MARKET WRAPS
Watch For:
Texas Manufacturing Outlook Survey for January; earnings from GE Healthcare, Whirpool
Today's Headlines/Must Reads
- Short Sellers Feel the Pain in Stock Market's 2023 Rally
- Fed Debates Whether Wages or Low Unemployment Will Drive Inflation
- Startup Valuation Resets to Kick-Start Stalled M&A
- Breakup of Google's Ad Business Would Reshape $500 Billion Sector
- China's Top Nuclear-Weapons Lab Used American Computer Chips Decades After Ban
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Opening Call:
Stock futures were weaker on Monday as investors awaited a bumper week of rate announcements from central banks, including the Federal Reserve, and earnings from some tech giants.
Overseas, European stock indexes declined, while markets in Asia were mixed. China reopened with modest gains following the Lunar New Year holiday.
Stocks to Watch
Alliance Resource Partners said it will increase its quarterly distribution by 40% to 70 cents per unit. The new payout, equal to $2.80 a year, represents an annual yield of roughly 14% based on Friday's closing price of $20.71. The company's shares rose 10% in after-hours trading.
Amazon.com raised the minimum price for free online grocery delivery. Shares in Amazon, which is due to report results on Thursday, fell about 2% ahead of the opening bell.
CN Energy said it plans to offer securities in an underwritten public offering. Its stock fell 27% in after-hours trading.
Helbiz plans to seek a reverse stock split to bring its shares back into listing compliance with Nasdaq. The stock declined 20% in after-hours trading.
Lucid gained 3% after the stock closed Friday with a gain of 43% amid unconfirmed rumors the company could be acquired.
Lucid declined to comment after stock news aggregation site The Fly on the Wall attributed the share spike to takeover speculation by stock research blog Betaville that the Saudi Arabia Public Investment Fund, which has invested in Lucid, would acquire the company. Lucid declined to comment.
Tesla was down 2% in premarket trading. The stock received an upgrade to Buy from Hold from analysts at Berenberg. Tesla rose about 33% last week. General Motors declined 2% after Berenberg reduced its rating on shares of the auto maker to Hold from Buy.
Week Ahead
Apple, Amazon. com, Meta Platforms and Alphabet report earnings in the coming week, four of the many companies providing quarterly updates as layoffs and slowing growth hit the tech industry.
Leaders across multiple industries-such as Exxon Mobil, Merck, McDonald's and Caterpillar-are also scheduled to report their financials in the coming week.
Read more here .
On the economic front, job reports will gauge wages, openings and the overall labor market, and the Fed will meet to consider raising interest rates as it strives to combat inflation.
Read more here .
Forex:
The dollar should remain supported heading into Wednesday's Fed decision, where a rate increase of 25 basis points is widely expected, and ING said the currency could enjoy a rally thereafter, albeit a brief one.
ING expects the Fed will likely push back against the market's pricing of 50 basis points of easing in the second half of 2023, resulting in the DXY dollar index temporarily rising to between 102.50 and 103.00. The dollar could fall, however, if the Fed suggests any additional rate rises will be data-dependent, ING said.
It thinks the DXY should stay above 101.30 heading into the Fed meeting.
Energy:
Oil prices were weaker in Europe as investors prepared for this week's central bank and OPEC+ meetings.
OPEC and their Russia-led allies are unlikely to adjust their output levels when they meet on Wednesday, and are expected to await more information about China's reopening and Russian production, ING said.
"We do not expect any change in output policy from the group, given the lingering uncertainty that overshadows the market, both from a supply and demand perspective."
Metals:
Base metal were mixed and gold lower in London.
For markets to rally, "the Fed may need to break new lower ground during post-op commentary by couching policy more in line with market pricing or hinting they are entering the pause and reassessing phase," SPI Asset Management said.
Silver Outlook
A weaker dollar and potential interest-rate cuts toward the end of the year are likely to drive the price of silver higher, UBS said.
It raised its forecast for the metal to $24 a troy ounce in March and $28 by the end of the year, from $21 and $24 an ounce respectively.
In addition, a firmer emerging market environment could trigger greater investment demand and higher prices, UBS said.
However, unlike gold, prices could be range-bound in the short term as silver lacks central bank purchases to provide a floor to prices.
TODAY'S TOP HEADLINES
Tesla's Big Price Cuts Fuel Owner Backlash
Tesla Inc.'s deep price cuts across its U.S. lineup this month have sparked a backlash from customers, many of whom paid thousands of dollars more for their vehicles just weeks earlier.
