Weekly Market Update: 2022 goes out on a predictably sour note
A painful 2022 for investors drew to a close this week with continued volatility in technology shares in particular. Overall volumes were thin, but heavy bouts of selling in bellwether tech names like Tesla and Apple was followed by a significant dead cat bounce on Thursday. Much of this week’s focus was on the impending full reopening of the Chinese economy next month, and the accompanying surge in Covid cases there. The US and other nations announced they will reinstitute some restrictions on travelers coming from China as anecdotal reports came in of planes brimming with Covid positive passengers. Bond yields tracked higher amid a slew of year-end US Treasury coupon supply, and as investors turned their attention to central bankers’ promises to continue tightening in early 2023. The December Richmond Fed offered modest improvement with a surprise move back into positive territory and a rebound in new orders, though that forward looking component remained negative. Weekly jobless claims ticked up as expected, a trend the Fed is likely to welcome into the New Year. Natural gas prices plunged in both the US and Europe as milder forecasts emerged looking into January. For the week, the S&P slipped 0.1%, the DJIA was off 0.2%, and the Nasdaq fell 0.3%, and for the year, the S&P lost 19.4%, the DJIA dropped 8.7%, and the Nasdaq tumbled 33%.
Corporate news was light this week and seemed to keep circling back to Tesla. Early in the week, reports said that the EV maker would idle production at its Shanghai plant through the last week of the year. Meanwhile as Tesla shares continued to sell off, CEO Musk told employees in an internal memo to ignore “stock market craziness” even as one report said he might be facing a margin call on his collateral for the Twitter deal. Samsung was reportedly considering 'radical' price cuts for memory in 2023, while Taiwan Semi is said to face a 15% q/q decline in Q1 revenue as fab capacity utilization rates fall substantially.
SUN 12/25
(CN) China’s National Health Commission (NHC) announces it will no longer publish daily COVID-19 figures
12/25 TSLA Said to have suspended production at its Shanghai plant on Dec 24th (one day earlier than speculated); No reason was cited; Requires all workers to return by Jan 1st - press citing internal memo
MON 12/26
(RU) Russia Pres Putin: We are ready to negotiate some acceptable outcomes on Ukraine with all parties involved in the conflict; The aim of special military operation is unification of the Russian nation
(JP) Japan PM Kishida: Will watch economic situation to decide on next BOJ Governor; Premature to talk about reviewing BOJ-Japan govt accord; BOJ move is not exit from easing, but way to make easing sustainable
(KR) Reportedly one North Korea drone briefly flew over South Korea's capital Seoul city; In total, five North Korean drones crossed the border (1st time since 2017) - local press
MA Mastercard SpendingPulse forecasts 7.6%* growth y/y in US Retail Sales (ex auto) for Nov 1st-Dec 24th holiday season
(CN) CHINA TO REMOVE ALL COVID-RELATED QUARANTINE REGULATIONS AND LIFT RESTRICTIONS ON INTERNATIONAL FLIGHTS; EFFECTIVE FROM JAN 8TH, 2023; DOWNGRADES COVID-19 FROM CATEGORY A TO CATEGORY B DISEASE
TUES 12/27
(JP) BOJ Nov Core CPI Y/Y: 2.9% v 2.7% prior [multi-year high]
(JP) Former Japan Finance Ministry official Nakaso [seen as possible Kuroda replacement]: BOJ modified its stimulus measures to ease the transition away from an unconventional monetary policy; Thinking the current framework must be modified sooner or later
TSLA Reportedly plans to reduce production for Jan 2023 at its Shanghai plant – press
TSM Reportedly TSMC Q1 Rev to be down 15% q/q when fab capacity utilization rates fall substantially – Digitimes
(US) DEC DALLAS FED MANUFACTURING ACTIVITY: -18.8 V -15.0E
(RU) Russia President Putin formally signs decree on Russia's response to Western Oil price cap, to come into force on Feb 1st and remain in place till July 1st 2023 - press
(CN) US said to consider COVID-prevention measures for travelers from China - US financial press
2196.HK BioNTech’s Chinese partner Fosun permits mainland Chinese citizens to register for mRNA COVID vaccine shot in Hong Kong – press
WED 12/28
005930.KR Samsung said to consider starting 'radical' price cuts for memory in 2023 - Digitimes
(HK) Hong Kong Chief Exec Lee confirms to scrap quarantine for COVID patients, close contacts and its vaccine pass, effective from Dec 29th; Aims to implement border reopening plan with mainland China by Jan 15th, 2023
(US) DEC RICHMOND FED MANUFACTURING INDEX: +1 V -10E; New orders improve
(US) NOV PENDING HOME SALES M/M: -4.0% V -1.0%E; Y/Y: -38.6% V -36.7% PRIOR
(US) Association of American Railroads weekly rail traffic report for week ending Dec 24th; 400.3K total units, -4.8% y/y
2330.TW Chairman Liu: Confirms have begun mass production of 3nm chips, demand very strong; Making preparations for its 2nm fabs
THRS 12/29
(CN) China NHC Official Wu: Strengthening COVID variant monitoring; COVID outbreaks in the cities of Beijing, Tianjin and Chengdu have passed the peak
AAPL Apple production in China begins to catch up despite Covid-19 woes – WSJ
(US) INITIAL JOBLESS CLAIMS: 225K V 225KE; CONTINUING CLAIMS: 1.71M V 1.69ME (highest continuing claims since early Jan 2022)
(US) Nevada reports Nov casino gaming Rev $1.22B, -7.6% y/y, Las Vegas strip Rev $669M, -11.3% y/y
(US) DOE CRUDE: +0.7M V -1.5ME; GASOLINE: -3.1M V 0ME; DISTILLATE: +0.3M V -2ME
FRI 12/30
(UK) DEC NATIONWIDE HOUSE PRICE INDEX M/M: -0.1% V -1.4% PRIOR; Y/Y: 2.8% V 4.4% PRIOR (4th straight monthly decline)
(US) DEC CHICAGO PURCHASE MANAGER’S INDEX (PMI): 44.9 V 40.0E
(JP) Reportedly BoJ considering raising inflation forecasts closer to 2% in FY24, which could support a pivot away from ultraloose monetary policy - Nikkei