Wall Street shows gains
US stocks are off to a strong start as investors focus on President-elect Biden’s COVID relief bill and as earnings season heats up. The US will see more stimulus in Biden’s first 100 days, but the question is will some Republicans in the Senate play ball with the Democrats. It is very unclear how life after President Trump will be, but some Republicans up for re-election in 2022 could take Biden’s USD1.9 trillion plan as an opportunity to distance themselves from the Trump administration. The headline figure will likely come down a bit but if Republicans show a willingness to coordinate with Democrats, risk appetite has not priced that in. Biden’s cabinet appointees grilling in the Senate and the Trump impeachment proceedings will garner much attention, but many political insiders will look to see if some Republicans don’t immediately reject everything the Democrats bring to the table.
BoA announces huge buyback
Bank of America was the big earnings report this morning and Wall Street liked the USD2.9 billion buyback announcement and shrugged off the disappointing fixed-income trading results. Fourth-quarter FICC trading revenue came in at USD1.74 billion, a miss of the consensus estimate of USD2 billion. Equities trading revenue impressed at USD1.32 billion higher than the USD1.16 billion estimate. EPS came in at USD 0.59 a four-cent beat, while net interest income came in at USD10.37 billion, slightly better than the consensus estimate. BOA shares held onto earlier gains but they were nothing to get excited over.
The euro held onto gains against the dollar after better-than-expected German ZEW data. Hope is coming back to Germany despite more restrictive measures. Expectations are rebounding in Germany but still are not quite at the September levels. If Friday’s German Flash PMI surprises to the upside, we could see the euro outperform.
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