Jobs, PMIs, OPEC, Earnings -Breaking
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By Daniel Shvartsman
Investing.com’s 2022 season begins with some December economic data points. They will give important clues about the current state of the economy and the impact of Covid-19 on global economy. While it’s not quite earnings season yet, we also have a few corporate reports to review this week. The OPEC meeting could be the most important event of the week, and have the greatest impact on the next year.
Here’s what you need to watch for in the first week of 2022 in financial markets:
1. December Jobs Report
Friday is the U.S. Jobs Day. There is a forecast for an increase of 400,000 jobs. This compares to 210K last week and an average of 494K new jobs every six months. Expect the unemployment rate to fall to 4.1%, from 4.2%.
Unemployment is the flipside of inflation, at least in the Federal Reserve’s estimation and aims, so a strong report would give more room to the Fed to proceed with rate hike and policy tightening plans. At the same time, the last report that came during a big Covid-19 wave – the August and September reports overlapping with the Delta wave – came in light at least in the initial read before the numbers were revised upward. While few new restrictions were put into place in response to the latest wave from the Omicron variant, consumers’ behavior changing and the raw fact of hundreds of thousands of people being sick may weigh on the numbers.
2. After a record-breaking year in Oil, OPEC meets
On Tuesday, the Organization of the Petroleum Exporting Countries will meet. OPEC reaffirmed the decision to increase oil production for 2022. With a month more data – which includes record cases and a bevy of flight cancellations on the one hand, but a not quite clear consensus that this variant’s effects are milder than previous incarnations of Covid – we’ll see whether OPEC holds the line, as expected, or alters its outlook and production schedule in any way for the year ahead.
Oil finished the year up over 50%, with having since 2009 and its best year since 2016, and the this year is expected to support the price of oil even with OPEC’s production increases.
3. CPI figures and PMI numbers all over the world
The PMI (Purchasing Manager Index), which is a key indicator on economic activity, will be released this week. Check out Investing.com. economic calendarForecasters are expecting increased activity in many places (numbers north 50), which may reflect the holidays and recovery momentum following the pandemic. With supply chain challenges continuing, one would expect manufacturing to ramp up as part of ‘normalization’, but the changes in behavior and winter weather in the Northern hemisphere may slow services growth.
This week, reports on consumer price indexes (CPI), and producer price indexes (PPI) are out from different countries. South Korea reports along with European countries reporting late this week.
2021 saw more money chase fewer good and experiences. This led to inflation. These two reports provide a quick check on which regions have exited 2021, and what that means for them in the coming year.
4. This week’s retail, office, and industrial earnings
Although Q4 earnings season is the most slow to start as businesses close their books for 2018, we do get some off-cycle reports to review this week.
Walgreens Boots Alliance (NASDAQ 🙂 headlines Thursday’s report by the U.S.-based pharmacy retailer. The revenue is $32.46B, which represents a decrease of 7% compared to the previous year (due to a divestiture) and $1.35/share earnings. This 31% increase comes amid a decline in sales. It comes amid reportsBain Capital is interested in buying Boots’ U.K.-based chain.
Bed Bath & Beyond (NASDAQ:) also reports Thursday morning. The struggling retailer was once a meme stock, but they provided little guidance. So all eyes will be on how the company can provide any positive or incremental guidance for the holiday quarter. This report is only for the period ending November 27th.
MillerKnoll (NASDAQ) reported Tuesday, after market hours. The office furniture maker – a combination of legacy companies Herman Miller and Knoll – in revenue in its first quarter as a combined entity, and the call and guidance will be a good indicator for whether companies are merely postponing plans to return to the office or abandoning them.
WD-40 Company (NASDAQ:
5. Presidents Biden and Putin to speak again
U.S. President Joe Biden and Russian President Vladimir Putin are scheduled to speak by phone this Thursday as the tension at the Ukraine/Russia border continues. This would mark the second call in three weeks amidst the stationing of 100,000 Russian troops on the Ukrainian border.
Officials from the U.S. and Russia are poised to meet in Geneva next Monday, January 10th, for security pact negotiations that this recent crisis has brought to light.
President Biden is also expected to speakTo Ukraine President Volodymyr Zilenskyy to today express his support for Ukraine
Investors are most concerned about the risks of geopolitical instability and how it would affect markets. This is especially true for European energy prices, as well the potential knock-on effects from inflation in the food supply chains and other areas. It has fallen from its peak in Europe, but a number of supply adjustments have helped to bring it down. A calming of tensions is good for both markets and the wider region, as long as it’s not too expensive.
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