 30-yr: -11 bps to 3.69% (-28 bps for the week)
For our complete Weekly Fixed Interest Analysis and Outlook visit our Bond Traders Weekly Outlook:
- Freddie Mac 30-year fixed mortgage rates added three bps to 6.44% (up 322bps y-o-y).
- Fifteen-year rates declined three bps to 5.77% (up 334bps).
- Five-year hybrid ARM rates fell nine bps to 5.53% (up 312bps).
- Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down 12 bps to 6.47% (up 311bps).
Part C: Commodities
- Bloomberg Commodities Index dropped 4.2% (up 6.7% y-o-y).
- Spot Gold rose 2.3% to $1,866 (up 3.8%).
- Silver slipped 0.5% to $23.83 (up 6.5%).
- WTI crude sank $6.49 to $73.77 (down 7%).
- Gasoline slumped 8.7% (down 2%),
- Natural Gas sank 17.1% to $3.73 (down 5%).
- Copper rallied 2.6% (up 3%).
- Wheat dropped 6.1% (down 2%),
- Corn fell 3.6% (up 8%).
- Bitcoin rallied $400, or 2.4%, this week to $16,980 (down 59.2%).
Key Long Term Commodity Charts
For complete Oil and Natural Gas Coverage please visit our dedicated publications ‘Around the Barrel’ and ‘Into the Vortex.’ – Weekly Analysis and Outlook for Energy Traders and Investors
BDI Freight Index
For our complete Weekly Commodity Analysis and Outlook visit our Commodity Traders Weekly Outlook:
Charts and commentary via KnovaWave on:
- Grains: Wheat, Corn, Soybeans
- Metals: Copper, Aluminum
- Precious Metals: Gold Silver
- Oil and Natural gas are covered separately (see below)
Part D: Forex Markets
John Maynard Keynes, 1920: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”
- For the week, the U.S. Dollar Index declined 1.6% to 102.20 (down 1.2% y-t-d). 2022 gains were 8.2%
- For the week on the upside, the Japanese yen increased 3.3%, the Brazilian real 2.4%, the South Korean won 2.2%, the Mexican peso 2.1%, the euro 1.8%, the South African rand 1.7%, the Singapore dollar 1.6%, the Australian dollar 1.3%, the Swedish krona 1.2%, the British pound 1.1%, the Norwegian krone 1.0%, New Zealand dollar 0.4%, the Canadian dollar 0.4% and the Swiss franc 0.1%. The Chinese (onshore) renminbi gained 1.90% versus the dollar (up 2.95% y-t-d).
- On the downside, None seen
For our complete Forex Weekly Analysis and Outlook visit our Forex Traders Weekly Outlook:
Charts and commentary via KnovaWave on the US Dollar, Euro, Japanese Yen, British Pound, Euro Pound, Swiss Franc, Canadian Dollar, Australian Dollar, New Zealand Dollar, Turkish Lira, Mexican Peso. Currency dynamics are complex. There are myriad facets to analyze and contemplate that influence all markets.
Bitcoin continues to churn following the FTX collapse. BTC had been stuck in the sphere of influence in continuation awaiting a catalyst, and it came. Continues to perform technically to perfection. Impulse begets impulse. To understand panic, understand greed. $BTC tested the top of a rising channel after the preceding sharp downturn which was the downside breakout of an earlier bearish flag, after breaking downside a H&S top and then down it went….
Recall Bitcoin exploded higher following it’s correction impulsively upon completing 5 waves up at +2/8. Each Tenkan and Kijun tap saw an explosive kiss of death until we completed 3 waves to around 28,000. From there we have seen extreme volatility.
Looking back Bitcoin put in a high of $63,000 around Coinbase, the largest US crypto exchange successfully went public which signaled profit-taking. The high over $68,000 came after the launch over the Bitcoin ETF. From that high we have 2 main alternatives a V of a 1 of a V. For bears it a completive five with impulse right to the 50wma – an incredible 26% fall in a Friday night session. That’s impulse!
On the Risk Radar
Geopolitical Tinderbox Radar
Economic and Geopolitical Watch
Major banks kicking off earnings this quarter, including BlackRock (BLK), Citigroup (C), First Republic Bank (FRC), JPMorgan Chase (JPM) and Wells Fargo (WFC).
