Investors will be focusing on the November print of the Producer Price Index, as there isn’t any corporate earnings report. Investors and economists will both be looking at the report ahead of tomorrow’s Fed policy meeting. This is after last week’s hot November CPI print. They will compare it with the expected headline figure (+9.2% YoY) and October’s +8.6% print. Economists and investors alike will also be comparing the report to the expected November core PPI forecast (+7.2%). The U.S. Senate will vote today to increase the federal government’s limit debt limit of $28.9 trillion.
Data Download
Coronavirus
The UK is experiencing an average of 200,000 infections per day. Norway has banned alcohol from bars and restaurants to reduce the spread of the disease. France may tighten controls on travelers arriving from Britain because of the rapid spread of the omicron coronavirus variant.
China has detected its first omicron in Tianjin. Reuters reports that multiple companies have stopped operations in Tianjin’s largest and busiest manufacturing centers. Authorities are stepping up to stop a COVID-19 epidemic, which has halted some goods production, including batteries, clothing, textile dyes, and plastics. Tens of thousands have been placed in quarantine, while domestic flights have been suspended. A national health official stated that the outbreak was developing in three cities, Ningbo Shaoxing and Hangzhou.
California, the United States, has imposed a month-long mandate that indoor public places must have a mask regardless of their vaccination status.
Moderna (MRNA), announced that the Ministry of Food and Drug Safety of Korea issued Spikevax (Modera’s COVID-19) a marketing authorization. This vaccine was manufactured by Samsung Biologics. Moderna shared that it had reached an agreement with Australia to construct a state of the art mRNA vaccine manufacturing plant in Victoria, Australia.
International Economy
South Korea’s economy is an indicator of global trade and saw its export prices rise by 25.5% YoY in November. This was slightly slower than October’s 26.1% pace. The decline in import prices from 36.3% to October was also slight, with 35.5% YoY compared to 36.3%.
Japan’s Industrial Production declined 4.1% YoY in October, after falling 2.3% YoY from September. After falling 7.3% in September, capacity utilization rose 6.2% MoM to October.
The UK’s October unemployment rate was 4.2%, down from 4.3% in September. This is in line with the consensus expectation. The average October earnings, including bonuses, in the UK increased more than expected at 4.9%, compared to the consensus forecast of 4.5%. The October actual is 5.8% higher than September’s.
The Eurozone’s Industrial Production was 3.3% YoY. This is a bit higher than the consensus of 3.2%, but at a slower rate than September’s 5.2% YoY growth.
The International Energy Agency has shared its latest report. It now predicts that global oil demand will rise by 5.4 million barrels per hour in 2021 and 3.3million barrels per hour in 2022. This would bring us back to pre-pandemic levels, which is 99.5 million barrels/day globally. The forecast includes downward barrel per-day revisions for 2021 and 2022, as Covid cases are expected to affect demand, especially for jet fuel.
Domestic Economy
Yesterday, the New York Fed published the Survey of Consumer Expectations for November. While the median consumer expectation for inflation in the immediate term was at 6%, it fell to 6% for three-years. However, inflation expectations for the long-term declined by a little each month. For those earning less than 50K, they expect spending to rise in the low single digits and for those with higher incomes, mid-single digit growth.
The NFIB Small Business Optimism Index clocked at 98.4 in November. This is a tick above the 98.3 consensus expectations but lower than October’s 98.2 reading.
We will soon receive the November Producer Price Index Report and the weekly API Crude oil stocks.
Markets
All major U.S. equity market indexes dropped yesterday due to renewed concern over the omicron variant. This was after Boris Johnson, the UK Prime Minister, warned of a “tidal tsunami” of coronavirus cases. In the morning, the S&P 500 fell and then again during the last hour of trading. The S&P 500 and Dow Jones Industrial Average both lost 0.9%, while the Nasdaq Composite fell 1.4% and the Russell 2000 fell 1.4%. The NYSE Fang+ Index fell 2.7% and Tesla (TSLA), 5%, while Apple (AAPL), dropped 2.1% despite JP Morgan’s (JPM) raising its 2022 price target at $210, a record on Wall Street.
The opposite end of the spectrum saw the defense areas outperform. Real Estate was the strongest sector in S&P 500, rising 1.3%. Utilities followed closely by Consumer Staples with a 1.2% gain.
The year-to-date gains of these indices are double-digit. Therefore, profit taking ahead Fed’s next monetary announcement and dot plot update Wednesday could have contributed to yesterday’s selloff in equities. Yesterday’s Treasury yields dropped and the yield curve flattened, all in the name of the Fed.
Stocks to Keep an Eye on
Before trading in the U.S. equity market begins, this morning, no companies are expected report their most recent quarterly results.
Pre-market trading has put pressure on Mesoblast’s shares (MESO), following reports that Novartis (NVS), Mesoblast’s pending deal, has been terminated.
Toyota Motor (TM), announced that it will roll out 30 BEV models, and anticipates sales of 3.5 Million BEVs worldwide by 2030.
Yesterday’s gain by Pfizer (PFE), 4.6%, was after Arena Pharma (ARNA), which is worth $6.7 billion or $100 per share in cash, was approved.
Nike (NKE), announced the acquisition RTFKT by the brand. RTFKT combines culture and gaming to create next-generation collectibles.
United (UAL), Virgin Australia Group (VBHLF), announced a partnership that will improve the travel experience between Australia, the Americas, and Australia.
Robinhood Markets (HOOD), according to reports, is working on a feature that allows users to send cryptocurrency as gifts to other users.
NEOGEN Corporation (NEOG), and 3M (MMM), announced that they have reached a definitive agreement. 3M will seperate its Food Safety business, and combine it with NEOGEN in a transaction intended to be tax-efficient for 3M and its shareholders.
MGM Resorts International (MGM), announced that it will sell Las Vegas’ Mirage casino and hotel to Hard Rock International for $1.08 billion.
The DeFi world was reminded recently that decentralization can bring freedom and power to people. However, people need to be aware of what they are doing. The sale of a piece of “Bored Ape”, a vaulted non-fungible token (NFT) that was supposed to be a vaulted item, resulted in the seller posting a piece for 0.75 Ether (ETH), instead of 75 Ethereum. Although the seller tried to cancel the transaction immediately, it was too late. The difference in dollars was close to $300,000. Lektion learned!
IPOs
Space as a satellite service company Sidus Space (SIDU), priced its initial public offering of 3,000,000 shares at $5.00 each share
Fresh Vine Wine (VINE), which is a low-carb, low-calorie wine producer, has set a $10 price per share for its 2.2 million shares IPO.
Closed for Business Today
Like yesterday, companies are not expected to report quarterly results.
The Horizon
December 15: Retail Sales, NY Empire State Manufacturing, Import/Export Prices, NAHB Housing Market, Business Inventories, Federal Reserve Interest Rate decision
December 16: Housing Starts and Building Permits, Philly Fed Manufacturing. December 16th, 2012: Jobless Claims, Industrial Production, Markit Manufacturing PMI, Flash.
December 22nd: Final estimate of GDP (Q3), Chicago Fed National Activity Index, Existing Homes Sales
December 23: Durable goods, Personal Income and Spending, PCE Price Index. Weekly jobless claims. New Home Sales. Michigan Consumer Sentiment.
Thoughts for the Day
“People see what they look at, and hear what you listen to.” -Harper Lee
