1) Fed rate meeting – 26/01 – last months Fed meeting saw the central bank accelerate its tapering program to $30bn a month, starting this month as expected, while adopting a more hawkish outlook when it comes to tackling the risks of rising inflation. Fed officials also brought forward their expectations of rate hikes to three in 2022 and three in 2023, however the tone of the statement, as well as the Powell press conference suggested that they still believed that current levels of inflation were likely to be transitory, even if the word wasn’t used in the statement. The reference to supply and demand imbalances and the reopening of the economy was just a roundabout way of saying the same thing. Nonetheless the change of tone did suggest that the Fed was alive to the risk of higher prices and would act decisively if they deemed it necessary. Since that meeting the debate has moved with the publication of the minutes spooking investors after it was revealed that FOMC members had actively been discussing how to reduce the size of the balance sheet after rate rises began, prompting concern that the Fed might start to go too quickly in normalising policy. There is no question that Fed officials feel that they might be behind the curve when it comes to dealing with inflation risk, and the change of tone in the last six months has been startling. We are now at the phase where up to 4, and even 5 rate rises this year are being actively discussed, a scenario that would have been inconceivable back in September, when even the mere prospect of more than two rate rises was being greeted with concern. This week’s Federal Reserve meeting is unlikely to add too much additional detail to the overall discussion other than being a staging post for the timing of the start of the first Fed rate rise which markets are expecting in March. The bigger discussion will be around the extent of what to expect in March, whether it be a 25ps rate hike or a 50bps one, and whether the topic of balance sheet reduction had become clearer in terms of scope and timing. In terms of a hike the Fed’s guidance would lead us to presume a 25bps rise is coming, and not much else. It has been ventured, given how vocal Fed officials have been over their concerns about inflation, as to why they feel the need to wait, and to start hiking rates this week. While this is a valid argument it would also fly in the face of the Feds own guidance that tapering will have finished in March, and then rate rises could then begin. For the sake of a few weeks, it would probably be unwise to change that policy guidance, as it could send the wrong message and suggest that Fed officials are more concerned than they are letting on.

2) US Q4 GDP – 27/01 – the US economy slowed in Q3, although it did better than initial estimates in the final upgrade to 2.3%, we saw at the end of last year. This week’s initial Q4 numbers are expected to see a significant improvement on Q3, although they are still expected to point to an uneven recovery, and better performance, driven by rising employment levels, as well as a strong recovery in both manufacturing and services activity, although we can expect to see a slowdown towards the end of the year due to Omicron disruption, which will impact on consumer spending. Services ISM activity hit a record high in November, while manufacturing remained steady. After a strong start to the quarter in October consumer spending hit its highest level since March as people brought forward their Christmas shopping plans. This is likely to have tailed off in December, as Omicron outbreaks caused staff shortages, as well lower economic activity. Notwithstanding all of this the US economy is still expected to show an expansion of 5.8%.

3) Germany/France flash PMI (Jan) – 24/01 – last month German services activity slipped into contraction territory, and its lowest level since February last year, as the German economy struggled with the twin challenges of a disjointed regional government response when it comes to restrictions, and sharply rising Delta outbreaks. These were then compounded by the spread of the Omicron variant. While the services sector has struggled manufacturing activity has proved to be more resilient, ending last year at 57.4, however these numbers don’t chime with the industrial production and factory orders numbers which have been poor. Earlier this month the Federal Statistics office estimated that the German economy had shrunk by between 0.5% and 1% in the final quarter of 2021, well behind its peers like France and Italy, due to supply chain disruptions, and higher energy costs, as well as high Covid infection rates. Economic activity has proved to be a little better in France with both services and manufacturing activity remaining steady over the past few months. This trend looks set to continue, although virus levels have been high in the past few weeks, which might constrain the services sector.