Tesla Chief Executive Elon Musk on Wednesday said demand has surged following the price reductions, which executives said were aimed at making Teslas more affordable and qualifying some models for a federal electric-vehicle tax credit.
Bed Bath & Beyond's Woes Prompt Landlords to Line Up New Tenants
Bed Bath & Beyond Inc.'s slide toward a potential bankruptcy filing threatens to flood the retail real-estate market with hundreds of vacant stores after the company said last week it would close about 90 additional locations.
But landlords who own big-box space occupied by the troubled home-goods retailer are more confident about finding new tenants than they would have been in years past, according to property owners and retail analysts.
Amazon, Apple, Alphabet Headline Another Busy Earnings Week
Apple Inc., Amazon.com Inc., Meta Platforms Inc. and Alphabet Inc. report earnings in the coming week, four of the many companies providing quarterly updates as layoffs and slowing growth hit the tech industry.
Leaders across multiple industries-such as fossil-fuel giant Exxon Mobil Corp., pharmaceutical company Merck & Co., fast-food chain McDonald's Corp. and construction-equipment giant Caterpillar Inc.-are also scheduled to report their financials in the coming week.
Breakup of Google's Ad Business Would Reshape $500 Billion Sector
Google spent the better part of two decades building the world's most powerful digital advertising machine. Breaking it up would send shock waves through the $500 billion online-ad market.
If the U.S. government wins the antitrust lawsuit it filed last week and the Alphabet Inc. internet company is required to spin off technology for brokering ad deals across the web, the separated businesses would be valued at tens of billions of dollars, according to ad and media-industry executives.
Rout in Adani Stocks, Bonds Continues; Conglomerate Trades Barbs With Short Seller
The namesake conglomerate of India's richest man, Gautam Adani, fired back at an American short seller, but the group's 413-page response didn't stop a slide in the shares and bonds of its companies on Monday.
On Sunday, the energy and infrastructure group released a strongly worded document addressing the allegations of fraud and misconduct put forth last week by Hindenburg Research. The New York-based firm, which was founded by Nathan Anderson, alleged that stock manipulation and questionable business and accounting practices had caused the market valuation of Adani's key listed companies to appreciate sharply over the past few years.
TikTok's Chief to Testify Before Congress in March
TikTok's chief executive has agreed to appear before a congressional committee in March, as House Republican lawmakers step up scrutiny of the Chinese-owned video-sharing app.
Shou Zi Chew will appear before the House Energy and Commerce Committee on March 23, a committee spokesman said, in what would be the first appearance of a TikTok CEO before a congressional panel.
TikTok Ban Faces Obscure Hurdle: The Berman Amendments
WASHINGTON-As lawmakers push to ban or restrict Chinese-owned TikTok, one of the many hurdles they face is a pair of measures passed by Congress decades ago to let films, books and music flow freely between the U.S. and hostile foreign countries.
The measures, known as the Berman amendments, date to the last years of the Cold War. They took away the president's authority to regulate or ban imports of "informational materials" from adversarial nations such as Cuba, and shielded those who produced such works-and their U.S. distributors-from penalties for violating economic sanctions.
Amazon Raises Price Minimum for Free Online Grocery Delivery
Amazon Prime members who order groceries online through Amazon Fresh will soon pay a lot more to get free delivery.
Starting Feb. 28, online Amazon Fresh grocery orders of less than $150 will incur delivery fees, Amazon.com Inc. said in an email to Prime members.
Small Oil Producer Stands to Win Big From Biden's Climate Bill
Middling oil producer Denbury Inc. emerged from bankruptcy in September 2020 with a collection of aging wells, pipelines to move around carbon dioxide and uncertain prospects.
Today, the Dallas-based company is one of the big winners of the Biden administration's signature climate bill.
Banks Brace for More Consumers to Fall Behind on Their Loans
U.S. banks dusted off their recession-ready playbooks at the end of 2022.
Regional lenders and banks with big credit-card businesses continued to profit from borrowers who ran up credit balances at higher interest rates in the fourth quarter. But many tightened their lending standards and set aside more money to cover potential loan losses, signs that they don't expect the good times to last.
How Quickly Rate Increases Slow the Economy Could Shape 2023 Fed Policy
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01-30-23 0624ET
