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Every global news service task, at the moment? Carefully updating traders about the latest signs on the rapidly-spreading Omicron COVID variant.
According to Reuters --
(1) Omicron Variant News Dominates
How much could this mutated COVID virus impact the U.S. and global economy and earnings as stock markets head into what has historically been a strong time of year for equities?
Overall, the S&P 500 is slightly ahead since Nov. 24th, prior to news of the variant hitting.
The S&P 500 marked a record-high close on Thursday Dec. 23rd at 4,726, as encouraging developments gave investors more ease about the impact.
The Omicron variant is causing infections to double in 1.5 to 3 days, according to the World Health Organization (WHO). The variant now accounts for 73% of all new U.S. cases, up from less than 1% at the beginning of the month.
Still, questions about Omicron's virulence have made investors less pessimistic than the original reaction. The S&P 500 closed down -2.3% on Nov. 26th after the variant was discovered, on fears of fresh economic lockdowns.
A South African study offered hope about the severity of Omicron and the trend of COVID-19 infections on Wednesday, Dec. 22nd.
Shares of vaccine makers slumped in December as investors expect the Omicron variant's impact to be limited based on recent data.
(2) A Santa Claus Rally Already Showed Up
Historically, U.S. stocks have risen during the last five trading days of December and the first two days of January — in 56 out of 75 years since 1945, according to data from CFRA Research.
This year, the time period starts today, Dec. 27th.
The average Santa Claus rally has boosted the S&P 500 by +1.3% since 1969, according to the Stock Trader's Almanac.
It is unclear to what extent Wall Street analysts expect Omicron to affect earnings and the economy. Estimated 2022 S&P 500 earnings growth was at +8.3% as of Friday, Dec. 24th, compared with +8.0% at the start of December, according to Refinitiv data.
Goldman Sachs cut its estimate for U.S. GDP growth to +3.8% from +4.2% due to the uncertainty of the impact of the Omicron wave.
(3) Any Good News from Senator Manchin in the Offing?
While there will likely be some economic impact from Omicron, U.S. consumer spending will likely remain strong, says Cliff Hodge, CIO for Cornerstone Wealth.
He is focused on any signs that Senator Joe Manchin (D-WV) could reach an agreement to support President Joe Biden's signature $1.75T Build Back Better climate and social spending bill.
Manchin, who would provide one of the key votes to pass the bill in a divided Senate, said on Sunday Dec. 19th that he could not support the bill in its current form. Senate Majority Leader Chuck Schumer (D-NY) said that the Senate will vote on the bill in early January.
"We need a little bit of good news — whether on the Manchin front or Omicron — to get a rally going,” Hodge said. "We are fully invested and anticipate a little bit of a relief rally into January.”
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three Japanese large-cap stocks on our current #1 list.
(1) Nomura Research Institute (NRILY - Free Report) : This is categorized as a “tech services” company now, though financial IT services may be more accurate.
Shares trade at $43. The market cap is $26.3B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of A. The F12M P/E ratio is 38.1.
(2) Nissan Motors (NSANY - Free Report) : This is the auto maker.
Shares trade at a paltry $9.80 each. The market cap is $20.7B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of B. The F12M P/E valuation ratio is 12.0.
(3) Sumitomo (SSUMY - Free Report) : Diversified operations is what this company does.
I see a paltry $14.70 share price. The market cap is $18.4B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of B. I saw a very low F12M P/E valuation ratio of 5.7.
Will traders and investors care about Japanese stocks in 2022? They mostly ignored them in 2021.
Key Global Macro
The last trading week of 2021 is light on macro data.
Boxing Day was observed in Europe and the U.K. on Sunday.
Wiki notes say: There are competing theories for the origins of the term, Boxing Day.
A. The tradition may come from a custom in the late Roman/early Christian era.
Alms boxes placed in churches were used to collect special offerings tied to the Feast of Saint Stephen, which, falls on the same day as Boxing Day, the second day of Christmastide.
On this day, it is customary in some localities for the alms boxes to be opened and distributed to the poor.
B. The European tradition of giving money and other gifts to those in need, or in service positions, has been dated to the Middle Ages.
It is sometimes believed to be in reference to the alms box placed in the narthex of Christian churches to collect donations for the poor.
C. The Oxford English Dictionary gives the earliest attestations from Britain in the 1830s.
The term "Christmas box" dates back to the 17th century.
They define it as "the first weekday after Christmas day, observed as a holiday on which postmen, errand boys, and servants of various kinds expect to receive a Christmas box.”
On Monday, it is Boxing Day in Canada. This is primarily a shopping holiday now.
On Tuesday, the Case-Shiller U.S. home price index (HPI) should be up +18.5% y/y thru October. Note: This HPI data is lagged two months, not one.
On Wednesday, U.S. pending home sales should be up +0.6% m/m in November. But this pending home sales data will be down -1.4% in y/y terms.
Is house demand slowing down, in the face of record high home prices?
On Thursday, the U.S. domestic Baker-Hughes rig count comes out.
Strangely low, lately, at 480 rigs. This used to get to 1,400 rigs a few years ago.
We also get the weekly U.S. unemployment claims data.
On Friday, it is New Year’s Day in parts of the world.
Conclusion
2021 was a great year to own U.S. stocks.
Global stocks? Not so much.
The next calendar year may be a very different story.
Have a safe New Year’s Eve celebration.
Warm Regards,
John Blank
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Goodbye 2021: Global Week Ahead
This is the final Global Week Ahead for 2021.
