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Markets go into the second week of January bruised and battered, having suffered nearly their
worst opening week of all time; the concerns aren't likely to abate, and the weakness in the
earnings outlook and worry about valuation means that buyers may continue to be skittish while
sellers take advantage of rallies to pressure stocks lower. Many strategists have noted the
market is oversold on a technical basis, which could produce something of a rebound, but so far
rebounds have been used as opportunities for more selling. That should help bonds keep yields
lower as investors use Treasuries as a safety opportunity.
Import prices would have likely seen a drop of 1.5 percent in December when Labor Department
releases figures on Thursday. Same day, Producer Price Index will show it fell 0.2 percent in
December after advancing 0.3 percent in November. Dollar strength and continued declines in oil
prices amid a glut and slowing global growth have dampened price pressures, leaving inflation
running persistently below the Fed's 2 percent target. Retail sales data for December is
estimated to have risen 0.1 percent according to a Commerce Department report scheduled for
Friday. The Treasury Department will issue December budget report after the U.S. federal
government ran $65 billion into the red in November. On Tuesday, U.S. small-business confidence
index is expected for December. The index tumbled to 94.8 in November amid worries over sales
growth and profits.
JPMorgan Chase & Co (N:JPM), the biggest U.S. bank by assets, reports fourth-quarter and full-year
results on Thursday, becoming the first major bank to kick start earnings season. Citigroup Inc (N:C)
and Wells Fargo (N:WFC) & Co follow suit, releasing their quarterly earnings on Friday. Analysts will be
keen to learn how the banking industry is shaping up; a month after the Federal Reserve raised
interest rates for the first time in nine years.
On Tuesday, Federal Reserve Vice Chair Stanley Fischer will participate in "Monetary Policy,
Financial Stability and the Zero Lower Bound" panel before the Banque de France and Bank for
International Settlements Farewell Symposium for Christian Noyer in Paris. Later that day,
Federal Reserve Bank of Richmond President Jeffrey Lacker is scheduled to speak on "Economic
Outlook January 2016" before the South Carolina Business and Industry Political Education
Committee in Columbia annual meeting. On Wednesday, Federal Reserve Bank of Boston President
Eric Rosengren will speak on economic outlook for the U.S. economy at the Greater Boston
Chamber's Government Affairs Forum in Boston. Federal Reserve Bank of Chicago President Charles
Evans will give a talk on the current economic conditions and monetary policy before the
Corridor Economic Forecast Luncheon in Iowa on the same day. Federal Reserve Bank of St. Louis
President James Bullard will give a presentation on U.S. economic and monetary policy before the
Economic Club of Memphis at the 2016 Regional Economic Briefing and Breakfast in Memphis on
Thursday.
Battered by a shrinking market for personal computers, Intel Corp (O:INTC) is estimated to report
fourth-quarter profit slightly below analysts' average estimate, according to Thomson Reuters
StarMine data. Intel has been rapidly expanding its line-up of higher-margin chips used in data
centers, but the PC business remains its largest. Last quarter, the world's largest chipmaker
cut its 2015 growth forecast for the data-center business.
Senior management at Valeant Pharmaceuticals International Inc (N:VRX) makes the first public
presentation at JP Morgan investor conference in San Francisco on Wednesday since board member
and former Chief Financial Officer Howard Schiller took over as interim chief executive.
Schiller replaces Michael Pearson (L:PSON), who has been hospitalized with severe pneumonia since late
December. Investors will look for updates on the drugmaker's internal probe into its
controversial use of a specialty pharmacy.
When BlackRock Inc (N:BLK) reports fourth-quarter earnings on Friday, investors will watch out for how
much market volatility hurt the asset manager's flows. The firm is the world's largest manager
of mutual funds, exchange-traded funds, hedge funds and other investment products and services.
The world's largest carrier, American Airlines, will report December traffic and expectations
for the just-ended fourth quarter on Tuesday. The top U.S. airlines' revenue per seat plummeted
in 2015 amid higher competition from smaller, low-cost rivals and a strong dollar, which has
hurt demand abroad and lowered value of foreign sales in dollar terms. The move to raise one-way
fares by $3 is expected to brighten up the outlook. After Delta Air Lines (N:DAL) said its unit revenue
will decline less than expected, investors are looking at whether American sees light at the end
of the tunnel.
Also reporting fourth-quarter results on Tuesday is CSX Corp (O:CSX). Traffic volumes for all the
railroads were off throughout 2015, driven largely by steep declines in coal. Analysts will be
watching for forward-looking comments on coal and the economy. Given the recent bid by Canadian
Pacific for Norfolk Southern (N:NSC), analysts will likely query management about mergers during the
conference call the morning after earnings.
Auto parts maker Magna International, whose stock is down amid fears of a peaking North American
auto cycle, will provide its 2016 forecast at the Detroit show on Tuesday.
Buoyed by growth in its subscription business, IHS Inc is expected to report higher revenue when
it reports fourth quarter results on Tuesday. The company has been looking to its industrials
business, the second-biggest revenue contributor, to offset weakness in the energy business. The
business research firm said last quarter it would continue to focus on "larger" acquisitions,
and expanding margins.
On Thursday, Mexico releases October's gross fixed investment data, the measure of spending on
machinery, equipment and new construction. The metric rose 1.4 percent in September, compared
with August, after falling for the previous two months.
On Monday, January 11
Amid slumping demand from top consumer China, Alcoa Inc (N:AA) reports fourth-quarter earnings after
market closes. Investors will be watching for commentary on poor market conditions as aluminum
prices on the London Metal Exchange are hovering near 6 1/2 year lows. Analysts will also be
looking for more details on its split planned for the second half of this year, especially how
pension liabilities and debt will be carved up.
Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on monetary policy before the
Rotary Club of Atlanta. (1270/1720) Later, Federal Reserve Bank of Dallas President Rob Kaplan
speaks before the North Texas Economic Forum hosted by Dallas chapters of Financial Executive
International, Association for Corporate Growth and National Association of Corporate Directors.
(1950/0050) These are among the first round of comments after the rate hike so will be important
to understand the debate moving forward and parameters for a second hike.
For the first time since it recalled millions of vehicles in 2014, General Motors (N:GM) will face a
jury in a lawsuit involving a faulty ignition switch that has been linked to nearly 400 deaths
and injuries and has already forced the automaker to shell out roughly $2 billion in criminal
and civil penalties and settlements. A trial scheduled to begin before U.S. District Judge Jesse
Furman in the Manhattan federal court is the first of six "bellwether" cases scheduled to go
before a jury involving claims that the switch caused accidents that led to injuries or deaths.
Canada's national housing agency releases housing starts for December. (0815/1315)
Mexico reports its industrial production data for November, an important signal about the health
of Latin America's second-largest economy. Industrial output shrank for the first time in five
months in October after mining slumped and factory output barely expanded. (0900/1400)
LIVECHAT- GLOBAL FLOWS with Lipper
Lipper's Pat Keon walks the forum through flows reports for early 2016, when global markets
sold-off and more than a few investors turned cautious. (1030/1530) To join the Global Markets
Forum, click here