This week’s key international financial events include: the US consumer price index (CPI) in January, the talks of central bank officials such as the US Federal Reserve (Fed) and the European Central Bank (ECB). (Central Bank, BOJ) President Haruhiko Kuroda’s successor. The financial report season continues, and Applied Materials, Cisco, Coca-Cola, etc. will announce their results for the previous quarter.
This week’s trading notes (0213-0217)
1. U.S. January CPI, Fed and other central bank officials talk
The super-strong non-agricultural employment population in the United States in January made investors start to revise their forecasts for the peak of this cycle of interest rate hikes, and this Tuesday (14th) the CPI in the United States in January attracted special attention.
The U.S. inflation rate rose to a 40-year high in the middle of last year, but has been lower than market forecasts for three consecutive months. Economists predict that the overall annual inflation rate may fall to 6.2% in January from 6.5% in the previous month. , the monthly growth rate rebounded to 0.4% from 0.1% in the previous month.
The Ministry of Labor only revised the seasonal indicators on Friday (10th), and revised the CPI in December to a slight increase of 0.1%, rather than the 0.1% decrease announced last month. Data for November also rose 0.1 percent from a revised 0.2 percent gain.
As the market judges whether the cycle of interest rate hikes in Europe and the United States is coming to an end, several central bank officials will speak this week, including John Williams, president of the Federal Reserve Bank of New York, who has permanent voting rights in the Federal Open Market Committee (FOMC). Lorie Logan, president of the Federal Reserve Bank of Dallas, who has voting rights. In addition, Lagarde, President of the European Central Bank (ECB), and Chief Economist of the Bank of England (BOE) will also deliver speeches,
2. Nominees for President of the Bank of Japan
The Japanese government will submit the nominee for the president of the Bank of Japan to the Diet on Tuesday. If the Senate and the House of Representatives agree, they can be appointed. Kyodo News reported on Friday that Japanese Prime Minister Fumio Kishida plans to nominate economist and former Bank of Japan review member Kazuo Ueda as the post. , the news was a big hit.
Japanese media previously reported that the new president may be Masaka Amamiya, the current president of the Bank of Japan, but according to Kyodo News, Kishida will nominate Kazuo Ueda. As the market initially interpreted that Ueda would be more hawkish than Kuroda, the yen once rose above 130 against the dollar. However, Ueda and Kazuo said in a subsequent interview that the current loose monetary policy is appropriate and should continue to make the yen restrain its rise.
Kazuo Ueda, 71, backed the zero interest rate policy in 1999 and quantitative easing in 2001 while serving as a board member of the Bank of Japan. Kuroda’s term ends on April 8.
3. US-China Relations
The relationship between the United States and China is at a stalemate over the balloon incident. After the United States shot down a Chinese air balloon that violated its airspace off the coast of South Carolina on February 4, it shot down an unidentified object over Alaska on Friday (10th), but it is still unclear object source.
The U.S. Department of Commerce announced on the same day that in response to the recent balloon incident, six Chinese entities will be included in the trade blacklist on the grounds that they are involved in this incident and support the PLA’s space development program, including balloons and related parts.
The six Chinese enterprises are: Beijing Nanjiang Aerospace Technology Co., Ltd., the 48th Research Institute of China Electronics Technology Group, Dongguan Lingkong Remote Sensing Technology Co., Ltd., Eagle Gate Aviation Technology Group Co., Ltd., Guangzhou Tianhaixiang Aviation Technology Co., Ltd., Shanxi Eagle Technology Co., Ltd. Men Aviation Technology Group Co., Ltd.
4. Earnings season continues
The earnings season for US companies continues. Companies that will announce their fourth-quarter results this week include Applied Materials (AMAT-US), Cisco (CSCO-US), Coca-Cola (KO-US), Shopify (SHOP-US), Airbnb (ABNB-US) US), Palantir (PLTR-US) and other enterprises.
According to FactSet’s statistics as of the 10th, 69% of companies have announced their financial results for the last quarter, of which 69%’s EPS is better than market expectations, and the EPS of these companies is about 1.1% higher than market forecasts. If the Q4 earnings season is finalized to be 1.1% ahead of market estimates, it would be the smallest lead in Q1 2020.
In addition, according to published financial reports and market forecasts, US companies’ fourth-quarter profits may eventually decline by 4.9%, which, if true, will be the first decline since March 2020. Four of the 11 sectors in the S&P 500 have year-over-year earnings growth, led by energy and industrials, but seven have seen their earnings decline, led by communications services, materials and discretionary. Consumer goods are the most obvious.