MARKET WRAPS
Watch For:
FOMC meeting; 4Q Employment Cost Index; S&P CoreLogic Case-Shiller Home Prices Index for November; Chicago Business Barometer -- ISM-Chicago Business Survey -- Chicago PMI for January; Conference Board Consumer Confidence for January; earnings from McDonald's, Caterpillar, General Motors, Exxon Mobil, Pfizer, UPS, Mondelez, AMD, Snap
Today's Headlines/Must Reads
- Labor Report to Give Fed Look at Wage Inflation
- Private Equity Taps Insurers' Cash to Speed Up Growth
- Biden Administration Considers Cutting Off Huawei From U.S. Suppliers
- Eurozone Economy Outpaced China and U.S. in 2022
- IMF Upgrades Outlook for Global Economy
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Opening Call:
Stock futures were lower on Tuesday, ahead of a spate of corporate earnings and the start of the Federal Reserve's two-day meeting.
"We doubt that the Fed will deliver a dovish surprise at its meeting, but the imminent end of interest rate hikes is nevertheless positive for risk appetite," HSBC Global Private Banking & Wealth said.
"That said, the main beneficiaries lie outside of the U.S., in emerging markets, where borrowing costs are already declining as Treasury yields have peaked and the dollar is falling."
Stocks in Europe and Asia-Pacific dropped after investors got fresh readings on growth, inflation and manufacturing data.
Stocks to Watch
Harmonic released disappointing fourth-quarter results and first-quarter guidance. Its shares dropped 9% in after-hours trading.
Integer reported a preliminary fourth-quarter profit that came in below expectations. Its stock declined 5% in after-hours trading.
Symbotic posted a surge in revenue in the latest quarter and said demand for its products continues to grow. Shares rose 7% in after-hours trading.
Forex:
The dollar index hit an 11-day high of 102.5190 in European action, and the currency should perform well in a cautious environment as traders await the Fed decision, ING said.
It said the greenback should be able to continue gains into the meeting, with high-beta currencies remaining main underperformers in the risk-off environment.
"Our view...is that the Fed still has an interest in hanging on to a hawkish rhetoric and pushing back against speculation of an early peak and--above all--rate hikes in 2023. The net result for the dollar may be positive."
Bonds:
Income is finally back in fixed-income thanks to higher yields and coupons, BlackRock Investment Institute said.
Short-term government bonds and investment-grade credit now offer some of the highest yields in the last two decades, it added.
BlackRock's preference for earning income right now is from high-quality fixed income assets as rates rise and stay high.
"Fixed income's appeal remains intact the longer central banks keep rates near their peak."
The lack of duration--or the sensitivity of bond prices to interest rates--in short-term paper also helps preserve income even if yields rise anew, BlackRock said.
Energy:
Oil prices were 1% lower in Europe as investors market awaited clarity on Chinese demand and Russian supplies.
Russian oil exports continue to show resilience in the face of an impending EU crude products ban set to come into force on Sunday.
"Russian oil continues to flow eastbound, which of course, is great news for central bankers, broader markets, and Brent crude short sellers," SPI Asset Management said.
With China's Lunar New Year holiday having now passed, investors are also looking for clues that the nation's demand for crude is recovering.
Metals:
Base metals and gold were lower early in the London session, as traders looked ahead to tomorrow's Fed decision on interest rates.
"Financial conditions have loosened and markets have rallied on softer inflation metrics over the past month," Peak Trading Research said.
"Traders expect that Powell will have a hawkish message tomorrow to temper some of this enthusiasm," Peak added, noting that the fall in metals prices today reflects profit taking given the possibility of a pivot from the Fed.
Gold
Demand for gold reached its highest level in more than 10 years in 2022 as rising central bank interest rates and worries over the global economy pushed investors toward the precious metal, according to the World Gold Council.
Annual gold demand last year hit 4,741 metric tons - up 18% on year, and the highest annual total since 2011, the WGC l said on Tuesday in a new report.
Read more here .
TODAY'S TOP HEADLINES
Spotify Adds Users, Reports Loss After Big Investments in Podcasts
Spotify Technology SA reported strong user growth but another quarterly loss after the company invested extensively to build its podcast business.
