💡Ask Pika Series #9- Keep note of these events🔦

There’s plenty of panics and solemn in the air. The equity market had a rough start since mid-Nov and continued into 2022. In our early 2 January 2022, 19th Edition of Pika World commentary, we share that corporate earnings will begin to drive market trajectory, and we continue to see that happening. 

Given multiple questions posted on Pika World’s outlook, this episode tries to put things into perspective. We encourage you to refer to our 2 January 2022, write up and refer to Page 9, which shows the critical economic calendar. 

🎙Why is it useful? 

The market had displayed a shift in behaviour, from buying the dip to selling into the rally. One would have observed that any rally or recovery often evaporate towards the end of the trading session. We are now on the risk-off sentiment as multiple headwinds linger. 

💼#1: FOMC Meeting (25-26 Jan)

It will be a critical component as investors have to make sense of the Fed’s projection and trajectory on two essential items: the possibility of rate hike and balance sheet runoff hint. If there is a shock rate hike (unlikely though), then, a sharp drawdown in stocks is possible. 

🍚#2: Jobs Report (4 February)

While the Fed is now focusing on taming inflation, its second mandate of full employment needs to stay intact. Hence, any signs of labour market weakness may slow the pace of the Fed’s tightening. 

🍜#3: Inflation Data, CPI (10 February), PPI (15 February)

We may not see an inflexion point at this stage to suggest a weakening of sustain price increase. As such, the market may continue to be on tip-toe. 

🥛#4: Inflation Data, CPI (10 March), PPI (15 March)

This will be critical as we might sense some clues of possible evaporating heat on price level in the economy. This will be the last date for the next FOMC, which is #5 of our discussion. 

💈#5: FOMC, (15-16 March)

With the last piece of inflation data before the meeting, the Fed will shed light on interest rates. There is a fear of an unexpected 0.5% rate hike instead of the milder 0.25%. More crucially is any hint of a balance sheet runoff idea. 

🖨In a Nutshell🛎

From now till mid-March, uncertainty will continue to loom in the market. Results do not matter as much for corporate earnings as Q1 guidance (the main focus). With multiple crucial periods along the way, we are hopeful that the sky will be clearer after 1Q2022. 

If the corporate earnings are robust, the Fed will be more inclined to be hawkish, which is detrimental to the stock market. Of course, if there is any positive surprise, such as a less hawkish Fed, it is a market bonus. But, till then, Pika World sees more hurdles for investors psychology as buy the dip sentiments dwindle. 

Have a restful evening, 

XOXO, 

Pika Nat.