Monday February 8, 2021: $136.91 +$0.15 +0.11%
Feb 8, 2021 1:38:26 GMT -8
artman1033 and 4aapl like this
Post by Dave on Feb 8, 2021 1:38:26 GMT -8
Good morning. We have a green pre-market this morning at +$0.09 at the moment. What will this new week hold?
What to Expect in the Markets This Week
Monday, Feb. 8:
German Industrial Production (December)
British Retail Association (BRC) Retail Sales Monitor (January)
Tuesday, Feb. 9:
German Trade Balance (December)
U.S. Energy Information Agency Short-Term Energy Outlook (February)
Mexican Consumer Price Index (CPI) (January)
Brazilian CPI (January)
U.S. Job Openings and Labor Turnover Survey (JOLTS) Job Openings (December)
Chinese CPI (January)
Chinese Producer Price Index (PPI) (January)
Wednesday, Feb. 10:
Uber (UBER) and MGM Resorts International (MGM) Report Earnings
U.K. Non-EU Trade Balance (December)
German CPI (January)
Brazilian Retail Sales (December)
U.S. Regular and Core CPI (January)
U.K. Royal Institution of Chartered Surveyors (RICS) House Price Balance (January)
Thursday, Feb. 11:
The Walt Disney Co. (DIS) Reports Earnings
Markets Closed in China, Japan, and South Korea for Spring Festival, National Day, and New Year's Day, respectively
Federal Reserve Semi-Annual Monetary Policy Report Released
Friday, Feb. 12:
Markets Closed in China, Hong Kong, South Korea, and Singapore for Spring Festival and New Years celebrations
U.K. Industrial Production (December)
U.K. Manufacturing Production (December)
U.K. Trade Balance (December)
U.K. Gross Domestic Product (GDP) (Q4)
EU Industrial Production (December)
Indian CPI (January)
U.S. Preliminary Michigan Consumer Sentiment and Expectations (February)
Earnings of Three Businesses Hit Hard by COVID-19
This upcoming Wednesday, ride hailing and food delivery firm Uber and casino and resort operator MGM Resorts International report earnings, while media conglomerate Disney reports earnings this upcoming Thursday. All three businesses rely substantially on travel for revenue, and so the pandemic has substantially hurt profits and sales for all three. MGM has been hit the hardest, with an estimated 59% drop in revenue for 2020 as whole, as its entire business is based on combining travel accommodations and crowded public entertainment. A good proxy for how business is recovering is the room occupancy rate at its Las Vegas Strip properties, which shows how much travel is picking back up. Occupancy rates plummeted for Q2 and Q3 2020 down to around 44% from 88% in Q1, though analysts predict the Q4 2020 rate was slightly higher at 49%.
The pandemic has affected Uber's business in two starkly opposite ways. The decline in travel has enormously cut its Rides segment, previously its largest segment by sales, substantially. While analysts expect it to continue to rebound in Q4 2020, it is still well below its pre-pandemic levels. On the other hand, Uber's food delivery business, Uber Eats, has boomed, becoming Uber's largest segment by revenue as people eschew trips to restaurants for delivery. However, this isn't a one-for-one trade for Uber. Because it takes a smaller cut of food delivery business, as of Q3 2020, Uber Eats still doesn't turn a profit, even judging by Uber's adjusted EBITDA metric. Investors should see how rides rebounds and if Eats continues to rise by looking at the gross bookings of both, as that's the total amount of business being done through each app, while also seeing if Eats can turn a profit.
Disney's business is more varied, with parts of its business, such as its streaming services and television channels, have been comparatively insulated from the pandemic, so its drop in sales has been comparatively smaller. However, other areas of its business, such as its Parks, Experiences, and Products segment, which includes its theme parks, cruises, and retail stores, have been devastated, and its movie production business has also seen huge revenue declines as COVID-19 has kept theaters closed and movie releases delayed. Keep an eye on how these two hardest-hit segments rebound when Disney reports.
American Rescue Plan
With the job numbers announced for January showing a continually sluggish labor market, President Joe Biden and the congressional Democrats have responded by working to pass his proposed roughly $1.9 trillion stimulus package. This package, called the American Rescue Plan, is meant to be the follow-up to the $900 billion package passed in December, which Biden referred to as a "down payment." Senate Democrats passed a budget resolution, putting the bill forward through the "budget reconciliation" process, which primarily differs from normal bill passing in that it allows the Senate to bypass the filibuster and the accompanying 60 vote supermajority needed to pass bills. The House Speaker Nancy Pelosi said that she and House Democrats are aiming to pass the package in the next two weeks.
Key pieces of the plan are, among many others, are:
-$1,400 checks to most Americans
-$350 billion to state and local governments
-Increasing the $300 a week unemployment benefits expansion to $400 a week and extending the expansion through September
-Continuing the eviction and foreclosure moratorium, set to end in March 2021, through September.
Notably left out of the package was a proposal to increase the federal minimum wage to $15, which was originally part of the American Rescue plan.
CPI
Inflation hawks have long voiced concerns that increased government spending will result in rising inflation, as stimulus overheats the economy. We can look at the evidence this week. This upcoming Wednesday, the U.S. core consumer price index (CPI), one of the primary measures of inflation, is released. The core CPI differs from the normal CPI, also released on Wednesday, in that it excludes food and fuel prices, which are extremely volatile, and so it may distort the view of the economy overall, especially when trying to take a longer-term view. We can see how inflation is doing now, and if the stimulus package passes, keep an eye on it next month and over the following few months to see if there is an impact or if the deflationary pressure from the pandemic is greater than the inflationary pressure of the stimulus.
