| Good morning. An imminent Italian government shake-up, a supersized buyback and megacap earnings. Here's what's moving markets. Conte's ManeuverItalian Prime Minister Giuseppe Conte will resign this morning to avoid a damaging defeat in the Senate and maneuver to return at the head of a new government. According to unnamed officials, the gambit is that by preemptively offering his resignation to Italy's president, Conte will then be asked to take another shot at putting together a government. Conte has been under pressure to resign from the largest parties within his ruling coalition after a junior ally, Matteo Renzi's Italy Alive, pulled out, depriving Conte of his majority in parliament. Italy's stock benchmark underperformed European peers on Monday, amid mounting signs of a government shake-up. Vaccine RideIt's been 24 hours of mixed news on the pandemic front. As Merck abandoned its pursuit of a vaccine amid lackluster trial data, the World Health Organization warned that vaccine coverage won't reach a point that would stop transmission of the virus in the foreseeable future. The European Union plans to require notification about intentions to export vaccines from facilities in the EU to other countries as the bloc lags behind both the U.S. and the U.K. in terms of doses administered as a share of its population. Meanwhile, Moderna said its vaccine will protect against both the South African and U.K. strains of the coronavirus, and European countries including Germany, France and the U.K. logged fewer new cases. Double TimeUBS will bolster shareholder returns with plans to buy back 4 billion francs ($4.5 billion) of shares over the next three years after rising fee income and investment bank revenue propelled gains at the world's largest wealth manager. The lender is doubling the size of a previous repurchase program and said it expects to buy back up to $1.1 billion of shares in the first quarter, according to a statement this morning. The bank finished the year strongly, with fourth quarter net income of $1.7 billion much higher than analyst estimates and the wealth manager meeting or beating all of its 2020 targets. Megacap WeekWith Microsoft, Verizon, and Johnson & Johnson reporting today and Apple, Facebook and Tesla due tomorrow, it's peak earnings season in the U.S. Companies representing 35.8% of the S&P 500's market capitalization report this week. So far, most U.S. companies who posted profit that beat analyst expectations for the fourth-quarter ended up underperforming the benchmark, as investors focus on outlook instead. Microsoft and Facebook are expected to post forward 12-month EPS growth that's slower than the weighted average of S&P 500 members, and may need to amp up expectations to reinvigorate shares, Bloomberg Intelligence writes. Coming Up…UBS and Novartis just announced year-end results, ringing in a red hot earnings day on both sides of the Atlantic. Switzerland's biggest bank beat expectations, while Europe's second-largest pharma company narrowly missed estimates. French luxury group LVMH is expected after markets close. A U.K. decision on stricter border controls, reports of which spooked travel-related stocks yesterday, is expected in the course of the day. HSBC's CEO Noel Quinn is likely to face uncomfortable questions about frozen accounts of Hong Kong democracy activists when he appears at a U.K. parliament hearing this afternoon. What We've Been ReadingThis is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morningU.S. stocks are moving ever less in tandem, to a degree that has preceded equity market selloffs in recent years. The S&P 500 Index's three-month realized correlation -- a gauge of how closely the top stocks in the benchmark move relative to each other -- has fallen to just 0.16, its lowest in a year and an extreme level relative to history. A maximum possible correlation of 1.0 would signify all the shares are moving in lockstep. Behind much of the decline is a combination of the stock rotation seen after the election of President Joe Biden -- as investors positioned for the likelihood of further stimulus -- and equity moves due to the current earnings season. But low correlations are also seen as a gauge of weakening market breadth and have occurred before recent stock market corrections, such as those in 2018. The S&P correlation index hit a record low 0.06 in December 2017, a month before the "Volmageddon" correction in U.S. equities began in January. It fell again to 0.10 that October, just before an end-of-year slump in U.S. stocks brought them to the cusp of a bear market. Still, low correlations are welcomed by fund managers looking to beat indexes through stock picking because if most equities are moving in the same direction, it's difficult to choose one that stands out from the crowd.  Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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