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With the USA observing a Labor Day holiday, the trading week is shorted to four days for stocks listed solely there.
In turn, this Global Week Ahead looks to be dominated by non-U.S. events.
I see policy rate decisions from Australia, Canada and the European Central Bank.
I also see a series of macro data prints hailing from Mainland China. Their trade data and PPI data will get scrutiny.
There are also a series of monetary policy decision being taken outside the G10 countries (Russia, Peru, Poland, Malaysia). Note this: a number of these central banks are going to hike policy rates. Their currencies are more volatile. Hence, their central bankers are more vigilant to rapid inflation risks.
In short, this Global Week Ahead will be truly global, for once.
Next are Reuters’ five world market themes, reordered for equity traders.
Given the list is dominated by macro prints and central bank actions, I put the list in serial time order.
(1) On Tuesday, Traders See Latest Mainland China Trade Data
While the Fed lays the groundwork for tapering, talk of easing has cushioned the disappointment from poor economic data in China, where the recovery momentum has all but run dry.
Trade data on Tuesday is likely to cap a run of weak releases, most recently showing manufacturing growth at a standstill last month while services contracted — all of which is beginning to make the yuan's strength look stretched.
Economists, bouncing stocks and rallying bond markets suggest easing before the year is out, probably via cuts to banks' reserve requirement ratio.
Beijing's policymakers may need to pay special attention to property developers if they want to see growth and lending flowing again follow a crackdown on indebtedness that has set them and their lenders reeling.
(2) On Thursday, European Central Bank Meeting Ends
The European Central Bank meeting ends on Thursday, and a deluge of recent comments from policy hawks suggest it is set for a lively debate.
Euro-area inflation has surged to a 10-year high at 3%. Markets may be willing to overlook noise around price pressures, generally viewed as temporary, but the hawkish chatter from German, Dutch and Austrian officials is reason for unease.
Economists reckon it's still too early for the ECB to call time on emergency stimulus, but it could on Thursday agree to slow the pace of its bond buys.
If markets interpret such a step as hawkish, the euro and bond yields will likely rise. ECB chief Christine Lagarde has a communication challenge on her hands.
(3) On Friday, Traders See U.S. Producer Price Index (PPI) for August
Just how sticky is the latest bout of inflation?
Friday's U.S. August producer price index data could provide some clues after July showed the largest annual increase in over a decade as inflation pressures undercut the Fed's view that higher prices will likely prove transitory.
The big jump in PPI came as the swift economic recovery caused a mismatch between supply and demand, leaving producers grappling with low inventories, higher commodity prices, a global shipping container crisis and increased labor costs.
Some worry that persistent signals of rising inflation could push the Fed to roll back easy money faster than expected.
Fed Chair Jerome Powell has repeatedly said the current inflation burst is temporary and assured markets that policymakers would take a measured approach to tapering monthly bond purchases.
(4) Emerging Market Central Banks May Hike Policy Rates
The Fed, ECB and Bank of Japan may be sitting on their hands as inflation ramps up, but developing economies most certainly are not as the coming days will again show.
Volatile emerging currencies can hugely amplify price rises, so central banks need to be on their toes:
- In Russia, where inflation is at a five-year year high, interest rates are expected to rise for a fifth time this year on Friday
- Peru could jack up its rates by 50-75 basis points on Thursday, along with fellow potential hiker Ukraine
- Although Malaysia should stand pat that day
- Even eastern Europe's lone dove Poland could sound more hawkish on Wednesday
(5) Post-Afghanistan, Geopolitical Event Risks Still With Us
Commemorations of the 9/11 attacks on New York's World Trade center two decades ago take place in the wake of a chaotic pullout of Afghanistan that has raised concerns about fresh terror threats and brought a multitude of humanitarian and security challenges.
Latest events are a potent reminder that there is little sign of political risk abating, and some momentous shifts are underway from changing international alliances to political reorientations.
Not all will be as violent as the exit from Afghanistan.
But markets are paying closer attention to growing political risks:
- Japan’s struggling Prime Minister Yoshihide Suga has just decided to quit,
- Germans head to the polls in what could be a momentous Sept. 26th election as Chancellor Angela Merkel steps down after 16 years in power, and
- A November ballot in Chile could see the pendulum in the region shift further to the left.
