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Five Stories to Watch in the Stock Market Today, Jan. 27:
- The Global Selloff Continues: Global markets fell again on Monday. Turmoil continues to spread through Argentina, India, Brazil, and Turkey amid a selloff in developing-market currencies. This complements a growing concern over a Chinese credit crunch. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index spiked 40% last week, the single largest weekly increase since September 2011, according to Bloomberg. The Volatility S&P 500 (VIX) is now up more than 47% in the past 30 days amid concerns of global turmoil ripping across emerging markets.
- The Davos Hangover Sets In: World's business leaders will return from Davos, where the media, politicians, and moguls gathered to discuss the global economy. Reports from Davos signaled a dramatic increase in concerns over "income inequality" after news broke that the top 85 billionaires (many whom attended the Forum) now have the same amount of wealth as the bottom half of the world's population (3.5 billion). With President Obama's State of the Union speech slated for Tuesday evening, income inequality will be a major theme.
- Government Investigations Coming: According to regulatory filings, the Commodity Futures Trading Commission (CFTC) and the Justice Department (DOJ) are investigating a Bank of America (NYSE: BAC) trading desk on suspicion that it made futures trades for its lender before executing large client orders. Details are slowly emerging.
Meanwhile, Sen. Edward J. Markey (D-MA) has asked the Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC) to investigate the business practices of Herbalife Ltd. (NYSE:HLF). Markey has suggested that the nutritional company is operating a pyramid scheme. Company shares plummeted by nearly 9% on Friday. This is the second time the company has faced similar allegations, as hedge fund manager Bill Ackman ran a sizeable short position in late 2012 against the stock.
- Vodafone Shares Fall: Vodafone Group Plc. (Nasdaq: VOD) shares fell sharply in premarket trading on news that AT&T Inc. (NYSE: T) is no longer a possible suitor for the company. The news jolted speculators who had positioned themselves for a possible acquisition, particularly after AT&T's CEO touted the possibilities of gaining greater access to the European mobile markets.
- The Midwestern Propane Crisis: Another round of frozen weather is shredding the Midwest, closing schools and airports from Minnesota to the Gulf of Mexico. The chronic cold has created a significant shortage of propane throughout the nation. This week, Wisconsin became the latest state to announce an energy emergency. In Wisconsin, average wholesale propane was $2.26 per gallon last Monday, a 25% premium since mid-December.
Monday Government Data:
At 10 a.m., the U.S. Census Bureau of the Department of Commerce will report new home sales for the month of December. The monthly report provides the level of new privately owned one-family houses sold and for sale. The briefing forecast is set at 440,000, while the market expects 457,000.
Earnings Watch Today: Key Companies Reporting Jan. 27:
- American Electric Power Company Inc. (NYSE: AEP): Consensus earnings per share is $0.56. Last week, AEP declared a regular quarterly cash dividend of 50 cents a share on the company's common stock.
- Caterpillar Inc. (NYSE: CAT): The company beat consensus earnings per share of $1.28 by 26 cents. Analysts remain reserved about the stock's future prospects. The company's gains were fueled less by sales and more by cost-cuts, currency gains, and inventory liquidation. The company needs 2014 to be a large year for global infrastructure development to approach its record highs.
- Royal Caribbean Cruises Ltd. (NYSE: RCL): Consensus earnings per share is $0.18. The company is reeling from reports of a gastrointestinal illness outbreak affecting 600 passengers on a 10-day cruise.
- United States Steel Corp. (NYSE: X): Consensus earnings per share is $0.25.
Other Companies Reporting:
Haemonetics Corp. (NYSE: HAE), Chemical Financial Corp. (Nasdaq: CHFC), Beam Inc. (NYSE: BEAM), First Bancorp (NYSE: FBNC), Harte Hanks Inc. (NYSE: HHS), NVR Inc. (NYSE: NVR), Rayonier Inc. (NYSE: RYN), Roper Industries Inc. (NYSE: ROP)
Today's top investment story: America's Biggest Bank Wants In (On This Truly Free Currency)
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.