This Week In Markets: 17th - 21st January 2022

Okay, very good evening to you. It is Sunday the 16th of January, and as per usual, I'm going to take a look at the major news over the weekend and the major things to look out for in markets coming up this week. Don't forget, first things first, it is Martin Luther King Jr. Day in the US, so US markets closed for Monday, and also really quiet calendar in fact in terms of major economic data coming out of the States. But we do see a bit of a pickup in earnings season, about 38 S&P 500 companies coming out, a few more big banks, 3 other names as well, which I'll look at in a moment, including companies like Netflix as well, which are quite closely followed. But let's get straight to it and talk about some of the weekend news first. And overall it has been really quiet, probably likely due to the fact of what I've just mentioned with the holiday in the States, but not a great deal going on. So just quickly, 2 stories to be aware of. One, In oil markets, Libya's oil production has picked up. This comes after a blockade of its western fields ended and ports in the east have now reopened. Output is said to now be back to around 1.2 million barrels per day, which was about normal in terms of the level of operation before the latest round of closures hit the North African nation's oil facilities late last year. So that in itself, we had seen a bit of a supply impact in the likes of Kazakhstan, Libya, but Those things started to normalize now a little bit and will continue to keep an eye on oil after a continuous multi-week run that we've been seeing of late. Then the other stocks news of, of interest, I don't think this is particularly meaningful for the stock in itself, but certainly for this Web 3.0 and metaverse conversation. There was a report on CNBC talking about Walmart is preparing its own cryptocurrency collection of non-fungible tokens. That's according to patent trademark filings that have shown that they're looking and have the intention to sell virtual goods such as electronics, decor, toys, sporting goods, personal care products, these types of things. So just something to be aware of. And I thought quite an interesting story. But look, before I begin and talk about the week ahead, one thing is if you're a student and you have not yet taken part in one of our Finance Accelerator events in 2021, well, we've got one of the first ones to land this year on Wednesday the 19th. Doesn't matter if you don't study econ. It doesn't matter if you've never done any trading or anything like that before. If you're keen about, about global markets, you want to work in finance industry but you don't have any experience, you want to fill some of these roles out like sales trader, market maker, hedge fund trading, these types of roles, then check it out. This is your chance to get some hands-on practical experience and accumulate some data on your own performance to hopefully tell you again where you could apply to in future with greater success. So I'll drop the link on the video And while we're here, don't forget to like and subscribe to the channel. I'd really appreciate it. Otherwise, look, let's talk about the week ahead and overnight. So going into Monday morning, we're going to see the release of the latest Chinese metrics, and these are going to be actually quite interesting. And the reason for that is we get GDP overnight. Now, really two major things here, or three major ones actually. The impact of the real estate downturn in the fourth quarter, We've also got Beijing's hardline approach, this zero tolerance approach to COVID lockdowns, which they've been enacting, of course, pretty much since the beginning of the pandemic. We have seen case numbers there particularly high of late in this quarter's reading. And then also we've had electricity shortages as well. So as you can see here, China's growth pattern has been slowing throughout 2021, and we are expecting that to happen Again, the median forecast is for a 3.3% print overnight. This also does come out alongside things like industrial production, retail sales, so the full suite of economic updates coming out of China in the overnight session. Otherwise, just flipping over to the calendar, you'll see here it commences on Tuesday because Monday is super quiet on the docket. And just focusing on the UK, uh, with this, you've got UK jobs data Tuesday, UK CPI Wednesday, And then you've got UK retail sales coming out on Friday. Now, a couple of things to be aware of here. For one, the labor statistics on Tuesday will likely continue to show a tight employment market. Intention very much so is going to be on the wage components in particular. That is the basis, a lot of the rationale for why the Bank of England have and are expected to be continuing to hike rates in the near term. And then on Wednesday, a further uptick in inflation is expected to 5.2%. That's according to the medium outcome of those polled by Bloomberg, which would match the previous high for the current century. So yes, inflation is super high. Directionally, we are expected that to continue to be the case, much like what we saw in the US with that uptick from 6.8% to 7% just a week or so ago. But despite the inflation metric being statistically very high, Actually, it's probably going to go, as I'm saying, even higher in the future. And in fact, most analysts are of the opinion the inflation in the UK is unlikely to peak until April, where analysts are expecting a roughly 50% increase in the household energy price cap. So that coming in shouldn't be a shock, but it's going to make those numbers look super high when that time comes around. And that's because of