The S&P 500 dropped 7% this month through Friday, and is heading for its worst monthly performance since March 2020. The Nasdaq Composite is down 12% for January, and is likely to score its worst month since October 2008.

Investors are still lacking confidence in the face of uncertainties such as inflation and monetary policy, but also geopolitics, with Russian aggressiveness on the Ukrainian border.

U.S. central banker Raphael Bostic (who is a hawk, i.e., a proponent of less accommodative policy) told the Financial Times that the Fed is not ruling out raising rates by half a point rather than a quarter point if inflation remains high. But its base case remains three quarter-point hikes by the end of the year.

This week will bring some cues about global monetary policy, with the Bank of England and the European Central Bank announcing their first 2022 monetary policy decisions on Thursday. They are however at different stages of their cycles. The BoE has already tightened rates once and is about to do so again, while the ECB is still in a holding pattern. In the US, January's employment figures will be the focus on Friday.

On the corporate side, quarterly results continue to pour in. So far, more companies are beating earnings per share estimates than average, but they are doing so at a lower-than-average margin, FactSet summarizes as one-third of large U.S. companies have already reported. On the revenue side, the average is exceeded in both quantity and quality. What does this mean? That corporate earnings are holding up well despite inflation affecting their costs and that this provides support for stocks in these more volatile times. There will be a lot of quarterly announcements this week, including Alphabet, Exxon, Meta, Alibaba, AbbVie, Novo Nordisk, Novartis, Roche, Shell, Amazon or Sanofi.

 

Economic highlights of the day:

German January inflation and Chicago PMI are on today's agenda. China published a manufacturing PMI that expanded very slightly in January to 50.1 points (consensus 50 points), but the Caixin manufacturing PMI, which is more focused on the private sector, fell back into the contraction zone to 49.1 points.

In the foreign exchange market, the dollars is worth EUR 0.8940. Gold is trading at USD 1,794 per ounce, while oil is down, with Brent at USD 88.58 and WTI at USD 86.93 per barrel. In the debt market, the US 10-year signature reaches 1.79% (+2 points) and the Bund -0.05% (unchanged). Bitcoin is just below USD 38,000

 

On markets:

* Spotify - The Swedish streaming music company announced several measures Sunday in the face of criticism that it is not doing enough to combat misinformation about COVID-19, including adding a link to its podcasts that allows listeners to access expert information about the disease. Spotify shares are up 1.5% in pre-market trading.

* Citrix Systems, a cloud computing company, announced Monday that it will be acquired by hedge fund Elliott Management and Vista Equity Partners for $16.5 billion.

* British telecom operator Vodafone said Monday it plans to work with Intel and other semiconductor makers to develop its own chip architecture to accelerate innovation in OpenRAN, an open wireless access network.

* Amazon - Shipping group CMA CGM announced Monday that it has signed a purchase agreement to take a 51 percent stake in Colis Privé in a deal that would see HOPPS own 39 percent of the French parcel delivery company and Amazon the balance.

* The Boeing Company - Irish airline group Ryanair, which posted a net loss in the final three months of 2021, said Monday it was "a long way" from reaching an agreement with Boeing for a possible order of 10 737 aircraft.

* Goldman Sachs - The U.S. bank announced Friday that it paid its chief executive David Solomon a total compensation of 35 million dollars for 2021 compared to 17.5 million a year earlier.

 

Analysts recommendations:

  • Anglo American: Jefferies downgrades from buy to hold around GBp 3300.
  • Berkeley: HSBC upgrades from light to hold with a target of GBp 4400.
  • Beyond Meat: Barclays upgrades to overweight from underweight. PT rises 41% to $80
  • Booz Allen: Raymond James upgrades to outperform from market perform. PT up 20% to $90
  • CACI International: Raymond James upgrades to outperform from market perform. PT up 22% to $300
  • Close Brothers: Jefferies remains "Hold" with a reduced target down from GBp 1,610 to GBp 1,370.
  • CVR Energy: Wolfe Research upgrades to outperform from peerperform. PT up 28% to $25
  • Fevertree: Berenberg remains Buy with a price target reduced from GBp 2700 to GBp 2600.
  • Haynes: KeyBanc Capital Markets raised the recommendation to overweight from sector weight. PT up 31% to $41
  • International Consolidated Airlines: Morgan Stanley resumes its Overweight rating.
  • Johnson Matthey: Berenberg remains Buy with a price target reduced from GBp 2800 to GBp 2550.
  • Kellogg: BMO Capital Markets cut the recommendation to market perform from outperform. PT up 7.3% to $70
  • Seagen: Morgan Stanley upgrades to overweight from equal-weight. PT up 37% to $175
  • Tesco: Berenberg remains Buy with a price target raised from GBp 308 to GBp 327.
  • Tesla: Credit Suisse upgrades to outperform from neutral. PT up 21% to $1,025