Several Focal Points Investors Should Consider in Short-and-Medium-Term Decisions This Week

North American markets today, Monday January 18 look closed, negative and mixed. U. S. markets are closed in observance of Martin Luther King Day while Canadian indicators are inching into the red but could improve by or before market opening.

European markets are open at time of writing and indicators there are in the red, but the DAX has been shifting between red and green. The British pound, Euro and Canadian dollar are all down

It seems reasonable to suggest that this week could very possibly become one for the textbooks. Markets, politicians, governments and security forces at all levels are waiting nervously for Wednesday’s inauguration of President-elect Joe Biden in Washington D. C. The city has become a heavily armed camp as residents and media also wait to see whether violence erupts.  Whether this overhangs the markets tomorrow or whether markets run up with the inauguration of a new president remains to be seen.

Meanwhile there are several focal points that investors might consider in short-and-medium-term decisions this week. Some of them reflect yet again the effects of the COVID 19 pandemic including the latest chapter in the streaming wars – the battle for the living room. NetFlix Inc. reports fourth quarter results tomorrow and though it is unlikely that it can continue its explosive North American growth over time, it will likely report increased viewership as a result of the holiday season and renewed pandemic restrictions. NetFlix and Disney+ are fighting for supremacy in the streaming wars which heated up because of the pandemic and tomorrow’s results might provide some clues about which company is getting a bigger share of living room attention. NetFlix dropped $2.88 on Friday to close at $497.98.

In a different look at the fallout from the pandemic and in the travel sector, United Airlines Holdings Inc. reports fourth quarter results on Wednesday and it would not take too much market savvy to predict that it will post a loss. It dropped $2.40 to close at $43.89 on Friday.

On a more positive note, and in the consumer sector, Procter & Gamble also reports its second quarter earnings on Wednesday.  It appears likely to report surges in demand for some of its home products during the crisis. It dropped $1.02 to close at $134.78 on Friday.

In the financial sector, Bank of America Corp. reports fourth quarter results tomorrow and may provide clues about the effect of the pandemic on financial decisions of consumers and corporations during the crisis. The Goldman Sachs Corp. reports fourth quarter results on Tuesday and Morgan Stanley reports fourth quarter results on Wednesday. In both cases they are expected to report increased trading revenues. Nearly a year after Morgan Stanley took over E*Trade, an early online trading platform, it would be interesting to know the net impact on the company’s revenues. Bank of America dropped $0.97 on Friday to close at $33.02. Goldman Sachs dropped $6.17 to close at $301.17 and Morgan Stanley dropped $1.72 to close at $75.22.

Also front and center this week, social media companies and their stocks will be in the spotlight to the extent that they are implicated in any protests that take place. The stocks dropped under scrutiny following the attack on the U. S. Capital on January 06.

Several firms including Facebook and Twitter took the unprecedented action of suspending outgoing President Donald Trump’s accounts and YouTube dropped his videos while Amazon stopped hosting Twitter competitor Parler and Apple removed Parler from its app store.

These moves were more oriented towards the bottom line than political conscience, suggests Paul DeSisto Executive President of M&R Capital in Summit New Jersey. “These ‘tech titans’ are doing this to curry favor with the incoming administration,” he says. DeSisto recalls that President-elect Joe Biden and others suggested during the election campaign that these companies exerted too much power.

Biden and several of his primary opponents were quite forceful during the campaign with their intentions to tap down these companies, claiming they exerted too much power. Senators on both sides of the aisle are working on legislation to rein them in, he points out.  

Facebook Inc. rose $5.72 on Friday to close at $251.36 while Twitter Inc. dropped $0.61 to close at$45.18.

As this week unfolds Twitter and Facebook may in the spotlight again and in that case, there may be a short-term impact on their valuations.

Still, social media companies are here to stay in our lives and their stocks are here to stay as investments. DeSisto says that four others merit consideration: Pinterest Inc., Alibaba Group Holding Ltd., Tencent Holdings Ltd and Snap Inc.

Pinterest dropped $1.20 to close at $69.76 on Friday while Alibaba rose $0.47 to close at $243.45 Tencent rose $0.65 to close at $81.65 and Snap rose $1.28 to close at $50.31.

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