ClearWater Market Commentary as of January 14th, 2022

Here is the ClearWater Market Commentary as of January 14th, 2022:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

S&P/TSX Composite Index
5 Day	1.30%
1 Month	2.98%
YTD	0.63%
1 Year	19.26%

^{As of 2022/01/14 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
WTI Crude (oil)	6.80%	12.00%
FTSE 100	2.07%	2.91%
Hang Seng Index	1.99%	3.51%
S&P/TSX Composite	1.30%	0.63%
DAX	1.11%	0.37%
CAC 40	1.05%	0.52%
S&P 500	-0.16%	-2.17%
Dow Jones Industrial	-0.30%	-1.17%
Nasdaq	-0.33%	-4.80%
Russell 2000	-0.45%	-3.73%
Nikkei 225	-0.51%	-1.59%
Shanghai Composite	-1.44%	-2.70%

^{As of 2022/01/14 – Source: www.marketwatch.com}

Last week’s and next week’s key economic events:

US economy (S&P 500 -0.16%):

• The large-cap indexes recorded their second consecutive weekly loss to start the year—and the technology-heavy Nasdaq Composite its third—as the unofficial start of earnings season began.
• Energy shares outperformed as oil prices continued their climb back to late-October highs.
• Inflation signals and concerns about rising interest rates seemed to loom large over sentiment throughout the week. Stocks started the week on a down note on news that more Wall Street analysts were expecting the Federal Reserve to hike rates four times in 2022.
• In a hearing before Congress on Tuesday, Fed Chair Jerome Powell assured lawmakers that the central bank would not hesitate to contain inflation. Investors seemed to take the news in stride.
• The week’s inflation data did little to calm fears but came in largely in line with expectations. On Wednesday, the Labor Department reported that overall consumer prices had risen 7.0% over the past year, the largest gain on a 12- month basis since June 1982.
• While the consensus among analysts and policymakers is that much of 2021’s inflation spike will prove temporary, the talk seemed to increase of a possible wage-price spiral—in which higher prices cause workers to demand higher wages, which in turn leads companies to raise prices.
• Weekly jobless claims rose unexpectedly to 230,000, the highest number since mid-November.

Canadian markets (S&P/TSX 1.30%):

• Canada’s main stock index snapped a two-week skid by bouncing back from a weak morning prompted by tepid U.S. retail sales and an underwhelming start to fourth-quarter U.S. bank earnings.
• There was some profit-taking, but Canadian banks held in and kept the market off the lows.
• Royal Bank of Canada, which recently regained the crown as the leading Canadian company by market capitalization, led the financials sector by gaining 1.3 percent on Friday.
• Energy led the TSX as crude oil prices climbed amid geopolitical tensions over potential Russian moves into Ukraine and colder weather that boosts consumption.
• The February crude oil contract was up US$1.70 at US$83.82 per barrel after hitting a high of US$84.22 in earlier trading.
• Crude oil is up 6.2 percent on the week and 11.4 percent so far in 2022, after surging 55 percent in 2021.

Performance 2021: S&P 500/400/600 Sectors

European and Asian economies:

• Shares in Europe pulled back on signals that the U.S. Federal Reserve would tighten monetary policy at a faster rate than the market had previously expected.
• The Netherlands is set to ease its nationwide lockdown from Saturday. The UK, Switzerland, and Norway cut the self-isolation period for those who test positive for COVID-19, suggesting a belief that the coronavirus is becoming endemic. Spain is changing its strategy from quarantines and restrictions to a monitoring system resembling the one applied to seasonal flu.
• The German economy expanded 2.7% last year after contracting 4.56% in 2020. However, the growth rate remained below pre-pandemic levels, in part due to coronavirus restrictions and supply bottlenecks. The statistics office said that an initial estimate indicated that the economy came close to stagnating in the final three months of 2021.
• The UK economy grew 0.9% sequentially in November 2021, beating consensus expectations for a 0.4% expansion.
• Industrial output in the euro area surged 2.3% sequentially in November—well above a consensus forecast for 0.5%.
• Japan’s stock market returns were negative for the week amid concerns about more aggressive monetary policy tightening by the U.S. Federal Reserve.
• The Bank of Japan (BoJ) continued thought to signal its commitment to monetary easing and is unlikely to raise short-term interest rates anytime soon.
• Prime Minister Fumio Kishida announced that the ban on non-resident foreigners entering Japan, which came into force on November 30, 2021, would be extended until the end of February.
• The BoJ’s January Regional Economic Report, which provides details on economic assessments from regions across Japan, showed that all regional economies had been picking up or show signs of a pickup.
• Chinese markets fell for the week weighed by headlines about refinancing difficulties in the country’s troubled property sector.
• China’s largest banks have grown more selective about funding real estate projects by local government financing vehicles, while several developers scrambled to obtain creditors’ consent for maturity extensions and exchange offers, Bloomberg reported.
• Other developers have intensified fundraising campaigns as traditional financing routes like presales have dried up.
• China Evergrande Group, the world’s most indebted property company, secured crucial approval from onshore bondholders to delay payments on one of its bonds. Shimao Group, which missed payment on a USD 101 million trust loan earlier this month, will meet with creditors to vote on payment extension proposals after denying reports of a fire sale, Reuters reported.
• A severe and prolonged downturn in China’s real estate sector would have significant economy-wide reverberations, the World Bank warned in its Global Economic Prospects report.
• In economic news, consumer and producer price inflation slowed more than expected in December. The moderating inflation signs raised expectations that China’s policymakers would lower interest rates and possibly the required reserve ratio for banks to bolster the economy. Any easing in China would mark a divergence with policy in the U.S.
• On the pandemic front, China suspended dozens of international flights and issued more restrictions in response to the global surge in omicron cases. Hong Kong, which had reported no local infections for months, reimposed some social and travel restrictions after a string of positive cases.

What to watch this week:

• Canadian inflation, retail sales and housing data
• Bank of Canada Business Outlook Survey
• US housing data
• China GDP, retail sales, industrial production, and fixed asset investment data
• Japan inflation, trade, and industrial production data
• Eurozone inflation and consumer confidence; ECB December meeting minutes
• UK inflation, employment, retail sales and consumer confidence
• 39 S&P 500 report earnings

• 

Sources: Bloomberg.com,Yardeni.com, Barron’s.com, Factset.com and Newyorkfed.org

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