Last checked at 
* Major stock indexes modestly green in see-saw session
* Energy leads S&P sector gainers; comm svcs weakest group
* Dollar slips, gold gains, NYMEX crude jumps
* US 10-Year Treasury yield ~1.14%
Jan 12 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
SAVINGS STOCKPILE AND PENT-UP DEMAND: THE COMING CONSUMER
SPENDING SPREE (1405 EST/1905 GMT)
The pandemic, and the resulting economic shock due to
widespread lockdowns to contain it, has made consumers
understandably cautious. But pent-up demand, combined with a
substantial increase in household savings, suggests consumers
could roar back to life in the coming year.
Oxford Economics published a research note on what global
markets can expect from the consumer in 2021 as vaccine
deployment and economic reopenings hopefully coincide with
people reopening their wallets.
"Sharply rising household savings, booming house prices,
strong financial markets, and unprecedented fiscal support have
all contributed to unusually strong household balance sheets at
the start of 2021," writes Tamara Basic Vasiljev, senior
economist at OE. "Consumers are still cautious but can now
afford a spending spree."
Lost income was offset by fiscal support in most advanced
economies, according to Vasiljev, who adds that easy monetary
policy, rising residential real estate prices and booming
financial markets have strengthened household balance sheets,
according to the note.
But this phenomenon failed to benefit all households
equally. "A large share of the savings boost may have been
accrued by wealthy households that have suffered less economic
hardship during the pandemic, while many of the relative losers
may have run down their savings," Vasiljev says.
In the United States, where the consumer contributes about
70% of economic growth, increased savings deposits and a sharp
decline in revolving credit outstanding suggests that when
Americans feel confident enough to embark on a post-COVID
spending spree, they'll be able to afford it:
(Stephen Culp)
*****
HIT ME: 21 OR BUST? (1252 EST/1752 GMT)
Although early in 2021, the S&P 500 index has kicked
off the new year with gains. The benchmark index is now up
around 1% so far this year.
That said, based on its average change per year of each
decade, the SPX may need to be dealt more favorable cards to
turn in another winning year.
Using Refinitiv yearly change data from 1929 through 2020,
the SPX has averaged a gain of around 7.5% per year. However,
breaking the data down by average change per year of a decade
shows that years that end in "one" have not been favorable:
Years ending in one show an average loss of 1.2%. In fact,
on average, it's the only negative year of each decade.
Meanwhile, including 2021's early action, the SPX has now
seen 12 higher-highs on a yearly basis. This matches the record
run of 12 consecutive higher-yearly highs from 1989-2000. Back
then, in 2001, the SPX then suffered its biggest yearly decline
since 1974.
(Terence Gabriel)
*****
RECORD HIGHS IN MARGIN DEBT NOT A BEARISH SIGN (1240
EST/1740 GMT)
Contrary to some popular beliefs, recent all-time highs for
margin debt are not a bearish sign, and the move instead
"confirms new highs" for the S&P 500, according to BofA
Technical Research Strategist Stephen Suttmeier.
As the S&P 500 gained 10.8% in November, margin debt
surpassed its all-time high from May 2018 to near $669 billion
in November, based on data from the Financial Industry
Regulatory Authority, he wrote in a report released this week.
"In our view, this confirms the new highs for the SPX,"
Suttmeier wrote.
Past new highs for margin debt occurred in January 2007,
when the S&P 500 rallied into the October 2007 secular bear
market peak; in January 2013, when the S&P 500 had a secular
bull market breakout in April 2013 and rallied 40.7% into May
2015; and in January 2017, when the benchmark index rallied
23.9% into January 2018 and 27.8% into September 2018, he noted.
Suttmeier added that FINRA data shows that free credit, or
cash, in customers' cash accounts and margin accounts moved to
the highest level since July 2008 in November 2020.
(Caroline Valetkevitch)
*****
AUTOS SAVE EUROPE'S SESSION (1220 EST/1720 GMT)
European stocks made it to positive territory but by the
skin of their teeth today.
