Market Strategy 1/19/2021
To Everything (Turn, Turn Turn)
Vaccine distribution and The Inauguration in Washington move to center stage
Key Takeaways
- In a holiday-shortened week, politics takes center stage with the inauguration of President-Elect Biden on Wednesday.
- Today brings the opening of confirmation hearings on Janet Yellen’s nomination as Treasury Secretary.
- Q4 earnings season moves ahead this week with 41 companies across a diverse group of sectors and subsectors scheduled to report. So far, just 29 companies have reported through last Friday, suggesting that it’s still too early to divine the outcome of the season.
- Last week saw markets give back some of their earlier gains from the start of the year as the effects of the delay in enacting latest fiscal rescue program were felt in economic data that crossed the transom.
The Martin Luther King holiday-abridged week greets investors stateside with plenty to parse and ponder with Janet Yellen’s Senate confirmation hearing on Tuesday as President-elect Joe Biden’s choice for Treasury Secretary, the Presidential Inauguration on Wednesday, along with S&P 500 Q4 earnings results scheduled from a diverse group of bellwether companies in banking, investment banking, technology, energy, oil services, airlines, consumer staples, railroads, industrial products and health care scheduled to report in a space of four days.
As of last Friday just 29 of the S&P 500’s companies had reported results for the most recent quarter. Six of the financial sector’s 65 companies reported last week as well. This week 41 companies across the diverse group of sectors mentioned above will likely provide a picture of how the fourth quarter’s results will shape up. In the week that follows this week the earnings season will gather momentum with 125 companies scheduled to report.
The economic calendar for the week is relatively light in terms of number of data releases scheduled with several key data points related to mortgages and housing market data on Wednesday, initial and continuing jobless claims on Thursday and U.S. manufacturing and services PMI data on Friday.
Last week saw the broad market wobble as some weakness in economic data began to exhibit the effects of the recent resurgence of Covid -19 across the US as well as stresses caused by what was a protracted delay on Capitol Hill in getting an agreement for an additional tranche of fiscal policy rescue.
A weakening in consumer sentiment, and a drop in retail sales for a second month straight, and a jump in initial jobless claims were among the data points that along with concerns about the potential cost of future policy decisions by the new Administration contributed to the equity markets’ lackluster performance last week.
As the transition in Washington moves forward and as public health officials find improved methods of distributing the vaccines, visibility is likely to improve.
In the weeks ahead as the “rubber meets the road” in 2021 some of the uncertainty that always comes with any change of government will likely begin to dissipate as the new administration moves into place and some idea of how much will change and how much may stay the same becomes clearer.
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