We Have Lot to Study This Week

North American markets this morning, viewed several hours before opening, appear set for a strong start with major indicators in the green, driven by positive job numbers and the promise of more to come with President Joe Biden’s recovery plans.

European markets are open at time of writing and major indicators there are all in the green.

The safe havens of gold and silver are down. The Canadian dollar and British pound sterling are up while the Euro is down.

Traders, investors and analysts have several issues to study this week starting with whether there will be an impact on shares of AstraZeneca Plc, Johnson & Johnson and Emergent BioSolutions Inc. 

That follows reports that the federal government has directed J&J to take over the Emergent facility in Baltimore after it ruined 15 million doses of COVID 19 vaccine. It also stopped AstraZeneca Plc. from using the same plant, according to a Reuters report.

Observers will also be looking to see whether there is any impact on Facebook shares following reports that a cyber-leaker was offering data on 500 million Facebook users almost for free. Facebook claims that the data is old and that it has fixed the problem that led to the leak. Still, the news would be disturbing for many and it remains to be seen whether there is a market impact.

Traders, investors and analysts will also be studying the potential impact of President Joe Biden’s $2 trillion infrastructure plan. Brian Deese, director of the Economic Council said on Fox News Sunday that the plan will revitalize American infrastructure, create jobs and boost the economy as it pulls out of the pandemic Analysts will be looking for potential impact on stocks such as Caterpillar Inc., United Rentals Inc. and others.

Still, with a $2 trillion price tag it appears unlikely that Biden will get bipartisan support. Republican Senator Roy Blunt has said that a $615 billion price tag stands a better chance. Where that difference leaves companies and jobs remains to be seen.

We can also look to see whether there will be more fallout from the implosion of Archegos Capital Management. Lenders initiated market calls forcing Archegos to sell huge holdings in Viacom CBS, Discovery, Baidu and Tencent Music along with other companies. Credit Suisse and Nomura Holdings Inc. both issued statements acknowledging large losses. Goldman Sachs and Morgan Stanley have stated that they minimized losses by moving quickly to unload large blocks of assets before the total picture become completely clear.

The total impact of this episode on the companies and banks remains to be seen and might crystallize this week. Even if there is no further share erosion the second-guessing about what went wrong will continue. Meanwhile, Treasury Secretary Janet Yellen recently presided over a meeting of the Financial Stability Oversight Council. According to a published summary, the Council discussed what it described as ‘recent market developments related to hedge fund activities,” though it did not name Archegos directly. That can be taken as a signal of more government attention to come. Moreover the net impact on bank lending policies also remains to be seen.

Even though there are few major quarterly reports scheduled, it’s going to be an interesting week.

DISCLOSURE: I do not own any shares in any company mentioned in this column.

Related: The Recovery Will Mean Some Interesting – and Difficult – Decisions