North American Morning Briefing : S&P 500, Dow on -2-

January 28, 2022 at 06:10 am EST

Hennes & Mauritz to Focus on Growth Again After Posting 4Q Earnings Beat

Sweden's Hennes & Mauritz AB said Friday it will now focus on growth again, after posting a forecast-beating rise in fourth-quarter net profit as sales returned to pre-pandemic levels.

The fashion retailer posted a net profit of 4.62 billion Swedish kronor ($493.6 million) for the fiscal quarter ended Nov. 30, compared with SEK2.49 billion a year earlier. Analysts polled by FactSet had expected a profit of SEK3.99 billion.

Home Depot Names Ted Decker as CEO

Home Depot Inc. is tapping its operating chief to replace Craig Menear as chief executive, as the home-improvement retailer looks to enter its next phase of growth in the Covid-19 pandemic.

Ted Decker, who also serves as president, will assume the CEO post March 1, Home Depot said Thursday. Mr. Decker, 58 years old, will also join the board of directors at that time. Mr. Menear will continue to serve as chairman following the transition.

Robinhood Shares Fall Premarket After Bigger-Than-Expected Loss

Robinhood Markets Inc.'s stock fell 14% in premarket trading after the brokerage reported a loss of $423 million for the fourth quarter.

The company had an increase in technology and administrative expenses that ate into its results.

Western Digital Taps Semiconductor Veteran for CFO Job

Western Digital Corp. recruited a chip-industry veteran as its new finance chief, a move that comes as the hard-drive manufacturer looks to expand its memory-chip business.

Consumer Spending Could Be Slowed by Inflation, Omicron

Consumer spending, a key engine of economic growth, has shown signs of stalling heading into 2022, amid rising prices and the Omicron wave.

Economists surveyed by The Wall Street Journal estimate that consumer outlays declined by 0.7% in December from the prior month, as prices rose at their fastest pace in nearly four decades. The Commerce Department will release a report on consumption and inflation in December at 8:30 a.m. ET Friday. The report comes on the heels of separate data showing retail sales declined last month.

U.S. Employers Confront Highest Labor Costs in 20 Years, Fueling Inflation

The cost of hiring new employees and retaining existing ones in the nation's tight labor market is growing at nearly its fastest pace in a generation. That is helping to fuel inflation as employers pass labor costs to customers.

The U.S. employment-cost index-a quarterly measure of wages and benefits paid by employers-is expected to show that costs continued to rise at the highest rate in two decades of available records. Economists surveyed by The Wall Street Journal expect a seasonally adjusted increase of 1.2% in the fourth quarter of 2021 over the prior three months, which experienced a similar increase. The third-quarter gain, when compared with the same quarter from a year earlier, rose 3.7% on a nonseasonally adjusted basis.

Derby's Take: Pandemic Stimulus Was Just Right, Powell Says

Federal Reserve leader Jerome Powell isn't buying the argument made by some critics that massive government aid and monetary-policy stimulus overdid it, creating a huge surge in U.S. inflation.

"It's too soon to write that history," Mr. Powell told reporters Wednesday after a Federal Open Market Committee meeting. As the second anniversary of the Covid-19 pandemic approached, he cautioned armchair quarterbacks who see the stimulus as overly abundant to think back to how dire things looked when the health crisis struck, and said "there was a real risk of lasting damage" to the economy that called for a very aggressive response.

The Real Brake on America's Electric-Vehicle Revolution

Electric vehicles won't get a "100% Made in U.S.A." stamp for a good while yet.

U.S. auto makers are pouring billions of dollars into domestic EV factories and lithium-ion battery plants to supply them. General Motors this week announced $6.6 billion of EV investments into two Michigan plants, including $1.3 billion from its South Korean battery partner, LG Energy Solution. Ford announced similar projects in Tennessee and Kentucky last September alongside LG's archrival, SK Innovation.

China's Property Crisis Has Investors in Green Bonds Seeing Red

Before the Chinese property sector ran into trouble, developers had rushed to issue green bonds, making them among the most prolific corporate issuers in this fast-growing corner of global finance.