Major US Banks Deliver Mixed Results in Q4, 2022
The major money cents banks released earnings with many strong results for Q4. Mainly from the interest rate spreads on the positive side. We see a reversal of loss reserve releases from the pandemic kitty as the economy slides into recession.
- Citigroup Record Fixed Income Sales & Trading Revenue Cushion Earnings
- JPMorgan Earnings Boosted by Higher Interest Rates but Sets Aside $2.29 billion for Loan Losses
- Another Swing and a Miss from Wells Fargo Earnings
- Bank of America Earnings Beat, Benefiting Most from the Federal Reserve’s Interest Rate Hikes
The Week Ahead – Have a Trading Plan
What Macro and Micro Risks and Opportunities Lie Ahead this week
Next Week’s Risk Dashboard via Scotiabank ..
- Why global bonds are ignoring core inflation, lower risk to global growth
- US debt ceiling dysfunction will hang over markets for months
- BoJ’s sequel to the JGB massacre
- PBoC to ease?
- BoC pricing to be informed…
- …by what BoC surveys say about inflation expectations…
- …and Canadian inflation: soft headline, firmer core?
- US earnings season continues.
- UK inflation, wages could influence BoE pricing
- Australia’s tight job market may keep driving wage pressures
- China’s economy probably contracted…
- …but shock could give way to a growth rebound
- US retail sales may have ended the year on a sour note
- Norges Bank winding down hikes
- Negara to hike, ringgit adds caution
- Bank Indonesia expected to hike again
- Turkey’s central bank seems to be done debasing
- Other Global macro readings
Central bank Watch
The most notable event is FOMC minutes. St. Louis Federal Reserve Bank President James Bullard is scheduled to give a presentation on the U.S. Economy and Monetary Policy on Thursday. Richmond Federal Reserve Bank President Thomas Barkin and Atlanta Federal Reserve Bank President Raphael Bostic are scheduled to give speeches Friday.
This Week’s Interest Rate Announcements (Time E.T.)
- Tuesday January 17, 2023
- 20:00 BoJ Interest Rate Decision
- Thursday January 19, 2023
- 02:00 Bank Negara Malaysia Interest Rate Decision
- 02:30 Bank Indonesia Interest Rate Decision
- 04:00 Norges Bank Interest Rate Decision
- 06:00 Central Bank of Turkey Interest Rate Decision
- 20:15 PBOC Loan Prime Rate
For our complete Central Bank Analysis and Outlook visit our Central bank Watch:
Economic Data Watch
US Data Focus
- Monday: Bond and equity markets closed for Martin Luther King Jr Day
- Tuesday: January Empire State Manufacturing survey (consensus -8.5; prior -11.2) at 8:30 ET
- Wednesday: Weekly MBA Mortgage Index (prior 1.2%) at 7:00 ET; December PPI (consensus -0.1%; prior 0.3%), Core PPI (consensus 0.1%; prior 0.4%), Retail Sales (consensus -0.8%; prior -0.6%), and Retail Sales ex-auto (consensus -0.5%; prior -0.2%) at 8:30 ET; December Industrial Production (consensus -0.1%; prior -0.2%) and Capacity Utilization (consensus 79.6%; prior 79.7%) at 9:15 ET; November Business Inventories (consensus 0.4%; prior 0.3%) and January NAHB Housing Market Index (consensus 31; prior 31) at 10:00 ET; weekly crude oil inventories (prior 18.96 mln) at 10:30 ET; $12 bln 20-yr Treasury bond reopening results at 13:00 ET; January Fed Beige Book at 14:00 ET; and November net Long-Term TIC Flows (prior $67.80 bln) at 16:00 ET
- Thursday: December Housing Starts (consensus 1.355 mln; prior 1.427 mln) and Building Permits (consensus 1.370 mln; prior 1.342 mln), weekly Initial Claims (consensus 212,000; prior 205,000), Continuing Claims (prior 1.634 mln), and January Philadelphia Fed survey (consensus -11.0; prior -13.8) at 8:30 ET; and weekly natural gas inventories (prior +11 bcf) at 10:30 ET
- Friday: December Existing Home Sales (consensus 3.96 mln; prior 4.09 mln) at 10:00 ET
Global Data Focus
- OPEC: OPEC will publish its monthly oil market report.
