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In the week ahead, the Federal Reserve holds its first meeting of the new year, with a range of new appointments in place, but a major policy change seems unlikely. Latest US GDP figures are released too. Forecasts are showing a mixed but optimistic outlook for Q4 2020’s numbers. Finally, earnings season continues with big tech firms leading the large caps in the latest earnings calls. 

FOMC meeting & press conference 

The first Federal Reserve meeting of 2021 goes ahead next week, off the back of newly inaugurated Joe Biden’s plans for additional stimulus and Treasury pick Janet Yellen’s calls to ‘act big’ on fiscal policy. $1.9 trillion is the ballpark figure for additional economic stimulus as the US seeks to shore up its economy against the continued Covid-19 onslaught. 

Four new regional Fed presidents are being rotated into the key voting spots this January – a rotation that could indicate a more dovish Fed for 2021. Out go Mester (hawk), Kashkari (dove), Kaplan (neutral) and Harker (neutral). In come Evans (dovish), Daly (neutral), Bostic (dove), and Barkin (neutral).  

New members provide a little interest, but the Fed is not about to change course, with Jay Powell making it clear that now is not the time to talk about tapering bond purchases, although some policymakers have suggested this may be warranted later in 2021. 

According to December 2020’s Fed meeting minutes, policymakers see rates staying in the 0%-0.25% currently targeted range until 2022, with a long-range estimate of 2.5%. No one foresees a rate hike this year. The status quo is very much in favour. According to Atlanta Fed President Bostic, a lot would have to happen for that to occur. 

There is a possibility of some increases in 2023, and maybe even as early as the second half of 2022. Three key points will be looked at: the health of small businesses, the effect of Fed lending programmes, many of which were closed by the end of 2020, and temporary vs permanent job losses. Overriding all of those though will be the continued response to the Covid-19 pandemic.  

Right now, it appears that the Fed will essentially be staying the course, committing to policy established across the course of 2020. 

Latest US GDP figures released

Like pretty much every advanced economy worldwide, the US was rocked by repeated blows from the Covid-19 pandemic. Thursday sees the advanced reading of Q4 GDP stats and the picture looks muddled to say the least. GDP diagnoses really depend on who you ask. 

The Atlanta Fed’s GDPNow model forecasts 7.4% annualised growth in Q4 as of its January 15th release, although this has been revised down from 8.7% forecast on January 8th., The New York Fed’s Nowcast model indicates 2.5% expansion.  

GDP growth will all depend on which economic sectors can back on their feet fastest. The US Commerce Department stated recently that consumer spending, the US main economic engine, had been revised upward slightly, alongside fixed business investments. However, these were tempered by a drop in exports. Services, where 61% of consumer spending goes, were down 17% year-on-year in third quarter of 2020 – can they recover? Time will tell.  

Earnings Season – Apple, Microsoft and Facebook lead the large caps 

Earnings season continues on Wall Street and this week the focus shifts to tech giants. Big tech seems like it’s getting bigger and bigger with lockdowns playing into the sector’s hands. Will earnings reports confirm that? 

Apple could be onto its first-ever $100bn quarter as the consensus EPS climbs 12% year-on-year to $1.40. Holiday shopping season falls squarely into Apple’s first-quarter reporting, and with a multitude of iPhone 12 models hitting markets – enough for 30% rise in production numbers this quarter – the indicators a bumper earnings call coming from the California tech giants are pretty strong. 

Microsoft has been a winner. If you’re working from home, you’ve probably had to grapple with Microsoft Teams, now the de facto business communications software of choice for businesses around the globe.  

Cloud computing solutions are helping Microsoft push record quarterly revenues. With the increased uptake of products like Azure, GitHub, SQL Server, and Windows Server, commercial cloud services have generated 31% more revenue y-o-y in the recent quarter, hitting $15.2bn. Combined with its other productivity-led software, i.e. Office, Teams, etc., Microsoft Q1 2021 revenues are on course to reach $40.2bn.  

Facebook’s reputation has taken a bit of a hit in recent months. The spread of fake news and hate speech on the platform is one of the major complaints levelled at the company. 

