Hedge Funds, GDP & Jobless Claims, Earnings

Monday and Tuesday recorded one of the biggest gross reductions in exposure to the market by hedge funds. That was in the last decade, according to Morgan Stanley.

That is down to the licking given to hedge funds. Additionally, other pros by the army of retail traders organizing on Reddit and other social media. 

It is not clear how long the movement can last. That is unless the day traders want to be the long-term owners of failing small businesses. The need to take profits is growing.

GDP, Jobless Claims

The United States will announce its preliminary reading of Q4 gross domestic product at 8:30 AM ET (1330 GMT).

The economy should have grown at an annualized pace of 4%. That is a sharp slowdown from the 33% seen in Q3. Seen rising 1.5% year-on-year was core personal consumption expenditures, which favoured inflation at the Federal Reserve.

Meanwhile, more timely data on the labour market will be released. Last week, initial jobless claims should have stayed at a high level of 875,000. December’s new home sales data completes the data roster.

Stocks to Open Mixed

In the U.S., stock markets should open mixed following their sharpest one-day sell-off in weeks on Tuesday.

Dow Jones futures were up 10 points, less than 0.1% by 6:35 AM (1135 GMT). The S&P 500 futures were down 0.2%, while Nasdaq futures were down 0.8%.

The deluge of earnings continues, with both Mastercard (early) and Visa (late) reporting, along with Comcast, McDonald’s, Altria and Dow. Moreover, Stanley Black & Decker and three of the country’s biggest airlines – American, JetBlue and Southwest.

Tesla, Apple cannot Meet High Expectations

Tesla recorded its first-ever full-year profits while Apple recorded its first-ever quarter of $100 billion in revenue. However, neither of them could live up to the sky-high expectations implicit in their current stock prices.

Tesla stock went down 4.9% in premarket trading. That was after forecasting growth of only 50% in both of the next two years.

Apple stock went down 2.3%. That is despite raising the average selling price of its iPhone from $803 to $879 in the space of a year.

Facebook should report after the bell on Wednesday. It declined 0.5% after warning of regulatory challenges to its dominance of the online ad market. This was accompanied by some highly critical comments from Apple CEO, Mark Zuckerberg.

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