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As traders return from the long holiday weekend on Tuesday and equity markets reopen, markets will turn their attention to the first days of the Biden administration and to another batch of corporate earnings results.
President-elect Joe Biden’s inauguration ceremony will take place on Wednesday in a dialed-down event, given the ongoing coronavirus pandemic. Most of the events are set to take place virtually, though Biden will be sworn in on the West Front of the U.S. Capitol in person.
This year’s event will also see heightened security relative to previous years’ Inauguration Day ceremonies, following the deadly riots at the Capitol on Jan. 6 and the heightened risk of additional violence in its wake. More than 20,000 National Guard troops have been authorized to secure Biden’s inauguration. Troops had already been patrolling the Capitol last week as lawmakers proceeded with debate and votes to impeach President Donald Trump for inciting the violence earlier this month. The FBI has also warned states that armed protests are being planned at all 50 state capitols this week.
Washington, D.C. Mayor Muriel Bowser has also urged Americans to avoid the city on Inauguration Day, given the heightened threats of violence during the day surrounding the event.
Some major companies have also unveiled new guidelines for this week in an effort to reduce the threat of harm for Americans. Airbnb (ABNB) said last Wednesday it would block and cancel reservations in the D.C. metro area this week, and would refund guests and reimburse hosts who had already booked stays over those days. Though the move meant Airbnb would foot the bill for the canceled bookings, the stock rallied nearly 6% the day of the announcement.
Lodging firm Marriott (MAR) — which has close to 200 hotels in the D.C. area and owns brands including The Ritz-Carlton, Courtyard and Residence Inn – said it would honor existing reservations this week. IntercontinentalHotelGroup (IHG), Hilton (HLT), Hyatt (H) and Expedia-owned VRBO (EXPE) are also maintaining bookings over Inauguration Day.
But other travel companies also issued new guidance around the event to promote safety. Delta Air Lines (DAL), United Airlines (UAL), Southwest Airlines (LUV) and American Airlines (AAL) each said they would temporarily ban passengers flying to Washington, D.C. from checking firearms, effective Jan.16 until the week after Inauguration Day.
Following Inauguration Day, attention will turn immediately to developments in Biden’s first days as president. And even ahead of Wednesday, some confirmation hearings are set to take place for key positions in Biden’s Cabinet. The Senate will hold a hearing to consider the nomination of Janet Yellen for Treasury Secretary on Tuesday, and of Pete Buttigieg for Transportation Secretary on Thursday.
On Jan. 20, Biden is seeking to sign about a dozen executive actions to address the pandemic, virus-stricken economy, climate change and racial equity, according to a memo from incoming White House Chief of Staff Ron Klain. Among a number of orders, Biden plans to extend a pause on student loan payments and interest on federal loans, rejoin the Paris Agreement, and issue a mask mandate on federal property and interstate travel. Biden also plans to sign additional executive orders in his initial 10 days in office, Klain noted.
Last week, Biden unveiled a $1.9 trillion coronavirus relief package, which seeks to offer stimulus payments of $1,400 to most Americans, increase enhanced federal unemployment benefits by $100 to $400 per week and extend these through the end of September, and provide $350 billion in aid to state and local governments, which had been excluded from Congress’s latest package. It also seeks to raise the minimum wage to $15 per hour and provide additional funds to schools and to ramp up COVID-19 testing and vaccination, among other provisions.
Biden also said he aims to roll out 100 million vaccines in his first 100 days in office, which would mark a significant acceleration from the sluggish start to the vaccine deployment in the U.S. to date.
“The inauguration of President-elect Joe Biden and new impeachment of President Donald Trump may signal a dramatic shift in the political landscape, but it remains to be seen whether hopes of a transformative boost to government spending will survive the reality of a narrowly divided Congress,” Andrew Hunter, senior U.S. economist for Capitol Economics, said in a note Friday.
Using a budget reconciliation process, which requires only a simple majority to pass the Senate, may be “the best chance of pushing through Biden’s plans,” Hunter said.
