After three meetings with NATO and its allies over Ukraine left both sides at an impasse, signals are beginning to emerge that Russia may be ready to invade Ukraine. Will it happen this week? Last week, it was brought to light that Boris Johnson had a party at Downing Street during lockdown. With his popularity already waning, could this be the end for him. This week, NFLX will report earnings, the first of the FAANGS. Earnings per share are expected at 0.82. Will they disappoint? In economic data, last week China and the US released CPI and PPU, with the US printing 7% for CPI! How high will inflation run this week for the UK and Canada?
Russia held meetings last week with the US, NATO, and the OSEC (Organization for Security and Cooperation in Europe). These meetings were all in the hopes of convincing them that they must meet Russia’s demand that the Ukraine will never become part of NATO. Russia feels that if this happened, it would threaten their security. The meetings ended the meetings at an impasse. As a result, Russia’s Deputy Foreign Minister Sergey Ryabkov said that if their demand is not met this week, there will be a “catastrophic outcome”. On Friday US intelligence gathered that Russia is preparing an operation to justify an invasion of Ukraine, which could occur between mid-January and mid-February. Could it happen this week? Watch for volatility in the Russian Ruble and the Euro as escalations rise.
Also last week, Boris Johnson’s staff was outed for having parties during lockdown that lasted until the early morning, including one on the eve of Price Philip’s funeral. Although Boris Johnson was not at these parties, he allegedly knew about them. Now he faces questions about breaking Covid lockdown rules. Johnson already admitted to attending a garden party in May 2020. Of course, his opposition is calling for him to step down, but that won’t happen immediately. This all comes at a time when Johnson is dealing with strong criticism over his handling of Brexit. Talks resume on January 24th regarding the Northern Ireland Protocol after new Foreign Secretary Liz Truss met with EU negotiators last week. The Pound has been on a tear over the last month, up nearly 575 pip vs the US Dollar! Could the bad press for Johnson cause the GBP to pull back?
Earnings season is set to kick into high gear this week as the first of the FAANGs reports earnings. Netflix is expecting to show earnings of 0.82. But the key will be in the guidance! How does Netflix think that higher interest rates will affect their business? That will be the key question all companies will have to answer this quarter. Other potential market movers reporting earnings this week are as follows:
BK, SCHW, GS, AA, UNH, UNH, ASML, UAL, BAC, PG, INTC, MS, AAL, NFLX