4) UK flash PMI (Jan) 24/01 – December saw a sharp fall in UK services sector activity, to 53.6 from 58.5 in November, a trend that could well continue in January due to the Plan B restrictions brought in by the UK government half way through the month due to concerns about the Omicron variant. The restrictions on the hospitality sector clearly hit pubs and restaurants, as well as some retail outlets, it would be surprising if we didn’t see a post-Christmas and New Year rebound, now that families have had their annual get-togethers and there is less fear about having to self-isolate, now that Christmas is in the rear-view mirror. On an anecdotal basis, while it was easy to get a restaurant booking in the lead-up to Christmas due to the sudden wave of cancellations, between Christmas and New Year was almost impossible. Manufacturing activity in the meantime remained steady throughout the quarter, with selling price inflation hitting a record high in December, while new orders and employment also rose.

5) US PCE deflator/Spending (Dec) – 28/01 – the recent headline CPI and PPI numbers may well have offered a ray of hope for Fed officials that the latest surge on inflation pressures might be starting show signs of plateauing. US central bankers will certainly be hoping so given how wrong their transitory calls have proved so far to be. US PPI for December fell back to 9.7% from 9.8% in November in a sign that supply chain pressures might be easing. This weeks Fed meeting will add further colour on the FOMC’s shift on policy thinking, however they will still be looking at this week’s Core PCE deflator numbers for any signs of an easing of pricing pressure. In the space of two months core PCE has gone from 3.7% to 4.7% in November, and could well go higher to 4.8% in December, its highest levels since 1983. For now, consumers don’t appear to be showing any indication that they are feeling the effects of the rise in the cost of living, however that is likely to change over time. Personal spending has been strong these past few months, however we can expect this to slow in December, to 0.1%, and the lowest level since July last year as US consumers slowed their spending in the lead-up to Christmas due to the sharp spread of the Omicron variant.

6) Diageo H1 22 - 27/01 – when drinks giant Diageo updated the markets back in November, the shares pushed up to new record highs, after the company upgraded its full year guidance for 2022. The company says it expects to see organic net sales growth of 16% in the first half of 2022. In addition to that, over the period from 2023 to 2025, expectations are for organic net sales growth of 5% to 7%, while expecting to grow operating profits in a range of 6% to 9%. Since the start of the year the shares have undergone a bit of a correction

7) Tesla Q4 21 - 26/01 – Tesla Q3 numbers saw the electric car maker post another record profit, coming in at $1.86c, above expectations of $1.67c. Revenues came in at $13.76bn, another record, however it was below expectations of $13.91bn. Automotive margins improved to 30.5% from 28.4%, with the company delivering just over 241k cars, an over 40k increase on Q2. Most of those deliveries were Model 3 and Model Y. Since then, the share price has pushed through the $1trn market cap, helped by the announcement at the end of October of its $4.2bn order of 100k cars from Hertz, although it has since transpired the deal hasn’t, as yet been signed. It’s certainly been a busy last quarter for Tesla with Elon Musk selling 10% of his stake in the business in order to pay a large tax bill, while sales have continued to improve. Earlier this month Tesla announced it another record number for quarterly deliveries of 308,600. The vast majority of the deliveries were of the Model 3 and Model Y accounting for almost 297k. The company plans to open its new plant in Austin Texas, in order to build more Model Y cars, although Cybertruck production appears to have been pushed back into 2023. The plant in Germany is also expected to open later this year. On an annual basis Tesla produced a total of 936,172 vehicles in 2021, with the hope that 2022 will push that total strongly above the 1m mark, with Musk saying as recently as October last year that he was looking to maintain an annual growth rate of more than 50%. Profits are expected to come in at $2.24c a share.