The pan-European STOXX 600 gained a meagre 0.05% and it's
thanks to a steep rise in the auto sector in the last hour of
trading with the sector's index adding 1.7%.
Some traders were scratching their head when shares in
French car parts makers Faurecia jumped 7% in late afternoon
trading but it quickly occurred to them that it was the whole
industry being lifted by a read-across from Wall Street.
General Motors' shares jumped on launching an
electric delivery vehicle business but Tesla was also
rising sharply with the electric-car maker getting closer to its
India launch later this year.
Other sectors sought after in European included banks,
energy and travel and leisure, which gave a slightly risk-on
tone to an otherwise underwhelming day of trading.
The clear outperformer of the day was Swiss online pharmacy
chain Zur Rose with a whopping 14.9% jump a positive
rating from BofA.
Here's the STOXX Automobiles and parts index rising at the
end of the session:
(Julien Ponthus)
*****
NFIB, JOLTS: SLOUCHING INTO 2021 (1102 EST/1602 GMT)
Relatively minor data enjoyed the spotlight on Tuesday,
providing a snapshot of the U.S. economic recovery slowing to a
crawl in the final months of 2020.
Small business sentiment, as measured by the National
Federation of Independent Business' (NFIB) Optimism index
, plunged by 5.5 points in December to 95.9, its
lowest reading since May.
"Small businesses are concerned about potential new economic
policy in the new administration and the increased spread of
COVID-19 that is causing renewed government-mandated business
closures across the nation," writes Bill Dunkelberg, chief
economist at NFIB.
While the uncertainty element abated, expectations for
improved sales and economic conditions dipped into pessimistic
territory.
"The details make for grim reading," writes Ian Shepherdson,
chief economist at Pantheon Macroeconomics. "With sharp falls in
the volatile expectations components - economy, sales, and
earnings - accompanied by declines in all the key labor market
numbers and four-point drop in capex plans."
Meanwhile, the Labor Department released its November Job
Openings and Labor Turnover Survey (JOLTS), which
measures churn in the U.S. jobs market.
The data showed a dip in job openings and an uptick in
layoffs, while new hires held firm.
The quit rate - seen as a gauge of consumer expectations, as
workers are unlikely to walk away from a gig amid economic
uncertainty - also remained steady.
While the major U.S. stock averages are last - modestly - in
positive territory, their gains were the latest swing in a
see-saw session as market participants found little to no
catalysts to prompt much of either a sell-off or rally.
(Stephen Culp)
*****
WALL STREET WOBBLES AT TENTATIVE OPEN (1003 EST/1503 GMT)
Wall Street stepped cautiously out of Tuesday's starting
gate, wobbling between red and green.
There were few catalysts to fuel momentum on a day with no
earnings reports of note and minimal economic data.
Among Tuesday's relatively minor indicators, small business
sentiment, as measured by the National Federation of Independent
Business, dipped in December to its lowest since May due to new
shutdowns to contain the resurgent pandemic.
Congressional Democrats have given President Trump through
the end of the day to resign, after which the House will
initiate an unprecedented second impeachment procedural.
The Centers for Disease Control and Prevention (CDC) said on
Monday that 9 million Americans have received the first of two
coronavirus vaccine shots, representing less than one-third of
the 25 million doses distributed so far by the U.S. Government.
Members of the U.S. Federal Reserve have expressed a growing
optimism that an accelerated deployment of vaccines to combat
the disease will translate to a jobs boom and economic recovery.
An uptick in U.S. Treasury yields helped out U.S. banks,
three of which - Citigroup, JPMorgan Chase & Co
and Wells Fargo & Co - are expected to report fourth
quarter results on Friday.