But the selloff in China's property-bond market in recent months, and a string of defaults, have hammered prices for many of these dollar-denominated green or sustainable bonds, which finance environmentally friendly or social projects. Creditors have suffered hefty losses. Several of the securities now trade at less than 30 cents on the dollar, indicating deep skepticism among investors that they will get back anything close to the original value.

IMF Says China's Economic Imbalances Have Worsened

Imbalances in the Chinese economy have worsened and delayed China's transition to consumption-led growth, the International Monetary Fund said in an annual review on Friday, slashing its outlook for the country this year.

The IMF assessment, in its Article IV review, reflects growing concern among some economists and officials that greater state intervention in the economy could be hindering China's long-held goal of "high-quality" growth-one driven by consumption rather than investment.

German Economy Contracted in 4Q

Germany's economy contracted in the fourth quarter due to a rise in coronavirus cases and the related re-imposition of restrictions, according to a first estimate published Friday by the German Federal Statistical Office.

Gross domestic product fell by an adjusted 0.7% from the previous quarter, Destatis said. This contraction was larger than economists' expectations of a 0.5% drop in a Wall Street Journal survey.

Natural-Gas Futures Spike in Latest Market Turmoil

A wild spike in expiring natural-gas futures contracts on Thursday afternoon was the latest bout of extraordinary volatility that has whipsawed financial markets to start the year.

Natural-gas futures for February delivery settled 46% higher, at $6.256 per million British thermal units, the largest one-day gain on record. More heavily traded futures for March delivery ended the day up 8.1% at $4.363.

Federal Judge Blocks Gulf of Mexico Drilling Leases, Citing Environmental Concerns

A federal judge invalidated the lease sale of 80 million acres in the Gulf of Mexico that the U.S. Department of Interior had made available for oil and gas drilling, saying regulators used flawed environmental analysis.

In a 68-page ruling on Thursday, Judge Rudolph Contreras of the U.S. District Court in Washington, D.C., called the federal agency's error in its environmental-impact determination "a serious failing."

U.S. Seeks to Confront Russia at U.N. Security Council Over Ukraine

The U.S. called for a meeting of the United Nations Security Council to discuss the standoff over Ukraine, seeking to apply international pressure on Russia to negotiate its concerns about European security among diplomats rather than on the battlefield.

The meeting would be a rare opportunity for Washington and its allies to discuss the actions of another permanent Security Council member-Russia-on the world stage. Set for Monday, the meeting would occur just one day before Moscow takes over the rotating presidency of the council.

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Real Matters Inc. (REAL.T) 1Q

Economic Indicators (ET):

-Nothing major scheduled

Other News:

Canada Optimistic U.S. Will Allow PEI Potato Shipments After Fungus Scare

Canada's agriculture minister said Thursday that she is optimistic about a breakthrough with the Biden administration on resuming shipments to the U.S. of fresh potatoes from the province of Prince Edward Island.

Canada in late November suspended all U.S.-bound exports of these potatoes over concerns the U.S. Department of Agriculture raised about the discovery of a potato fungus in the Atlantic Coast province.

Canadian officials said the suspension was the result of pressure from the U.S. government. The Biden administration relayed to Ottawa it intended to stop imports of fresh potatoes from Prince Edward Island if Canada didn't halt the shipments first, officials said.

The fungus, known as potato wart, isn't harmful to human health but can reduce crop production. The island's potato board has said the potato wart was discovered in fields under surveillance by Canadian food-inspection officials, and any potatoes from those properties were never destined for the U.S.

Canadian Agriculture Minister Marie-Claude Bibeau met with U.S. Agriculture Secretary Tom Vilsack in Washington on Thursday, and she told The Wall Street Journal she's confident some Prince Edward Island potatoes could be headed back to the U.S. in the next couple of weeks.

Expected Major Events for Friday

00:01/UK: 4Q BRC-LDC Vacancy Monitor

00:30/JPN: Dec Detailed Import & Export Statistics

06:30/FRA: Dec Household consumption expenditure in manufactured goods

06:30/FRA: 4Q GDP - first estimate

07:00/GER: Dec Foreign trade price indices

07:45/FRA: Dec Housing starts

07:45/FRA: Dec PPI

09:00/ITA: Jan Business Confidence Survey

09:00/ITA: Jan Consumer Confidence Survey

09:00/GER: 4Q GDP - 1st release

09:30/UK: Dec Capital issuance