- WEF: The World Economic Forum’s annual meeting kicks off in Davos, Switzerland Monday
- Canada: December CPI report, seen falling 0.5% month-on-month, driving the annual inflation rate to ease from 6.8% to 6.3%.
- Brazil: Employment survey, jobless rate expected to drop to 8% in December, lowest since January 2015.
- Mexico: Mexico international reserves
- Europe: ECB monetary policy meeting accounts. CPI figures for December. Germany’s ZEW economic sentiment index. Euro Area current account and construction output; Germany wholesale and producer prices; and Spain and Italy foreign trade data. Central Banks in Turkey and Norway will be deciding on interest rates.
- UK: Inflation, the jobs report, retail sales, and consumer morale. The annual inflation rate likely slid to 6.3% in December, the lowest since March.
- China: China property prices, medium-term lending, GDP. Retail sales, unemployment
- Japan: BoJ’s monetary policy decision after the central bank signaled it would debate side-effects of own wider yield curve control. Japanese inflation rate and balance of trade for December.
- India: India wholesale prices
- South Korea: South Korea money supply
- Australia: Inflation gauge. Westpac consumer confidence gauges for the first month of the year, followed by labor market figures for December.
- New Zealand: December’s PMI data.
Earnings and Event Watch
US Stocks Watch
Investors (and algos) will focus on the conference calls and outlooks. Last quarter everyone expected the worse, we saw critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals.
- Monday. U.S. stocks markets are closed for observance of the Martin Luther King holiday.
- Tuesday Roblox (RBLX) monthly bookings. OPEC will publish its monthly oil market report. The World Economic Forum in Davos, Switzerland will run all week. Chinese Vice Premier Liu He, U.S. Trade Representative Katherine Tai, BlackRock (BLK) CEO Larry Fink, Salesforce (CRM) Co-CEO Marc Benioff, and JPMorgan Chase (JPM) CEO Jamie Dimon some off planning to attend. Monster Beverage (MNST) will host a virtual investor day. AVmed (PAVM) and Lucid Diagnostics Inc. (LUCD) will hold a joint conference call to provide a strategic business update.
- Wednesday Shareholders with Adara Acquisition Corp. (ADRA) will meet to vote on the SPAC deal to take Alliance Entertainment public. Newtek Business Services Corp. (NEWT) will hold an investor conference call.
- Thursday – FDA action date arrives for Seagen’s (SGEN) Tukysa in combination with Trastuzumab for metastatic colorectal cancer. Merck (MRK) has rights to Tukysa outside of the U.S., Canada, and Europe. The FDA also expected to act on BeiGene’s (BGNE) Brukinsa (zanubrutinib) for chronic and small lymphocytic leukemia. ARK Invest will hold its Q4 fund webinar.
- Friday – 2023 Montreal International Auto Show begins with most of the major brands expected to show off their 2023 models. Tesla (TSLA) will make a rare auto show appearance and Vietnamese electric vehicle startup Vinfast will also be featured. Zymeworks (ZYME) scheduled to present Phase 2 data at the ASCO Gastrointestinal Cancers Symposium.
Earnings Highlights This Week:
- Monday includes US markets closed for Martin Luther King Day
- Tuesday includes Goldman Sachs (GS), Morgan Stanley (MS), United Airlines (UAL). Silvergate Capital (SI), New Oriental Education (EDU), Citizens Financial Group (CFG), TAL Education Group (TAL), and Interactive Brokers (IBKR)
- Wednesday includes Charles Schwab (SCHW), PNC Financial (PNC), Discover Financial (DFS), Kinder Morgan (KMI). Alcoa (AA), JB Hunt Transport Services (JBHT), Prologis (PDT), Burberry Group (BURBY),
- Thursday includes Fastenal (FAST), Procter & Gamble (PG), Netflix (NFLX). Truist Financial (TFC), PPG Industries (PPG)
- Friday includes Schlumberger (SLB), Ally Financial (ALLY), Regions Financial (RF), State Street (STT), Ericsson (ERIC)
US IPO Week Ahead:
Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2022.
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