4 Good Reasons to Focus on the USA: Global Week Ahead
John Blank
Updated
In the Global Week Ahead, the bulk of any trader’s time should focus on the good ol’ USA.
Why do I think that? There are four old-fashioned reasons.
First, on Wednesday, the Fed wraps up its first monetary policy meeting since raising policy rates 25 basis points in December. The Bank of Japan and the Bank of England follow suit this week.
Expect the U.S. Federal Open Market Committee (FOMC) to keep policy rates firm. However, they could provide bond market-moving detail on the timing of future rate increases. There are signs aplenty of rising U.S. consumer and wage inflation, with a firmer labor market in hand.
Economists opine the new Trump administration’s budget; regulatory and international trade regimes must be clear before the Fed moves rates again.
Second, the U.S. manufacturing sector — in the face of a much stronger U.S. dollar — gets a checkup.
On Wednesday, the influential Institute for Supply Management (ISM) releases its manufacturing purchasing managers index (PMI) for January. The ISM non-manufacturing PMI hits the tape on Friday.
Third, on Friday, the U.S. Labor Department releases the all-important non-farm payroll report for January.
Fresh jobs data offer traders a snapshot of the U.S. labor market as President Trump took office. Economists forecast U.S. employers added +170K jobs — not far off from last year’s monthly average. The U.S. jobless rate should be 4.7%, a level the Fed considers near full employment.
Fourth, don’t forget: this is still quarterly U.S. earnings season.
103 U.S. multi-nationals report EPS results. The marquee names out --with fresh results that matter to markets-- include large caps Apple, Facebook, Amazon, UPS and Exxon Mobil.
I can tactfully add a fifth reason -- showman Donald Trump -- but that might be U.S. overkill. Imagine a trading week where he doesn’t get any media attention?
I know. It’s hard.
New Zacks #1 Rank (STRONG BUY) large cap stocks—
(1) Blue Buffalo Pet Products BUFF, a Consumer Staples industry stock at $4.8 billion in market cap.
Blue Buffalo Pet develops, produces, markets and sells pet food primarily in the United States. The company is headquartered in Wilton, Connecticut.
(2) East West Bancorp EWBC, an Asia-focused bank based in Los Angeles, CA with a $7.6 billion market cap.
This company is one of the largest independent commercial banks still headquartered in California. It maintains $33 billion in assets.
(3) Hologic HOLX, a Medical Device industry stock at $11.33 billion in market cap.???
The company develops, manufactures and markets X-ray bone densitometers and ultrasound bone analyzers that address a growing market for osteoporosis prevention and treatment -- a key element of women's health care.
Key macro data and events--
Traders should focus on central bank policy. The Fed, the Bank of Japan and the Bank of England hold monetary policy meetings.
Owing to Lunar New Year celebrations, Japan and Australia’s markets are the only two major bourses open in Asia.
Big U.S. macro news will come from Friday’s non-farm payroll report. Look for a sound +170K additions and a steady, low 4.7% U.S. unemployment rate.
The U.K. parliament will formally debate Article 50 Brexit.
Apple Computer reports results on Tuesday.
On Monday, a 2-day long Bank of Japan (BoJ) policy meeting begins.
Brazil’s FGV inflation rare went to 6.65% y/y from 7.17% y/y last time. That is good news there. Getting inflation down will allow more policy rate cuts.
Germany’s most important inflation rate, the HICP (harmonized index of consumer prices) comes out. It should get to 1.9% y/y from 1.7% in a prior reading.
Japan’s unemployment rate is 3.1%.
On Tuesday, Argentina’s policy interest rate, the 7-day repo reference rate, should be left at 24.75%. That’s not a typo, folks.
The BoJ Outlook report comes out.
The U.K. Parliament holds its first debate about Article 50 Brexit. This goes on for 2 days.
Germany’s retail sales should be +3.2% y/y. Its unemployment rate is 6.0%.
France’s HICP inflation rate should be a much lower +0.8% y/y. That’s deflationary.
The Eurozone’s HICP rate should get to 1.2% y/y on the core rate, from 0.90%.
The Eurozone unemployment rate should be 9.8%.
Mexico’s GDP should get to +2.3% y/y from +2.0% y/y.
The Chicago PMI should be 53.9.
On Wednesday, Indonesia’s inflation rate should be +3.0% y/y.
The U.K.’s Nationwide House Price Index should be up +4.5% y/y.
The final Eurozone manufacturing PMI should be 55.1. That’s a nice high level, and could make for +2.0% or better GDP growth annually.
Brazils’ Markit manufacturing PMI should be 46.0.
Mexico’s Markit manufacturing PMI should go to 49.8 from a prior 50.2. It’s a small decline, but it is a decline nonetheless.
The Bank of England (BoE) holds a monetary policy committee meeting and issues a rate decision. The base rate is 0.25% right now.
The U.S. Fed wraps up its 2-day meeting.
On Thursday, U.S. initial claims for unemployment insurance should be low at 259K.
On Friday, Spain’s services PMI should be strong at 55 and Sweden is red hot at 59.9. Italy’s services PMI should be 52.3. France is at 53.9. Germany is at 53.2.
Eurozone retail trade is growing +2.3% y/y.
The U.S. non-farm payroll number should be good at +170K and the unemployment rate should remain low at 4.7%.
The U.S. ISM non-manufacturing index should get to 57.5 from 56.6.
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