North American markets, viewed several hours before opening at 9:30 a.m. EST, look set to open down with major indicators firmly in the red at time of writing. This reflects concerns over the possible impeachment of incumbent President Donald Trump, questions about what he will do in his final days in office, the mounting death tolls from COVID 19 and economic uncertainties. This could change – and sometimes has changed – before and after market opening.
European markets are open at time of writing and firmly in the red and in fact shifted from green to red while I was assembling this column. The Euro, the British pound and the Canadian dollar are also in the red. Not surprisingly, the safe havens of gold and silver are in the green at time of writing.
This follows Friday’s trading in which the markets seemed to look over the horizon from the horrific demonstrations in Washington and to focus more directly on hopes for economic stimulus to deal with the pandemic.
With President-elect Joe Biden now firmly confirmed, and the recognition that he is, in fact, assuming the presidency on January 20, the markets, investors and worried individuals can firmly focus on the COVID19 pandemic and the economy.
Friday’s job numbers will overhang the trading to an extent today. While there were huge losses in sectors directly affected by the crisis such as leisure and hospitality, retail, manufacturing and construction showed improvement. Analysts hope that this balancing act will mean that we are heading off a fall back into recession.
It remains to be seen whether Biden’s promises on Friday of trillions in pandemic relief for individuals, local and state governments lift the markets today.
Meanwhile, this will be a headline week for several sectors including American nd travel companies and banks.
On Thursday, Delta Airlines releases fourth quarter and full year financial results. Not surprisingly analysts expect a loss on the quarterly results given the decimation of air travel during the pandemic. The Delta results will also be instructive in that it is the first airline to result 2020 results.
Carnival Corporation‘s fourth quarter and full year reports appear scheduled for Friday. The reports form Delta and Carnival, taken together will provide yet another view of the damage to the travel industry caused by the pandemic.
On Friday, JPMorgan Chase & Co., Citigroup and Wells Fargo & Co. report fourth quarter results. The reports from JPMorgan Chase and Citigroup will provide at least some clarity into loans and spending by consumers as the COVID-19 19 crisis wears on. As well, there may be some glimmers on how the crisis is impacting foreign economies.
However, in terms of Wells Fargo’s report investors and others will be looking for clues from chief executive officer Charles Scharf on plans to continue putting scandals behind it as well as plans for the crisis and afterwards. Wells Fargo’s share price improved on Thursday after analyst Ken Usdiin at Jefferies & Co raised his rating to a ‘Buy’. Shares then jumped to $33.90 but fell back on Friday to close at $33.19 Other analysts including Raymond James, Morgan Stanley and Odeon Capital Group also have it as a ‘Buy’ while Barclays, Oppenheimer and Piper Sandler have it as a ‘Hold’. Interestingly, there are no ‘Sell’ ratings on it currently Generally, its iconic name, customer loyalty and strong branch and advisor networks have helped it weather the scandal strum.
On Thursday, Federal Reserve Chairman Jerome Powell speaks virtually at Princeton University, while the Presidents of the Reserve Banks of Atlanta, Cleveland, Philadelphia all speak virtually, and their outlooks will be at last somewhat instructive.
Amongst other indicators to watch this week and saying for the moment that there is no further change in the on-again-off-again-on-again delisting of three Chinese telecommunications firms, it would be useful to watch for whether the action erodes confidence in otherwise unrelated Chinese firms.
The New York Stock Exchange had originally announced plans to delist China Mobile Ltd., China Telecom Corp and China Unicom Ltd. Then last Monday, it decided to keep them listed. On Wednesday it decided to delist them and barring another change that takes effect effective today.
Several broader market trends also need careful examination. If the explosive growth of TESLA were to last for a year would mean a share price of epic proportions which not even the most enthusiastic TESLA booster would predict.
Much the same goes for the growth in cryptocurrency, of which bitcoin is the one most often cited. (Bitcoin is actually one of over two dozen cryptocurrencies.)
Some investors will feel an urge to play catch-up and that can be dangerous. For them, the best coping move could be what I call the ’bingo money strategy’. In the same way that earlier generations could play a game of bingo in a church basement and not be upset about losing their bingo bet, so too, nowadays, for those who need to play ‘catch up’ the most appropriate amount to invest in a risky asset is the number of dollars they can afford to lose if a hot investment suddenly turns south.
If ever there were a time to approach the market with extreme care – this is it.
Disclosure: I do not own shares in any company mentioned in this column.