The audio giant, which last week laid off employees and reorganized its top brass, said it aims to become a more efficient business this year following an intense period of spending. Spotify's chief content and advertising business officer, Dawn Ostroff, will leave the company. She spearheaded the company's expansion into podcasting, helping acquire studios and ink deals with high-profile figures such as Joe Rogan, Michelle Obama and Kim Kardashian.
Blockbuster Arthritis Drug Humira Faces Competition From First Lower-Price Copycat in U.S.
AbbVie Inc.'s arthritis therapy Humira is set to face its first competition in the U.S. from a near-identical copycat, the end of the exclusive run of what was for years the country's biggest-selling drug.
After two decades of patent protection and more than $135 billion in U.S. sales, Humira will contend with the near-identical version from Amgen Inc. starting Tuesday, Amgen said. Other Humira copycats are due to become available later this year.
Airbnb and Expedia Turn Customer Cash Into Profit, Aided by Rising Interest Rates
Airbnb Inc. and Expedia Group Inc. invest billions of dollars of their customers' money for their own profit. Thanks to rising interest rates, returns on these investments are higher than ever.
The travel sites typically collect money from guests the moment they book. But they only pass it on to hosts or hotels after the guest stay starts, which can be several months later.
UBS Attracts Wealthy Clients to Help Lift Profit
UBS Group AG said wealth clients added new assets at the bank in the fourth quarter, helping it post a better-than-expected net profit.
The Swiss bank made a $1.65 billion quarterly net profit, more than the $1.28 billion analysts expected and up from $1.35 billion a year earlier. Inflows from its wealth customers picked up in the quarter across most regions, lifting the annualized growth above the bank's 5% target, to 7.9%.
Biden Administration Considers Cutting Off Huawei From U.S. Suppliers
WASHINGTON-The Biden administration is considering entirely cutting off Chinese telecommunications giant Huawei Technologies Co. from U.S. suppliers over national-security concerns by tightening export controls targeting the firm, according to people familiar with the matter.
The move-should the administration move forward-would mark the latest salvo in the high-stakes clash between the world's two largest economies as U.S. policy makers seek to counter China's industrial policy they say threatens Western interests.
Samsung Expects Sluggish Demand to Drag On as Profit Slides
SEOUL-Samsung Electronics Co. expects demand for semiconductors and smartphones to remain sluggish as macroeconomic challenges and fears of a recession continue to hurt sales, but it said a recovery could be possible in the second half.
Economic uncertainties are weakening momentum for any short-term rebound in demand for memory chips, Samsung's main cash cow, said Kim Jae-june, executive vice president for global sales and marketing at the company's memory business, in an earnings call on Tuesday.
UniCredit to Hand $5.70 Bln to Shareholders After Record Profit - Update
Italy's UniCredit SpA plans to distribute 5.25 billion euros ($5.70 billion) to shareholders in the coming months, EUR1.5 billion more than in the previous year, after the bank swung to a profit in the fourth quarter and posted revenue well ahead of analysts' forecasts.
The Italian bank said Tuesday that the distribution, subject to supervisory board and shareholder approvals, would consist of a EUR1.91 billion cash dividend and a share buyback of EUR3.34 billion. A first tranche of the buyback worth some EUR2.34 billion will launch once approved by the company's annual general meeting at the end of March, followed by another tranche of around EUR1 billion in the second half of the year.
Alameda Research Sues Bankrupt Crypto Lender Voyager for $446 Million
The managers steering failed crypto hedge fund Alameda Research through chapter 11 have sued Voyager Digital Ltd. for nearly $446 million, alleging it received preferential payments while Sam Bankman-Fried's crypto empire collapsed.
In a lawsuit filed on Monday, Alameda accused Voyager of feeding its customers' money to risky crypto companies without due diligence, which helped fuel the alleged misuse of customer funds that brought down Alameda and its affiliated crypto exchange, FTX.
Shein to Name Ex-SoftBank Executive Claure to Head Latin America Business
SINGAPORE-Shein, one of the world's largest online fashion retailers, is set to appoint Marcelo Claure, a former executive at SoftBank Group Corp., as its Latin America chairman, according to people familiar with the matter.
Mr. Claure also made a personal investment of about $100 million dollars in Shein, the people said.
Labor Report to Give Fed Look at Wage Inflation
Worker-pay and benefits data set for release Tuesday will shed light on whether the Federal Reserve is successfully cooling fast wage growth as officials meet to consider further increases in interest rates.
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01-31-23 0636ET