wholesale prices for energy being so high That's going to be compensated in then to all of us paying more, of course, for our energy bills. And then on Friday, you've got retail sales expected to fall. Did have a pretty bumper November, and a lot of that was— appeared to be stronger than usual Black Friday trading period. So we tend to see a front-running purchasing demand in that fashion. It tends to then decelerate afterward. And also, of course, we saw the outbreak of Omicron yet to be seen how much of an impact that had. Certainly, probably people's reluctance to go out in hospitality and things like that, probably slightly less so than what we saw in the past, a year prior and so forth. But nonetheless, we are expecting that to decline when that comes out on Friday. The other thing, of course, in the UK is politics. Probably can't get away from it the weekend because of all the trouble that's been coming at the door of Number 10 and Boris Johnson. So, Sue Gray, the senior civil servant, may release her report. It's a little bit tentative around what specifically the timing will be about those Whitehall parties, which we saw emerge and was really in the forefront of mainstream media last week. The report is expected to be highly critical of Downing Street staff and will set out in detail an apparent culture of drinking and COVID rule-breaking. Boris Johnson is likely to just cut a couple of low-hanging fruit aides to try and take accountability for that. Having had him make the apology last week. She's not expected in that report to blame PM Johnson directly for this. So for the moment, I would say he lives to fight another day as far as this week is concerned. And if you want more kind of thoughts and insights as towards what I think about that more long term, then check out the Amplify Me Market Maker podcast where Piers and I talked about this at length in Friday's latest episode. Otherwise, moving on and going to take a quick look at Japan. The Bank of Japan have their rate meeting coming up this week. And they may consider signs of price, price pressures in their meeting on Tuesday. Analysts at Morgan Stanley have said that they now guess that the BOJ's existing outlook, which judges the risk to prices are, quote, skewed to the downside, may be revised to suggest that risks instead of downside are now balanced. And so a bit of an upgrade in that front. Inflation figures for December in Japan will follow later this week, and we're also going to get latest trade numbers coming out of the country as well. And as you can see on this chart right here, Japanese Producer Price Index being the highest that it's been in multiple decades. And so yes, the rate's not quite as dramatic on the CPI front as what we're seeing elsewhere globally, but nonetheless, they're following in the same direction. So although the distance is very far away from the sort of policy juncture where the Fed are at or the Bank of England having already pulled the trigger, the BOJ certainly will be moving slightly towards that direction as well. And then in Europe, you get the ECB minutes. So here she is, Christine Lagarde, the president, of course, of the central bank. The minutes about the December deliberations will be coming out on Thursday. The bank, much like in the case of the Bank of Japan, probably not quite so much so, but is quite a different place from where the BOE and the Fed are at this point in time. Nonetheless, eurozone inflation hit a record high of 5% in December, prompting some governing members to warn that if prices keep rising faster than its 2% target for longer than expected, it would require a more dramatic shift in policy. So really, you're looking for a bit more of a detailed account of their conversations when those minutes come out towards the back end of this week. Australia monthly consumer confidence data is released on Wednesday, likely to be hit by the raging coronavirus that we've seen domestically there, while December labor market data out the day after are on Thursday is unlikely to capture the full impact of the worsening outbreaks, is something to consider and might well diminish the impact of that specific data point. And then at the end of the week, of course, we do see the earnings come out. And so, as I said, US-Canada is pretty quiet. The NYSE is going to look exactly like this, which is deserted because markets are closed on Monday. Calendar is extremely quiet. We've got some regional manufacturing, some housing data really coming out of the US, but none of that is going to really move the needle on Fed thinking in terms of their policy. And don't forget, Federal Reserve members are now in their blackout period ahead of their meeting, which will take place on the 25th and 26th of this month of January. We do have though earnings reports. Earnings season starts to pick up a little bit of pace. It's really next week when it really does ramp up. But following on the coattails of some of the banks like JP Morgan, which had a pretty disappointing outlook and declined around 6% on Friday. BlackRock, others, we now start to see people like Goldman Sachs, Morgan Stanley, Bank of America, they're all coming out on Tuesday and Wednesday pre-market. 38 S&P companies in total, including 4 Dow components. Other highlights include companies like Netflix aftermarket on Thursday, um, as well as some transportation names as well hitting the tape. Um, so that is it. So feel free to check out the full notes for this briefing on my Twitter handle below. As I said, appreciate it if you could like and don't forget to subscribe to the channel, really helps build out our community. And yeah, have a great week ahead. Take care.