Markets are starting the week significantly higher following a some big drops in both stocks and cryptocurrencies last week.\
Crypto Volatility
Stocks rebounded Monday and crypto markets are attempting to recover from a rough trading weekend as concerns mount over Tether’s (USDT) rampant minting. The stablecoin has minted 3 billion USDT over the past two weeks and traders are growing increasingly concerned over a potential “run on the bank” when investors decide to cash out of positions that were converted to Tether.
Many cryptos have recovered from lows set during the weekend as Bitcoin (BTC) sits near $49,000 and Ethereum (ETH) remains above $4,100. High volatility is nothing new for cryptocurrencies but with serious regulatory discussions revolving around stablecoins and exchanges at the moment, traders should keep a close eye on potential longer bear markets as coins experience some growing pains in the still fairly new technology.
Outside of cryptocurrencies though, investors are looking ahead to a moderately filled economic data and earnings report week.
Inflation Outlook
Economic data is relatively light this week with the monthly Consumer Price Index (CPI) headlining the list. CPI is expected to show a 0.6% rise in November while core CPI is estimated to increase 0.5% last month. The projected jump comes following a 0.9% and 0.6% increase in October for CPI and core CPI respectively.
Conversations revolving around inflation have not been in short supply ever since the pandemic first made its way around the world. Large stimulus efforts through monetary and fiscal policy were deployed to keep the economy afloat. Those policies seem to have kept the economy from falling into a deeper hole, but the speed of the recovery has been too much for some industries to keep up with, leading to shortages and price spikes. The Federal Reserve has begun tapering its asset purchase program and recent comments from Fed Chair Jerome Powell suggest the central bank may accelerate the winding down of those purchases.
The current situation with the omicron variant may lead to officials watching to see other measures taken by governments in efforts to limit the spread. However, currently the Fed has maintained its desire to taper purchases and likely speed up the rate of doing so.
Other Data To Look For
Aside from the November CPI report, investors will be keeping an eye on the weekly initial unemployment claims and trade balance scheduled for earlier in the week.
The trade deficit is expected to once again rise with it moving from -$80.9 billion to -$66.8 billion. Meanwhile, initial claims are expected to once again rise from 222,000 to 228,000. The estimated increase in claims comes after a massive drop to 199,000 claims a few weeks back which set the lowest number since before the pandemic. In fact, claims mostly hovered around 210,000 in late 2019/early 2020. Thus, the current initial unemployment claims are finally back to roughly where they were pre-COVID.
Lastly, the preliminary reading for the University of Michigan Consumer Sentiment for December is expected to show a rise from 67.4 to 68.0.
Earnings Round-Up
A relatively light earnings week is still headlined by a few big names. Costco (COST), Oracle (ORCL), GameStop (GME), lululemon (LULU), Chewy (CHWY), Broadcom (AVGO), and AutoZone (AZO) are some of the biggest names to report. More traditional brick and mortar based businesses take up a significant portion of earnings reports this week. Going forward earnings results are pretty light in the next few weeks during the holiday season.
Economic Events this Week
Tuesday
- 8:30 a.m. - Trade Balance
Wednesday
- 10:30 a.m.- EIA Crude Oil Inventories
Thursday
- 8:30 a.m. - Initial & Continuing Claims
Friday
- 8:30 a.m.- CPI and Core CPI
- 10:00 a.m. - Preliminary University of Michigan Consumer Sentiment report
Earnings Reports This Week
Monday:
After the bell:
COUP, HQY, MDB
Tuesday:
Before the bell:
AZO, DBI, CONN
After the bell:
CASY, TOL, SFIX, PLAY
Wednesday:
Before the bell:
UNFI, CPB, KFY
After the bell:
GEF, GME, RH, CURV
Thursday:
Before the bell:
HRL, CIEN
After the bell:
COST, ORCL, AVGO, CHWY, LULU, LESL, MTN, MESA
Friday:
Before the bell:
ASO
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