2022 enters the stage at the end of the week.
Every global news service task, at the moment? Carefully updating traders about the latest signs on the rapidly-spreading Omicron COVID variant.
According to Reuters --
(1) Omicron Variant News Dominates
How much could this mutated COVID virus impact the U.S. and global economy and earnings as stock markets head into what has historically been a strong time of year for equities?
Overall, the S&P 500 is slightly ahead since Nov. 24th, prior to news of the variant hitting.
The S&P 500 marked a record-high close on Thursday Dec. 23rd at 4,726, as encouraging developments gave investors more ease about the impact.
The Omicron variant is causing infections to double in 1.5 to 3 days, according to the World Health Organization (WHO). The variant now accounts for 73% of all new U.S. cases, up from less than 1% at the beginning of the month.
Still, questions about Omicron's virulence have made investors less pessimistic than the original reaction. The S&P 500 closed down -2.3% on Nov. 26th after the variant was discovered, on fears of fresh economic lockdowns.
A South African study offered hope about the severity of Omicron and the trend of COVID-19 infections on Wednesday, Dec. 22nd.
Shares of vaccine makers slumped in December as investors expect the Omicron variant's impact to be limited based on recent data.
(2) A Santa Claus Rally Already Showed Up
Historically, U.S. stocks have risen during the last five trading days of December and the first two days of January — in 56 out of 75 years since 1945, according to data from CFRA Research.
This year, the time period starts today, Dec. 27th.
The average Santa Claus rally has boosted the S&P 500 by +1.3% since 1969, according to the Stock Trader's Almanac.
It is unclear to what extent Wall Street analysts expect Omicron to affect earnings and the economy. Estimated 2022 S&P 500 earnings growth was at +8.3% as of Friday, Dec. 24th, compared with +8.0% at the start of December, according to Refinitiv data.
Goldman Sachs cut its estimate for U.S. GDP growth to +3.8% from +4.2% due to the uncertainty of the impact of the Omicron wave.
(3) Any Good News from Senator Manchin in the Offing?
While there will likely be some economic impact from Omicron, U.S. consumer spending will likely remain strong, says Cliff Hodge, CIO for Cornerstone Wealth.
He is focused on any signs that Senator Joe Manchin (D-WV) could reach an agreement to support President Joe Biden's signature $1.75T Build Back Better climate and social spending bill.
Manchin, who would provide one of the key votes to pass the bill in a divided Senate, said on Sunday Dec. 19th that he could not support the bill in its current form. Senate Majority Leader Chuck Schumer (D-NY) said that the Senate will vote on the bill in early January.
"We need a little bit of good news — whether on the Manchin front or Omicron — to get a rally going,” Hodge said. "We are fully invested and anticipate a little bit of a relief rally into January.”
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three Japanese large-cap stocks on our current #1 list.
(1) Nomura Research Institute (NRILY - Free Report) : This is categorized as a “tech services” company now, though financial IT services may be more accurate.
Shares trade at $43. The market cap is $26.3B. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of A. The F12M P/E ratio is 38.1.
(2) Nissan Motors (NSANY - Free Report) : This is the auto maker.
Shares trade at a paltry $9.80 each. The market cap is $20.7B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of B. The F12M P/E valuation ratio is 12.0.
(3) Sumitomo (SSUMY - Free Report) : Diversified operations is what this company does.
I see a paltry $14.70 share price. The market cap is $18.4B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of B. I saw a very low F12M P/E valuation ratio of 5.7.
Will traders and investors care about Japanese stocks in 2022? They mostly ignored them in 2021.
Key Global Macro
The last trading week of 2021 is light on macro data.
Boxing Day was observed in Europe and the U.K. on Sunday.
Wiki notes say: There are competing theories for the origins of the term, Boxing Day.
A. The tradition may come from a custom in the late Roman/early Christian era.
Alms boxes placed in churches were used to collect special offerings tied to the Feast of Saint Stephen, which, falls on the same day as Boxing Day, the second day of Christmastide.
On this day, it is customary in some localities for the alms boxes to be opened and distributed to the poor.
B. The European tradition of giving money and other gifts to those in need, or in service positions, has been dated to the Middle Ages.
It is sometimes believed to be in reference to the alms box placed in the narthex of Christian churches to collect donations for the poor.
C. The Oxford English Dictionary gives the earliest attestations from Britain in the 1830s.
The term "Christmas box" dates back to the 17th century.
They define it as "the first weekday after Christmas day, observed as a holiday on which postmen, errand boys, and servants of various kinds expect to receive a Christmas box.”
On Monday, it is Boxing Day in Canada. This is primarily a shopping holiday now.
On Tuesday, the Case-Shiller U.S. home price index (HPI) should be up +18.5% y/y thru October. Note: This HPI data is lagged two months, not one.
On Wednesday, U.S. pending home sales should be up +0.6% m/m in November. But this pending home sales data will be down -1.4% in y/y terms.
Is house demand slowing down, in the face of record high home prices?
On Thursday, the U.S. domestic Baker-Hughes rig count comes out.
Strangely low, lately, at 480 rigs. This used to get to 1,400 rigs a few years ago.
We also get the weekly U.S. unemployment claims data.
On Friday, it is New Year’s Day in parts of the world.
Conclusion
2021 was a great year to own U.S. stocks.
Global stocks? Not so much.
The next calendar year may be a very different story.
Have a safe New Year’s Eve celebration.
Warm Regards,
John Blank