The S&P Banking index is last up ~1.5%
Here is your opening snapshot:
(Stephen Culp)
*****
AGGRESSIVE SPECULATIVE FEVER (0954 EST/1454 GMT)
When the largest stock in the U.S. small cap index Russell
2000 is worth close to $30 billion, it's hard to avoid the
"bubble" talk. And, quite rightly a piece of news this afternoon
from Renault and Plug Power sums up the
euphoria in green stocks.
Fuel cell maker Plug Power's shares are soaring 13% in U.S.
premarket trade, after it signed a hydrogen-powered light
commercial vehicle joint venture with Renault. The French
carmaker was up a modest 1.4%.
The jump in Plug Power takes it's 52 week gains to a
whopping 1,220% -- some of the latest action in the stock came
after Biden was elected U.S. president as investors expect the
new administration to spend more on infrastructure and support
green energy.
Plug is not alone, another company in this space, Fuelcell
Energy has surged 600% since the election in November. Both are
yet to make profits and analysts don't see them making money
until at least 2022.
Strange isn't it? Agreed, green revolution is in its early
phase, but such unreasonable valuations are baffling some
investors. Pointing to today's news on Renault-Plug, one
Germany-based trader said "the way this news is traded is
obviously completely wrong".
The market cap jump in Plug Power today alone is 1/3 the
size of Renault -- a company that's been profitable for several
years. Investment bank Saxo recently described this as
"aggressive speculative fever in technology and green stocks".
A similar trend is observed in Sunrun -- a provider of
residential solar panels and home batteries -- which has jumped
541% in the last 1 year and is worth $19 billion with a
valuation of 198 times 12-month forward earnings.
And then there is an entirely illogical trade such as Signal
Advance where a stock, OTC traded, has no full-time
employees, and has been scaling 1,000% intraday highs everyday.
- LIVE MARKETS-Itchy fingers: Fangdd to Signal, a retail
mania like no other?
(Thyagaraju Adinarayan)
*****
EUROPEAN BANKS: STILL CHEAP? (0915 EST/1415 GMT)
In the last few days, as U.S. rate expectations have
improved, markets have been more optimistic on the potential for
reflation, bolstering European bank share prices.
The outlook remains positive in 2021, says Barclays.
The European banking sector is trading at 0.7X 2020E TNAFF,
whilst it is not as "cheap" as we saw in Q320 and early Q420,
but it is still "not overly demanding", Barclays says.
Here is a snapshot of the monthly performance of European
banks:
The UK bank expects earnings growth, earnings upgrades in
aggregate and increasing capital return to compensate for the
higher valuations in the sector.
It could trade to 0.8-0.9x TNAFF later on, "although at that
point it may start looking less attractive to us," Barclays
says.
Looking ahead, much of the journey for European banks will
depend on effectiveness of the COVID-19 vaccine roll out. The
impact of the third lockdown in the UK presents "additional
near-term challenges to revenues, and hence consensus estimates
in 2021," it adds.
On a brighter note, Barclays looks for a consumer-led
rebound in Britain to support banks in the second half of the
year.
Lloyds, ABN and Santander are
Barclays' preferred names.
(Joice Alves)
*****
S&P 500: DOES IT HAVE THE LEGS TO CONTINUE ITS CLIMB? (0900
EST/1400 GMT)
The S&P 500 index has mounted an impressive advance
from its March 2020 low. That said, the benchmark index is
nearing another significant resistance hurdle, amid a protracted
monthly momentum divergence. (Click on chart below)
On a closing basis, in the 203 trading days since its March
trough, the SPX has posted a gain of about 70%. That's its
biggest rolling 203 trading-day rise since in 1933-1934, amid
the Great Depression.
Despite the stellar rise, monthly momentum is lagging. Since
registering an all-time high in early 2018, the RSI has been
making lower highs. Of note, just since 2007, SPX declines of
varying degree were preceded by monthly momentum divergence.
Meanwhile, the SPX faces a monthly channel resistance line
from its 2010 high which resides around 3,905 this January. This
line is only around 2% above last Friday's 3,826.69 high.
(Terence Gabriel)
*****
FOR TUESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE:
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