“But even that would leave no margin for error and there are already signs that it could prove difficult, with West Virginia Sen. Joe Manchin voicing skepticism over the proposals for $2,000 checks,” he added. “Reconciliation can be used only once each fiscal year, so Biden will be wary of wasting one of what may only be two shots on a narrow bill that made few inroads into his wider agenda. At the same time, however, pushing for a further deficit-financed fiscal expansion will only get harder as the sense of urgency created by the pandemic starts to ease.”
“Overall, we suspect that any eventual package will be worth no more than half of what Biden is calling for, and could take considerably longer to negotiate than many expect,” Hunter said.
One of this week’s key earnings reports will come from Netflix (NFLX) Tuesday after market close.
Last quarter, Netflix disappointed investors with signs that its skyrocketing user growth from the start of the pandemic was slowing down.
The streaming giant missed even its own conservative third-quarter new subscriber guidance, adding just 2.2 million new members versus the 2.5 million the company had expected over the summer. Netflix said the weak user growth was “primarily due to our record first half results and the pull-forward effect” that ensued. More than 10 million subscribers had joined Netflix during the second quarter, and a record nearly 16 million paying users were brought on during the first.
For the fourth quarter, Netflix expects 6 million net paid additions to its streaming platform, representing another year-over-year decline after adding 8.8 million in the fourth quarter of 2019. Netflix also said it expected paid net additions to be down year-over-year throughout the first half of 2021, given the difficult comparisons to 2020’s record first-half performance.
Netflix, while still the leader among U.S. streaming platforms when it comes to total users, has also faced increasing competition over the past year, especially from relative newcomer Disney+ (DIS). Disney’s streaming service had 86.8 million paying subscribers as of Dec. 2, compared to the more than 195 million Netflix reported at the end of September. But Disney also revealed it would be raising the monthly price of its streaming subscription starting in March, suggesting the platform believed it had the user demand and pricing power to command higher fees.
Still, some analysts suggested concerns about competitive pressures were overblown, and that Netflix might also benefit from stay-in-place behavior among consumers for longer than previous anticipated given the slow vaccine rollout and ongoing pandemic.
“Despite increasing competition, Netflix continues to capture a significant share of content consumption dollars,” Piper Sandler analyst Yung Kim, who rates Netflix shares as Outperform, said in a note Friday. “Additionally, with COVID-19 fears pushing consumers away from travel and out-of-home entertainment, we look for Netflix to continue as a beneficiary of this altered behavior.”
Consensus analysts are expecting Netflix to grow revenue 21% over last year to $6.62 billion in the fourth quarter, slowing for a fourth straight month and ticking down from the third quarter’s 23% year-over-year growth rate. Earnings will likely grow 5% to $1.36 per share, according to Bloomberg data.
Shares of Netflix have risen 47% over the past 12 months through Friday’s close, outperforming the S&P 500’s 13% advance over that period.
Tuesday: Confirmation hearing in the Senate Finance Committee to examine the expected nomination of Janet Yellen to be Secretary of the Treasury.
Wednesday: President-elect Biden expected to sign roughly a dozen executive orders.
Thursday: Confirmation hearing in the Senate Commerce committee to examine the expected nomination of Peter Buttigieg to be Secretary of Transportation.
Wednesday: Morgan Stanley (MS), US Bancorp (USB), Citizens Financial Group (CFG), Bank of New York Mellon Co. (BK), Procter & Gamble (PG), UnitedHealth Group (UNH) before market open; Alcoa (AA), United Airlines (UAL) after market close
Tuesday: Total Net TIC Flows, November (-$10.4 billion in October); Net Long-Term TIC Flows, November ($51.9 billion in October)
Wednesday: MBA Mortgage Applications, week ended January 15 (16.7% during prior week); NAHB Housing Market Index, January (86 expected, 86 in December)
Thursday: Initial jobless claims, week ended January 16 (830,000 expected, 965,000 during prior week); Continuing claims, week ended January 9 (5.271 million during prior week); Housing starts, December (1.562 million expected, 1.547 million in November); Building permits, December (1.600 million expected, 1.635 million in November)
Friday: Markit US Manufacturing PMI, January preliminary (56.5 expected, 57.1 in December); Markit US Services PMI, January preliminary (53.6 expected, 54.8 in December); Existing home sales, December (6.55 million expected, 6.69 million in November)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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