Top Zacks #1 Ranked (STRONG BUY) Stocks
Pricy Biotech/Pharma stocks are a worthy subject this week. Three made out #1 list.
(1) Regeneron (REGN - Free Report) : This is now a $675 share price stock, creating a market cap of $72.3B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of B.
(2) Vertex Pharma (VRTX - Free Report) : This is a $199 share price stock, creating a market cap of $1.7B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of C.
(3) West Pharmaceutical Services (WST - Free Report) : This is a $459 share price stock, creating a market cap of $34B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of D.
Those steep share prices amount to sticker shock, at least for this economist.
Key Global Macro
Australia, Canada, and Europe offer up monetary policy decisions, and in that order.
On Monday, there is a Labor Day holiday in the USA. Stock markets are closed.
However, China exports (+8.1% y/y is the prior reading) for August come out.
Ditto China imports (+16.1% y/y prior) for August.
Australia’s RBA produces an interest rate decision.
On Tuesday, a Eurozone ZEW survey is out for September. The economic sentiment prior reading was 42.7.
For Germany, the ZEW economic sentiment looks to be much higher. I see a consensus for 56.7, after 40.4 in August.
Vaccines are well distributed in Europe now. It is making a huge difference to sentiment.
On Wednesday, U.S. JOLTS data should show 9.3 million job openings for July, down from 10 million the month prior. Note that this is old lagged data.
There is a Bank of Canada rate decision.
Mainland China’s PPI should be +8.8% y/y for August (+9.0% was the prior).
On Thursday, there is an ECB policy rate decision, and a press conference.
On Friday, Mainland China’s Foreign Direct Investment (FDI) for August comes out. I see +25.5% y/y was the prior reading. That is a substantial prior print. So much for a lack of interest in Mainland China FDI.
Conclusion
What about Q3 earnings for U.S. companies?
Here is what Zacks Research Director Sheraz Mian had to say:
“Estimates for 2021 Q3, whose early reports will start coming out in the coming days, have not moved up as much as had been the case in the comparable periods in the last few quarters. That said, the revisions trend remains positive and could very well gain pace as the reporting cycle gets underway.
“Total Q3 earnings for the S&P 500 index are expected to be up +26.2% from the same period last year on +13.7% higher revenues. This would follow the +94.6% earnings growth on +25.1% higher revenues in Q2.”
Have a great, albeit short, trading week.
Regards,
John Blank
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A Short Trading Week: Global Week Ahead
With the USA observing a Labor Day holiday, the trading week is shorted to four days for stocks listed solely there.
In turn, this Global Week Ahead looks to be dominated by non-U.S. events.
I see policy rate decisions from Australia, Canada and the European Central Bank.
I also see a series of macro data prints hailing from Mainland China. Their trade data and PPI data will get scrutiny.
There are also a series of monetary policy decision being taken outside the G10 countries (Russia, Peru, Poland, Malaysia). Note this: a number of these central banks are going to hike policy rates. Their currencies are more volatile. Hence, their central bankers are more vigilant to rapid inflation risks.
In short, this Global Week Ahead will be truly global, for once.
Next are Reuters’ five world market themes, reordered for equity traders.
Given the list is dominated by macro prints and central bank actions, I put the list in serial time order.
(1) On Tuesday, Traders See Latest Mainland China Trade Data
While the Fed lays the groundwork for tapering, talk of easing has cushioned the disappointment from poor economic data in China, where the recovery momentum has all but run dry.
Trade data on Tuesday is likely to cap a run of weak releases, most recently showing manufacturing growth at a standstill last month while services contracted — all of which is beginning to make the yuan's strength look stretched.
Economists, bouncing stocks and rallying bond markets suggest easing before the year is out, probably via cuts to banks' reserve requirement ratio.
Beijing's policymakers may need to pay special attention to property developers if they want to see growth and lending flowing again follow a crackdown on indebtedness that has set them and their lenders reeling.
(2) On Thursday, European Central Bank Meeting Ends
The European Central Bank meeting ends on Thursday, and a deluge of recent comments from policy hawks suggest it is set for a lively debate.
Euro-area inflation has surged to a 10-year high at 3%. Markets may be willing to overlook noise around price pressures, generally viewed as temporary, but the hawkish chatter from German, Dutch and Austrian officials is reason for unease.