What to Expect in the Markets This Week
Monday, Feb. 8:
German Industrial Production (December)
British Retail Association (BRC) Retail Sales Monitor (January)
Tuesday, Feb. 9:
German Trade Balance (December)
U.S. Energy Information Agency Short-Term Energy Outlook (February)
Mexican Consumer Price Index (CPI) (January)
Brazilian CPI (January)
U.S. Job Openings and Labor Turnover Survey (JOLTS) Job Openings (December)
Chinese CPI (January)
Chinese Producer Price Index (PPI) (January)
Wednesday, Feb. 10:
Uber (UBER) and MGM Resorts International (MGM) Report Earnings
U.K. Non-EU Trade Balance (December)
German CPI (January)
Brazilian Retail Sales (December)
U.S. Regular and Core CPI (January)
U.K. Royal Institution of Chartered Surveyors (RICS) House Price Balance (January)
Thursday, Feb. 11:
The Walt Disney Co. (DIS) Reports Earnings
Markets Closed in China, Japan, and South Korea for Spring Festival, National Day, and New Year's Day, respectively
Federal Reserve Semi-Annual Monetary Policy Report Released
Friday, Feb. 12:
Markets Closed in China, Hong Kong, South Korea, and Singapore for Spring Festival and New Years celebrations
U.K. Industrial Production (December)
U.K. Manufacturing Production (December)
U.K. Trade Balance (December)
U.K. Gross Domestic Product (GDP) (Q4)
EU Industrial Production (December)
Indian CPI (January)
U.S. Preliminary Michigan Consumer Sentiment and Expectations (February)
Earnings of Three Businesses Hit Hard by COVID-19
This upcoming Wednesday, ride hailing and food delivery firm Uber and casino and resort operator MGM Resorts International report earnings, while media conglomerate Disney reports earnings this upcoming Thursday. All three businesses rely substantially on travel for revenue, and so the pandemic has substantially hurt profits and sales for all three. MGM has been hit the hardest, with an estimated 59% drop in revenue for 2020 as whole, as its entire business is based on combining travel accommodations and crowded public entertainment. A good proxy for how business is recovering is the room occupancy rate at its Las Vegas Strip properties, which shows how much travel is picking back up. Occupancy rates plummeted for Q2 and Q3 2020 down to around 44% from 88% in Q1, though analysts predict the Q4 2020 rate was slightly higher at 49%.
The pandemic has affected Uber's business in two starkly opposite ways. The decline in travel has enormously cut its Rides segment, previously its largest segment by sales, substantially. While analysts expect it to continue to rebound in Q4 2020, it is still well below its pre-pandemic levels. On the other hand, Uber's food delivery business, Uber Eats, has boomed, becoming Uber's largest segment by revenue as people eschew trips to restaurants for delivery. However, this isn't a one-for-one trade for Uber. Because it takes a smaller cut of food delivery business, as of Q3 2020, Uber Eats still doesn't turn a profit, even judging by Uber's adjusted EBITDA metric. Investors should see how rides rebounds and if Eats continues to rise by looking at the gross bookings of both, as that's the total amount of business being done through each app, while also seeing if Eats can turn a profit.
Disney's business is more varied, with parts of its business, such as its streaming services and television channels, have been comparatively insulated from the pandemic, so its drop in sales has been comparatively smaller. However, other areas of its business, such as its Parks, Experiences, and Products segment, which includes its theme parks, cruises, and retail stores, have been devastated, and its movie production business has also seen huge revenue declines as COVID-19 has kept theaters closed and movie releases delayed. Keep an eye on how these two hardest-hit segments rebound when Disney reports.
American Rescue Plan
With the job numbers announced for January showing a continually sluggish labor market, President Joe Biden and the congressional Democrats have responded by working to pass his proposed roughly $1.9 trillion stimulus package. This package, called the American Rescue Plan, is meant to be the follow-up to the $900 billion package passed in December, which Biden referred to as a "down payment." Senate Democrats passed a budget resolution, putting the bill forward through the "budget reconciliation" process, which primarily differs from normal bill passing in that it allows the Senate to bypass the filibuster and the accompanying 60 vote supermajority needed to pass bills. The House Speaker Nancy Pelosi said that she and House Democrats are aiming to pass the package in the next two weeks.
Key pieces of the plan are, among many others, are:
-$1,400 checks to most Americans
-$350 billion to state and local governments
-Increasing the $300 a week unemployment benefits expansion to $400 a week and extending the expansion through September
-Continuing the eviction and foreclosure moratorium, set to end in March 2021, through September.
Notably left out of the package was a proposal to increase the federal minimum wage to $15, which was originally part of the American Rescue plan.
CPI
Inflation hawks have long voiced concerns that increased government spending will result in rising inflation, as stimulus overheats the economy. We can look at the evidence this week. This upcoming Wednesday, the U.S. core consumer price index (CPI), one of the primary measures of inflation, is released. The core CPI differs from the normal CPI, also released on Wednesday, in that it excludes food and fuel prices, which are extremely volatile, and so it may distort the view of the economy overall, especially when trying to take a longer-term view. We can see how inflation is doing now, and if the stimulus package passes, keep an eye on it next month and over the following few months to see if there is an impact or if the deflationary pressure from the pandemic is greater than the inflationary pressure of the stimulus.