In the Global Week Ahead, the Trump administration kicks off its first 100 days.
Much like whitecaps hitting shore on a stormy lake, expect this President’s executive orders to land in a fast and furious fashion.
These could include: orders on immigration policy, withdrawing from the Trans-Pacific Partnership (the TPP), establishing a group to renegotiate NAFTA and firing off a letter to leaders in Canada and Mexico, approving the Keystone pipeline, boosting coal and repealing some gun control legislation.
Acting like another Loch Ness monster, the Brexit serpent agitates the political waters in the U.K.
On Tuesday, the U.K. Supreme Court should affirm a lower court ruling: The U.K. Parliament must vote to trigger Article 50. FX strategists write of any subsequent U.K. pound rally as “limited and short-lived.”
Despite strident political activism here and across the pond, a strengthening U.S. economy will endure. This is the deep water beneath the surface. On Friday in the U.S., the latest snapshot of real GDP growth hits the tape.
According to the Jan. 19th GDPNow forecast, real GDP growth should be supportive at +2.8% in Q4. This is down a bit from a +3.5% Q3 final rate. Mind you, Q4 data serves up a preliminary estimate. There are 2 revisions down the road.
All week long, stock traders also digest a steady diet of Q4 EPS reports.
More than 20% of S&P 500 companies report Q4 results this week. The list includes large-cap marquees -- Google-parent Alphabet, Yahoo, Intel, Microsoft, McDonald’s, Starbucks, Boeing, Lockheed Martin, Comcast, Verizon, Ford, 3M, Dow and Caterpillar.
Hint: Take Q4 U.S. real GDP growth – add +2% as a proxy inflation gain -- and compare the sum to nominal revenue growth reported by each U.S. company. That compare-and-contrast exercise should be provocative about where outperforming revenue growth can be found in the U.S. economy.
When writing this week’s column, I used the analogy of a stormy lake as a literary device. I use what I learned, spending summers as a boy in Northern Minnesota. Whitecaps from strong winds can churn the surface all they want. The deep lake beneath can remain relatively calm, moved only by hidden currents.
Top Zacks #1 Rank (STRONG BUY) Large Cap Stocks—
(1) Goldman Sachs GS
Goldman Sachs is a global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base.
(2) Honda Motor HMC
Honda manufactures a wide range of products, including motorcycles, ATVs, generators, marine engines, lawn and garden equipment and automobiles. Historically, Honda has been a leader in fuel-efficiency and low-emission technology.