Economists reckon it's still too early for the ECB to call time on emergency stimulus, but it could on Thursday agree to slow the pace of its bond buys.
If markets interpret such a step as hawkish, the euro and bond yields will likely rise. ECB chief Christine Lagarde has a communication challenge on her hands.
(3) On Friday, Traders See U.S. Producer Price Index (PPI) for August
Just how sticky is the latest bout of inflation?
Friday's U.S. August producer price index data could provide some clues after July showed the largest annual increase in over a decade as inflation pressures undercut the Fed's view that higher prices will likely prove transitory.
The big jump in PPI came as the swift economic recovery caused a mismatch between supply and demand, leaving producers grappling with low inventories, higher commodity prices, a global shipping container crisis and increased labor costs.
Some worry that persistent signals of rising inflation could push the Fed to roll back easy money faster than expected.
Fed Chair Jerome Powell has repeatedly said the current inflation burst is temporary and assured markets that policymakers would take a measured approach to tapering monthly bond purchases.
(4) Emerging Market Central Banks May Hike Policy Rates
The Fed, ECB and Bank of Japan may be sitting on their hands as inflation ramps up, but developing economies most certainly are not as the coming days will again show.
Volatile emerging currencies can hugely amplify price rises, so central banks need to be on their toes:
(5) Post-Afghanistan, Geopolitical Event Risks Still With Us
Commemorations of the 9/11 attacks on New York's World Trade center two decades ago take place in the wake of a chaotic pullout of Afghanistan that has raised concerns about fresh terror threats and brought a multitude of humanitarian and security challenges.
Latest events are a potent reminder that there is little sign of political risk abating, and some momentous shifts are underway from changing international alliances to political reorientations.
Not all will be as violent as the exit from Afghanistan.
But markets are paying closer attention to growing political risks:
Top Zacks #1 Ranked (STRONG BUY) Stocks
Pricy Biotech/Pharma stocks are a worthy subject this week. Three made out #1 list.
(1) Regeneron (REGN - Free Report) : This is now a $675 share price stock, creating a market cap of $72.3B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of B.
(2) Vertex Pharma (VRTX - Free Report) : This is a $199 share price stock, creating a market cap of $1.7B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of C.
(3) West Pharmaceutical Services (WST - Free Report) : This is a $459 share price stock, creating a market cap of $34B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of D.
Those steep share prices amount to sticker shock, at least for this economist.
Key Global Macro
Australia, Canada, and Europe offer up monetary policy decisions, and in that order.
On Monday, there is a Labor Day holiday in the USA. Stock markets are closed.
However, China exports (+8.1% y/y is the prior reading) for August come out.
Ditto China imports (+16.1% y/y prior) for August.
Australia’s RBA produces an interest rate decision.
On Tuesday, a Eurozone ZEW survey is out for September. The economic sentiment prior reading was 42.7.
For Germany, the ZEW economic sentiment looks to be much higher. I see a consensus for 56.7, after 40.4 in August.
Vaccines are well distributed in Europe now. It is making a huge difference to sentiment.
On Wednesday, U.S. JOLTS data should show 9.3 million job openings for July, down from 10 million the month prior. Note that this is old lagged data.
There is a Bank of Canada rate decision.
Mainland China’s PPI should be +8.8% y/y for August (+9.0% was the prior).
On Thursday, there is an ECB policy rate decision, and a press conference.
On Friday, Mainland China’s Foreign Direct Investment (FDI) for August comes out. I see +25.5% y/y was the prior reading. That is a substantial prior print. So much for a lack of interest in Mainland China FDI.
Conclusion
What about Q3 earnings for U.S. companies?
Here is what Zacks Research Director Sheraz Mian had to say:
“Estimates for 2021 Q3, whose early reports will start coming out in the coming days, have not moved up as much as had been the case in the comparable periods in the last few quarters. That said, the revisions trend remains positive and could very well gain pace as the reporting cycle gets underway.
“Total Q3 earnings for the S&P 500 index are expected to be up +26.2% from the same period last year on +13.7% higher revenues. This would follow the +94.6% earnings growth on +25.1% higher revenues in Q2.”
Have a great, albeit short, trading week.
Regards,
John Blank