MARKET WRAPS
Watch For:
Housing Starts for December; Weekly Jobless Claims; Weekly Petroleum Status Report; Canada Wholesale Trade for November; earnings from Netflix, Northern Trust Bancorp, PPG Industries, Procter & Gamble; speeches by Fed's Brainard, Collins Williams
Today's Headlines/Must Reads
- Treasury to Begin Special Measures to Pay Bills Amid Debt-Ceiling Debate
- Big Hedge Funds Are Top Performers
- China's Property Bust Compounds Economic Pain
- Netflix Earnings Test Whether Strong Slate, New Ad Plan Can Deliver Customer Growth
- Blackstone Raises Record $25 Billion for Secondary Deals
- Crypto Lender Genesis Is Preparing to File for Bankruptcy Within Days
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Davos Commentary
Ease Political Friction to Better Respond to Next Health Crisis, Pfizer CEO Says
ECB's Knot Sees Multiple 50-Basis-Point Interest-Rate Increases Despite Slowing Inflation
Opening Call:
Stock futures were softer on Thursday as investors remained cautious after Wall Street suffered its worst decline in more than a month.
Sentiment has been hit by further signs of a weakening U.S. economy after data showed retail sales fell more than expected, industrial production slumped, and Microsoft confirmed it would shed 10,000 jobs.
"The [economic] bad news would normally be good news for stocks, if the Federal Reserve members weren't there to spoil the dovish Fed expectations by saying that U.S. rates should go higher," Swissquote Bank said.
Read Two Fed Officials Back Quarter-Point Rate Rise Next Month
Fedspeak for Thursday includes Susan Collins at 9 a.m., Lael Brainard at 1:15 p.m. and John Williams at 6:35 p.m.
Of particular concern to equity bulls is that the S&P 500 has failed to break decisively above the 4,000 level and has been rebuffed again by its 200-day moving average, meaning the bear market downtrend remains intact.
Overseas, European indexes were lower across the board, with haven assets gaining ground, while Asian indexes were mixed.
Stocks to Watch
Alcoa shares were down more than 7% in premarket trading after reported late Wednesday a big drop in revenue due to lower prices, although its quarterly loss was narrower than analysts had expected.
Discover Financial stock fell about 6% premarket, after an earnings report showed the company's customers are increasingly falling behind on payments on loans and credit cards.
H.B. Fuller posted lower-than-expected revenue for the fourth quarter due to a more pronounced and accelerated slowdown in demand for construction adhesives. The company guided for fiscal 2023 revenue to be flat to 3% lower than the prior year. Shares fell 4% in after-hours trading.
Veris Residential said that Kushner informed the company it wasn't interested in proceeding with a potential transaction at this time. Shares tumbled 10% in after-hours trading.
Forex:
Concerns about a weaker economic outlook has left the dollar vulnerable to data as markets continue scaling back Fed interest rate expectations, ING said.
The fact that the ongoing repricing of rate expectations lower is not only a consequence of slowing inflation but also of a worsening economic outlook has "exacerbated the negative implications for the dollar, especially as a positive re-rating of growth expectations is happening in Europe and China," ING said.
"We see more downside risks for USD in the near term."
Read Crypto Crisis Latest: FTX, Genesis, Bitcoin prices and more
Energy:
Oil prices fell more than 1% in Europe as concerns over the health of the U.S. economy and bearish crude stocks data raised worries about demand.
Metals:
Base-metal prices fell in early trade in London, with Marex pointing to a speech by James Bullard, who backed rapidly raising the fed-funds rate above 5% to prevent a resurgence of inflationary pressures.
Marex also said that Chinese car passenger sales growth may also struggle this year, though subsidies for electric vehicles may be introduced.
TODAY'S TOP HEADLINES
Netflix Earnings Test Whether Strong Slate, New Ad Plan Can Deliver Customer Growth
Netflix Inc. last quarter launched a lower-cost ad-supported plan in an effort to attract price-conscious customers and released a slate of highly anticipated hits including "Wednesday," "Glass Onion: A Knives Out Mystery" and "Harry & Meghan." Investors will find out Thursday whether the moves translated into strong subscriber gains.
The streaming giant has said it expects to add 4.5 million new subscribers during the final three months of the year, which would make it the weakest fourth quarter for subscriber growth since the end of 2014.