8) Microsoft Q2 22 – 25/01 – we’ve seen a bit of a pullback in the share price since the record highs of November. Microsoft managed to pull off a record year in 2021, with record revenues in Q4 of of $46.15bn, which was driven by a 51% rise in Azure, which competes with Amazon, and helped drive Intelligent Cloud segment revenue to $17.38bn. Revenues did slow in Q1, although they still beat expectations, coming in at $45.32bn, a rise of 22% year on year. Its Azure and Intelligent cloud business saw revenue rise to $16.96bn, a rise of 31%, while personal computing, and gaming saw a rise of 12% to $13.31bn. This is expected to pick up in Q2 with the rollout of Windows 11, supply issues not withstanding as well as expectations that revenues from Office 365 will increase. Given last week’s news on the $68.7bn acquisition of Activision we might hear some more detail on that. For Q2 Microsoft expects to set a record for revenues above $50bn, at between $50.15bn and $51bn. Profits are expected to come in at $2.32c a share.

9) Apple Q1 22 – 27/01 – as we look ahead to a new fiscal year, and what generally tends to be Apple’s best quarter, given that it covers the Thanksgiving and pre-Christmas period it is becoming increasingly difficult to predict what would be a decent quarter for the tech titan. At its last earnings update, once again Apple declined to offer guidance, although that hasn’t stopped investors from doing so. In Q4 revenues fell short of expectations, coming in at $83.36bn which is still a solid number. Like everyone else Apple has had to contend with supply chain disruptions, as well as chip shortages, cutting production on their iPhone by 10m units in Q3. In Q4 its biggest problem was fulfilling the demand for its products. CEO Tim Cook said that the various supply problems cost Apple $6bn over the quarter, with iPhone revenues coming up short at $38.87bn during the quarter, below the $41.6bn consensus. iPad revenue on the other hand was better than expected, coming in at $8.25bn, well over the $7.16bn, while Mac revenue came in at $9.18bn, missing slightly on $9.31bn. Services, which Apple is increasingly focussing on, saw another record performance generating $18.28bn, well above $17.57bn. Apple did announce a raft of new product upgrades during Q4 with the newest iPhones, iPads, Watches and Macs not shipping until the end of November, beginning of December. This availability could well offer a welcome boost to this week’s Q1 numbers with profits expected to come in at $1.89c a share.

10) Robinhood Markets Q4 21 – 27/01 – after the initial optimism surrounding its IPO last year, when the shares surged from $38 to above $80 in the first week of trading, the wheels have come off in spectacular fashion for the Robinhood share price. The weakness in the shares was exacerbated after its Q3 earnings report after revenues missed expectations as a collapse in crypto trading and decline in meme stock activity saw trading turnover plunge. Total revenue for Q3 came in at $364.9m, well short of the $423.9m estimates. Crypto revenue fell back to $51m from $233m set in Q2, which is quite a drop-off. The drop off in crypto revenue is a particular worry given the recent rise to record highs, after all if people don’t trade when news flow around bitcoin hitting record highs is front of mind, you have to question when they will. Losses came in at $1.32bn with the company warning that Q4 revenue could be even lower at $325m. Since then, cryptos have fallen back which doesn’t bode well for Q4, and with the shares now at record lows near to $15 the bar may well be low enough to prompt a surprise uplift. Losses are expected to come in $0.39c a share.

11) Moderna Q4 21 – 25/01 – it’s been a disappointing few months for the Moderna share price, with the shares well below the record highs of August when they got to within touching distance of $500 a share. Since they have more than halved over concerns that with the advent of new antiviral pills and other treatments will impact on demand for its vaccine. These concerns appeared to be borne out by their Q3 numbers after the vaccine maker missed on revenues and guided its outlook lower. Revenues came in at $4.8bn missing expectations of $5.86bn, with the company delivering 208bn doses. The company also lowered its vaccine production forecasts for this year to between 700m and 800m doses. Moderna said it was now expecting sales of $15bn and $18bn for the year, down from $20bn, with an increase to between $17bn to $22bn next year. Despite the current pullback the shares are still well above the levels they were pre-pandemic, however any further negative news could well see the shares come under further pressure. Profits are expected to come in at $9.17c a share.

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