1. A Week To Remember
Or for some, a week to forget! Another turbulent week comes to a close with two important announcements that, hopefully, will not throw more curve balls into the mix. The markets are in dire need of confidence, we don’t need any more surprises!
The US labour report is due along with an important announcement from Fed Chairman, Jerome Powell. The final jobs report for 2018 will provide crucial information about the health of the US economy going forward in terms of unemployment, job additions, labour participation and wage growth.
Analysts are expecting strong job addition numbers and consistently low unemployment figures. A positive report will give some much needed confidence to the markets, indicating a stable growth outlook, despite a bout of short-term volatility. Our fingers, toes and eyes will be crossed for a good outcome there!
Powell’s much-anticipated speech will be watched closely for any signs of a softer tone going forward since his last announcement suggested more rate hikes to come in 2019. Investors are concerned that more rate hikes will cripple the fragile economy further, but any suggestions of a pause in the rate hike cycle could be the remedy needed to offset the global slowdown.
Let’s hope Mr. Powell gives the markets a dose of the right medicine.
2. Airlines Take A Nosedive
Delta, United and American Airlines all lost altitude yesterday after Delta trimmed its fourth quarter revenue forecast, sending lot of them into the red on fears of the global slowdown dampening demand and profits going forward.
The fallout cost Delta 8.9%, with United and American Airlines also falling 5% and 7.45%, respectively.
Whilst Delta analysts still consider demand to be stable within the industry, a weaker than expected holiday season has thrown the cat among the pigeons in the airline sector.
In addition, the US State Department’s warning against travel to China for fear of ‘exit bans’ for US citizens is set to punish United Airlines the most with its heavy exposure to Asian business.
The overall picture for the airline sector looks shaky at best going into 2019. Even lower jet fuel prices provide no solace for battered airlines who will likely use the additional revenue to push out lower fares to customers to keep up in the highly-competitive industry.
Buckle-up for a turbulent 2019, it may get bumpy.
Today we are watching…
1. Advanced Micro Devices (#amd)
US Chipmaker, AMD, fell prey to the massive tech implosion that hit markets yesterday after Apple slashed its revenue guidance on weaker Chinese data. AMD slid 9.45% as investors hammered tech stocks across the board, seeking asylum in safer sectors, such as consumer staples and utilities. Hopefully, next week’s US-china trade talks can bring some stability to the big tech names.
2. Celgene Corp. (#celgene)
The 2019 M&A season kicked off with a $74 billion bang when BMS bought Celgene, sending their stocks in flying in opposite directions. The mega-merger is the third-largest in biopharma history and shows an important blurring of the lines between big pharma and biotech. Yesterday’s reaction show that the markets believe BMS overpaid and Celgene got a great deal, but only time will tell. Keep your eyes on both of them!