Blackstone Raises Record $25 Billion for Secondary Deals
Blackstone Inc. has raised $25 billion across two funds dedicated to buying secondhand stakes in private capital funds.
The New York-based asset manager raised $22.2 billion for its ninth Strategic Partners fund, making it the largest dedicated fund ever raised for secondary deals, according to a statement. Strategic Partners IX primarily invests in portfolios of fund stakes, as well as single fund interests, sponsor-led deals and co-investments.
Crypto Lender Genesis Is Preparing to File for Bankruptcy Within Days
Crypto lender Genesis Global Trading Inc. is preparing to file for bankruptcy within days, according to people familiar with the matter.
Genesis, owned by the crypto conglomerate Digital Currency Group, is in the final stage of preparing paperwork before it files for chapter 11 protection, said the people with knowledge of the matter.
Alcoa Fourth-Quarter Revenue Declines 20% on Lower Aluminum Prices
Alcoa Corp. reported a 20% decline in revenue in the fourth quarter, citing challenging market conditions and lower prices for both alumina and aluminum.
The Pittsburgh-based aluminum producer said sales decreased to $2.66 billion, from $3.34 billion. Analysts polled by FactSet expected $2.65 billion.
Crypto Platform Bitzlato Charged With Laundering More Than $700 Million of Illicit Money
U.S. authorities designated cryptocurrency exchange Bitzlato Ltd. as a primary money-laundering concern and charged its founder for allegedly facilitating money laundering for criminals.
The Treasury Department designated Bitzlato under a section of the USA Patriot Act, a law used to combat money laundering and terrorist financing, for allegedly laundering illicit funds for ransomware actors based in Russia. This type of action, a rarely used so-called death-knell sanction that cuts off the entity from the U.S. financial system, has been used mainly in the past against banks and other financial institutions and in most cases has forced the institution to close.
Treasury to Begin Extraordinary Measures to Pay Bills Amid Debt-Ceiling Debate
The Treasury Department is set to begin taking special measures to keep paying the government's bills on Thursday as the divided Congress braces for a potentially lengthy and difficult debate over raising the debt ceiling.
With the federal government about to run up against the debt limit, which Congress set at roughly $31.4 trillion in 2021, the Treasury Department has said it expects to start deploying so-called extraordinary measures. Those accounting maneuvers, which include suspending investments for certain government accounts, will allow the Treasury to keep paying obligations to bondholders, Social Security recipients and others until at least early June, the department said last week.
Big Hedge Funds Are Top Performers, for a Change
Lately, bigger is better for hedge funds.
For the first time since 2018, larger hedge funds outperformed smaller hedge funds. The evidence: HFRI Fund Weighted Composite Index, which gives equal weight to funds of all sizes, fell -4.25% in 2022, while the HFRI Asset Weighted Composite Index, which gives more weighting to the larger funds, rose: 0.97%.
China's Property Bust Compounds Economic Pain
HONG KONG-China's housing market flipped from being a growth driver to an economic drag in 2022, with sales slumping, prices falling and widespread job losses. The prognosis for this year isn't much better, compounding Beijing's efforts to get its economy back on firmer footing.
Sales of new residential properties in the country tumbled 28% last year to the equivalent of $1.7 trillion in value terms, a five-year low. By floor area, they dropped to their lowest level in nearly a decade, after a wave of real-estate developer debt defaults, delays in construction of unfinished apartments and Covid-19 lockdowns dampened consumer confidence.
Two Fed Officials Back Quarter-Point Rate Rise Next Month
NEWARK, Del.-Two Federal Reserve officials said they would favor raising interest rates at the central bank's next meeting by a quarter percentage point, further slowing the pace of increases.
The Fed raised rates by a half point at its meeting last month, stepping down the pace after four consecutive increases of 0.75 point aimed at combating high inflation. Dallas Fed President Lorie Logan said Wednesday she supported that decision "and the same considerations suggest slowing the pace further at the upcoming meeting" on Jan. 31-Feb. 1.
Stocks flash rare bull-market signal for first time in nearly 3 years. But some have their doubts.
A technical signal that has portended previous turning points for the U.S. stock market arrived for the first time in nearly three years, according to data supplied by its creator.
But some on Wall Street suspect it may no longer be as reliable as it once was.
Poland Suggests It Would Send German-Made Tanks to Ukraine Without Berlin's Consent
(MORE TO FOLLOW) Dow Jones Newswires
01-19-23 0621ET