Despite this, Facebook reported 12% growth in active daily users in the last quarter, up to 1.82bn, while monthly active users grew at the same rate, reaching 2.74bn – just over a quarter of the global population. Ad revenues are up 22% y–o–y too, even in the face of a boycott from 1,000 prominent advertisers. 

See below for a full breakdown of the large caps reporting earnings this week. 

Major Economic Data 

Date Time (GMT) Currency Event 
Mon Jan 25    
Tue Jan 26 7.00am GBP Unemployment Claims 
 3.00pm USD CB Consumer Confidence 
Wed Jan 27 12.30am AUD CPI q/q 
 3.30pm USD US Crude Oil Inventories 
 7.00pm USD FOMC Statement 
 7.00pm USD Federal Funds Rate 
 7.30pm USD FOMC Press Conference 
Thu Jan 28 1.30pm USD Advanced GDP q/q 
 1.30pm USD Advanced GDP Price Index q/q 
 3.00pm USD CB Leading Index m/m 
 3.30pm USD US Natural Gas Inventories 
Fri Jan 29 8.00pm CHF KOF Economic Barometer 
 1.30pm CAD GDP m/m 
 2.45pm USD Chicago PMI 
 3.00pm USD Pending Home Sales m/m 


Key Earnings Data 

Date Company 
Mon 25 Jan NIDEC  
 Graco Inc. 
 Brown & Brown 
 Equity Lifestyle Properties 
Tue 26 Jan Microsoft 
 Johnson & Johnson 
 NextEra Energy 
 Texas Instruments 
 United Technologies 
 American Express 
 General Electric 
 Lockheed Martin 
 Canadian National Railway Co. 
 Capital One 
 Rockwell Automation 
 D.R. Horton 
 Maxim Integrated Products 
 LG Household & Health Care 
 Boston Properties 
 Nitto Denko Corp. 
 Metro Inc. 
 C.H. Robinson 
 Disco Corp. 
 F5 Networks 
 W.R. Berkley 
Wed 27 Jan Apple 
 Abbott Laboratories 
 Lam Research 
 Shin-Etsu Chemical Co. 
 Automatic Data Processing Inc. 
 Crown Castle 
 Norfolk Southern Corp. 
 Edward Lifesciences Corp. 
 Lonza AG 
 General Dynamics 
 TE Connectivity Ltd 
 Las Vegas Sands Corp. 
 Amphenol Corp. 
 ITC Ltd. 
 Xilinx Inc. 
 V.F Corp 
 Corning Inc. 
 Axis Bank 
 Ameriprise Financial Inc. 
 Hormel Foods Corp. 
 Nasdaq Inc. 
 Nomura Research Institute 
 Essity AB 
 Cheil Industries 
 MarketAxess Holdings 
 United Rentals 
 Rollins Inc. 
 PTC Inc 
 Duke Realty 
 Teledyne Technologies 
 Raymond James Financial 
 Cree Inc. 
 Packaging Corp. of America 
 MKS Instruments 
 Hess Corp. 
Thu 28 Jan Samsung 
 Air Products & Chemicals 
 Northrop Grumman 
 Walgreens Boots Alliance 
 T. Rowe 
 Xcel Energy 
 Stanley Black & Decker 
 Southwest Airlines 
 Skyworks Solutions 
 McCormick & Co. 
 Rogers Communications 
 Arthur J. Gallagher & Co. 
 Dover Corp. 
 Western Digital 
 Celanese Corp. 
 NVR Inc. 
 WestRock Co. 
Fri 29 Jan Eli Lilly 
 Charter Communications 
 SK Hynix 
 Atlas Copco 
 Johnson Controls 
 Phillips 66 
 Simon Property Group 
 Astellas Pharmacy 
 Simens Gamsea 
 LG Electronics 
 Synchrony Financial 
 Church & Dwight Co. 
 Sun Pharmaceutical 
 SG Holdings 
 Svenska Cellulosa AB 
 Booz Allen Hamilton 




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