Good data out China gave the MLK holiday futures and non-US markets a kick-start. Then, the four-day trading week saw Joe Biden inaugurated as the 46th President of the USA and immediately rejoin WHO and the Paris Accord. John Roe of L&G said “The concept of a United States that isolates itself … is being reversed very rapidly and that is good for international co-operation, international law and international trade.”. Also TreasSec nominee Janet Yellen support the call for Biden’s $1.9Tr stimulus package. All this, plus strong earnings, resulted in a strong risk-on week, with all indices up, and risk index NDX outperforming, although with early technical signs of fragility.
Oil, Gold, the yen and the Dollar continued to range, either repeating or reversing last week’s move. They were joined this week by yields, as the US10 posted an inside week. Bitcoin continued to retreat, now 23% down in two weeks.
Earnings season steps up for the final week of January, as the two largest (free-float) companies in the world, AAPL and MSFT, ’cult’ stock TSLA, and Dow giants BA, V, JNJ, MMM and AXP all report. The tone of the season should be set by the end of the week. The Fed rate decision meeting is on Wednesday, and all eyes will be looking to see how close Chair Powell is aligned to his predecessor who spoke last week. First readings of US and German GDP for Q4 will show the extent of the COVID economic recovery. And don’t forget end-of-month sentiment positioning moves. February does not have the same magic cachet, and traders may try to front-run a pullback.
Monday January 18
Tue Jan 19
Today Treasury Secretary nominee, and former Fed Chair Janet Yellen voiced strong support for the Biden $1.9Trn relief package. GS reported blowout earnings, however their shares fell slightly. Nevertheless the general trend was upwards with SPX up 0.8% and NDX outperforming adding 1.5%. Oil was also up, and Bonds and Gold were down in line, although not by much.
Wednesday January 20
Today was pure inauguration enthusiasm, with a gap-up rally, with SPX and NDX at new highs, helped enormously by a 17% rise in NFLX after beating on subscriber estimates and hinting at buybacks (the engine of rallies). The SPX inauguration rally was the biggest since Ronald Reagan’s in 1985. All the FANG stocks outperformed. Surprisingly Oil was flat, and Gold, after a sharp dip around inauguration time ended up on the day, as did Bonds and the yen. The dollar overall was more or less flat after a choppy day.
Thursday January 21
President Biden moved immediately today to rejoin WHO and the Paris Accord, and to scrap the Muslim travel ban. John Roe of L&G said “The concept of a United States that isolates itself … is being reversed very rapidly and that is good for international co-operation, international law and international trade.”. Markets made new highs, but only just, given the strength of the rally to date. Bonds were down in line, and Gold was flat. However Oil was slightly down. The dollar continued downwards, with no significant change on the ECB press conference.
Friday January 22
After rallying all week, markets took a breather and pulled back slightly today, with some scepticism about the speed of the stimulus package. SPX was down 0.3%. Oil was down and Bonds were up in line. A safe haven dollar once again rose, more than yen, for once, and of course Gold was up in line with both the dollar and the mood.
WEEKLY PRICE MOVEMENT
NDX substantially outperformed this week, up 4.39%, more than twice that of any other index. The top forex mover was NZDCAD up 1.0%. Bitcoin fell again, down nearly 10%. FANGs were superb, all outperforming even NDX.
Last time, I was right about EURGBP, however it only made 0.11%, totalling 1.23% (3/3 wins). This week I'll go back to buying EURNZD
Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.
NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold)
Monday January 25
As is often on Mondays, a quiet start to the week.
09:00 Germany IFO – Business Sentiment Reports
13:30 Chicago Fed National Activity Index
23:50 BoJ MPC Minutes
Tuesday January 26
The first big earnings day of the week with JNJ, MMM and AXP (together 9.74% of DJIA) all reporting before the bell, and MSFT (8.95% of NDX) reporting after the close. Macro data on the day is light.
07:00 UK UnEmp/AHE (UnEmp e5.1% p4.9%)
14:00 US Housing/Home Price Indices
15:00 US Consumer Confidence
23:30 Aus Westpac Leading Index
Wednesday January 27
Troubled Dow giant BA reports before the bell, but all the action today comes towards the end. At 1900 the Fed will indicate where they stand on COVID and stimulus, and then after the bell we have reporting from AAPL, TSLA and FB, together 21% of NDX by weight.
00:30 Australia CPI (e1.5% p1.6%)
07:00 Germany Gfk Consumer Confidence Survey
10:00 DE10Y Bond Auction (time approx.)
13:30 US Durable/ND Capital Goods (Durables e0.9% p1.0%)
19:00 Fed Rate Decision/Statement/Presser (e0.25% hold)
23:50 Japan Retail Sales
Thursday January 28
The first reading of US Q4 GDP today will give a feel for normal growth, as the previous quarter (33.4%) was based on the extremely low March base. Dow regulars report today; MCD before the bell, and V after the close.
10:00 Eurozone Consumer Confidence/Business Climate
13:00 Germany CPI (e-0.6% p-0.7%)
13:30 US PCE (QoQ)
13:30 US Jobless Claims
13:30 US Q4 GDP Prelim (e4.4% p33.4%)
15:00 US New Home Sales
23:30 Japan Tokyo CPI
23:30 Japan Jobs/Unemployment
23:50 Japan Industrial Production
Friday January 29
More Dow components CAT, CVX and HON report today before the bell. In macro news, the Canadian GDP and Michigan Consumer Sentiment are important.
08:55 Germany Unemployment Rate/Change
09:00 Germany Q4 Prelim GDP (p8.5%)
13:30 US PCE (MoM and YoY)
13:30 Canada Q4 GDP (MoM)
14:45 Chicago PMI
15:00 Michigan CSI
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