Monday Morning Cheat Sheet: 3 Stories Moving Markets
The U.S. equity markets are closed on Monday in honor of Martin Luther King, Jr. Day. Investors are free to take a break, come up for air, and look ahead to this week’s battery of big earnings reports.
Perhaps the most-watched report this week will be Apple’s (NASDAQ:AAPL) post-market earnings release on Wednesday. On average, Wall Street is looking for profit to drop 3.1 percent year over year to $13.44 per share. Revenue, on the other hand, is expected to climb nearly 18 percent to $54.6 billion. The company is entering its first-quarter earnings with tremendous top-line momentum but a negative slope on the stock chart. Shares are currently trading at about $500.00, down 21 percent over the past 3 months… (Read more.)
1) Top Federal Reserve policymakers believed, in the months leading up to the recession, that problems with the housing industry in 2007 were isolated and non-threatening to the U.S. economy.
New reports issued this week show U.S. Treasury Secretary Timothy Geithner, then-president of the New York Federal Reserve Bank, believed the symptoms banks were showing, such as lack of funds, were normal and that Wall Street was still doing fine… (Read more.)
2) With a tentative, short-term debt-ceiling fix on the table, the December Thomson Reuters/University of Michigan consumer sentiment survey may be overly pessimistic. Last month, the index fell to its lowest level since 2011, from 72.9 to 71.3, far below expectations for an increase to 75.
To blame could be fallout from the fiscal cliff negotiations and the shadow the debt ceiling fighting looming over Washington, the markets, and the economy. But the markets got an injection of optimism on Friday following news that Republicans would vote on a short-term increase to the debt ceiling this week, in order to provide Congress time to make a decision on spending cuts.
3) The Nikkei fell 1.5 percent ahead of the start of a two-day policy meeting at the Bank of Japan this week. Looking to turn the country’s beleaguered GDP growth around, Prime Minister Shinzo Abe is expected to double the country’s acceptable inflation rate to 2 percent as part of a 10.3 trillion yen ($115 billion) stimulus plan.
Japan is trying to reduce the value of its yen in order to help its struggling exporters, but a temporary increase in the yen versus the dollar helped bring stocks down on Monday. Many observers believe that the BoJ’s easing measures have largely been priced in, but there will still be adjustments as the yen corrects itself.
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