1. Speedbumps Ahead
The word on everyone’s mind this week is volatility, volatility & more volatility. With an inordinate amount of important announcements on the cards this week, the markets are sure to be shaken up a bit. So hold on tight!
Asian markets kicked off the week in the red after disappointing Chinese trade data spooked investors into sell-off mode. Both exports and imports fell by more than was expected in the world’s second largest economy, dampening the positive sentiment of the last two weeks.
Ahead of the UK’s Brexit vote Theresa May has warned of a higher likelihood of a no-Brexit than no-deal, should her plans be voted down tomorrow. However, many investors are brushing her remarks off as scare tactics to add pressure on voters to approve her deal. The expectation is for MP’s to still vote overwhelmingly against her deal. But only time will tell.
The US shutdown has now become the longest in history as President Trump continues to hold government employees’ salaries and important data to ransom over his border wall financing. Investor stress levels are climbing as the economic impacts start looming into view.
Earnings season starts today with the big US investment banks and Netflix due to post reports. After a rough fourth quarter, investors are likely to be wary of some disappointing results from the big names.
So, keep your wits about you this week. It may get bumpy!
2. Malaysian Crypto Battle
The Malaysian government is still on the fence about legalising cryptocurrency and the regulations surrounding the wild west landscape of Initial Coin Offerings (ICOs). Come on guys, what’s the hold up?
The government has been in talks with its central bank since December, but no clear result has come to light. This leaves crypto, “neither legal, nor illegal” according to Federal Territories Minister, Khalid Abdul Samad.
The fuss over legality has come about as a result of the first blockchain backed political fundraising ICO, called Harapan Coin. Whilst some are touting the benefits of such fundraising and federal payment mechanisms, others have concerns about the government’s eagerness to adopt “trendy, but untested schemes.”
The fear is that involving federal payments such as licenses, fines, summonses and political donations will lend itself to corruption and political misuse. Well, they’re not wrong there!
Whilst the brakes have been put on for now, the Territories Minister has said the battle is far from over and that crypto has an important part to play in Malaysia’s future. Let’s see if he’s right.
Today we are watching…
1. Citigroup (#citi)
Citigroup is set to post its Q4 earnings today which are likely to set the tone for the entire banking sector this week. Citi’s shares have recovered some of their 30% decline that started in October. However, rough global conditions may have taken their toll on banks in the final quarter. The earnings per share estimate is $1.55 and revenue estimate is $17.56 billion. Keep your eyes peeled for this result. It’s a big one!
2. Netflix (#netflx)
Investors are gearing up for Netflix’s earnings which are due to be published on Thursday and could send it through the roof or floor depending on the outcome. Since Christmas the stock has been on an unstoppable 45% bull-run fueled by its smash hit, Bird Box. However, markets are expecting weaker earnings data that may push its share price lower, but a surprise earning beat would allow the bull-run to carry on.
