Next week will be a holiday-shortened one, with U.S. markets closed on Monday. However, it will still be a busy week for earnings, with more reports due from big banks and financial sector firms, including Morgan Stanley, Goldman Sachs, Charles Schwab, PNC Bank, and Discover Financial Services, among others. We’ll also get earnings from United Airlines, American Airlines, Procter & Gamble, and Netflix. On Wednesday, the U.S. Census Bureau will report on December retail sales, while the Bureau of Labor Statistics (BLS) will issue the latest Producer Price Index (PPI). We can also expect updates on the housing market, including December housing starts, building permits, and existing home sales.

Treasury Secretary Janet Yellen warned the U.S. could hit its statutory debt limit next week, and called on Congressional leaders to either raise or suspend the debt ceiling. Federal lawmakers previously raised the federal debt limit to $31.4 trillion in December of 2021. Yellen has pledged to do whatever is necessary to prevent a sovereign debt default, stating that the Treasury Department will “begin taking extraordinary measures to prevent the U.S. from defaulting on its debt obligations.”1

KEY TAKEAWAYS

Earnings season continues next week with the remaining big banks and financial firms, including Morgan Stanley, Goldman Sachs, Charles Schwab, PNC Bank, and Discover Financial Services scheduled to report earnings.
Netflix, Procter & Gamble, and United and American Airlines are also among the companies scheduled to report next week.
The U.S. Census Bureau will release national retail sales figures for December on Wednesday, indicating whether consumer spending held up during the holiday shopping season.
Also on Wednesday, the Bureau of Labor Statistics (BLS) will issue the Producer Price Index (PPI) for December, tracking inflation from the standpoint of manufacturers and wholesalers.
The latest housing market updates will also become available, including December housing starts, building permits, and existing home sales.

Earnings Season Continues

Earnings season continues next week with reports from more big banks and financial sector firms. Morgan Stanley and Goldman Sachs will report on Tuesday, with Charles Schwab, PNC Bank, Discover Financial Services, and others reporting later in the week. We will also receive fourth quarter results from Netflix and Procter & Gamble, as well as United and American Airlines.

Morgan Stanley is projected to announce fourth quarter earnings per share (EPS) of $1.25, which would represent a 40% decline from a year earlier. Revenue is projected at $12.17 billion, down 16.2% from the fourth quarter of 2021. Goldman Sachs, which announced last week it will be cutting 3,200 jobs, is projected to post EPS of $5.25, down from $10.81 a year earlier. Global investment banking fees nearly halved in the first three quarters of 2022, to $77 billion from $132 billion in 2021 according to findings by Dealogic.2

December Retail Sales

On Wednesday, the U.S. Census Bureau will report on December retail sales, providing a key update on consumer spending during the holiday season. Retail sales are projected to have fallen 0.5% last month, extending their declines after a 0.6% drop in November. Despite record-breaking online sales early in the holiday shopping season, sales are anticipated to have underperformed last month as a combination of high inflation, rising interest rates, and the drawdown of household savings from early in the pandemic affected spending.

Producer Price Index (PPI)

Also on Wednesday, the Bureau of Labor Statistics (BLS) will release the Producer Price Index (PPI) for December, tracking inflation from the standpoint of goods manufacturers and wholesalers. Producer inflation likely flatlined in December, following a 0.3% gain in each of the previous three months. On an annual basis, price growth likely decelerated to 7%, down from 7.4% in November and compared to a peak of 11.7% in March of last year. Core prices, which exclude volatile food and energy costs, likely rose 0.1%, with annual price growth expected to fall below 6% for the first time since June of 2021.