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In the Global Week Ahead, Jackson Hole, Wyoming, is the focal point for markets.
Both stock traders and long-term investors alike will zero in on the Fed's annual confab.
Business activity (manufacturing PMI) indicators in the Euro Zone, and a key inflation gauge (core PCE) in the United States, are also on tap.
Meanwhile, policy rate cuts could start the week, coming from Mainland China’s PBoC.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) The KC Fed’s Jackson Hole summer conference is the top attraction
How big will future rate hikes be? How strong is the economy? What about quantitative tightening?
Investors hope the Federal Reserve may shed light on those questions when central banking heavyweights meet on Aug. 25-27 for their annual symposium in Jackson Hole, Wyoming.
U.S. stocks have screamed higher this summer, despite Fed warnings that expectations of a peak in inflation and a so-called dovish pivot from the central bank may be premature.
Some investors believe Chairman Jerome Powell will push back against the market’s optimism again, reminding investors that there is one more inflation report and another jobs number before the Fed’s September meeting.
Also in demand are further details on the Fed’s reduction of its $9 trillion balance sheet, known as quantitative tightening, which some investors have flagged as a potential risk to market liquidity.
(2) Flash PMI data will show how badly the Eurozone is hurting
Concerns the Eurozone economy is hurtling toward recession are building. Flash purchasing managers index survey data should shed some light on how soon that might happen.
The August numbers, due on Tuesday, may show another month of business activity contraction after S&P Global's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, fell to a 17-month low of 49.9 in July.
Eurozone businesses are struggling from soaring energy prices and shortages, surging inflation and expectations of higher interest rates. An economic sentiment index for Eurozone powerhouse Germany recently showed investor sentiment falling in August as fears grow that the rising cost of living will hit private consumption.
Tuesday will also include the release of flash PMI numbers for the United States and Britain.
(3) On Monday, the People’s Bank of China (PBoC) sets policy rates
More rate cuts loom in China, but analysts and investors doubt they will give any support to an economy ravaged by a property crisis and strangling COVID-19 lockdowns.
The People's Bank of China sets the so-called Loan Prime Rate for one-year and five-year borrowing on Monday — the basis for business loans and mortgages, respectively — after recently surprising markets by cutting key bank lending rates.
The move stoked slowdown fears that sent the yuan sliding to a two-month low.
The PBOC is prodding banks to lend more, and pouring money into the financial system. But demand to borrow simply is not there, with corporates fretting about the economic outlook and consumers wary with property prices plunging.
(4) The release of Personal Consumption Expenditure (PCE) data will draw focus from inflation worriers this week
With markets twitching on any inkling that surging inflation has peaked or remains at four-decade highs, the U.S. Federal Reserve's preferred measure of prices is due on Aug. 26.
The release of the Personal Consumption Expenditures (PCE) price index for July comes after another key inflation measure, the Consumer Price Index (CPI), was flat on a monthly basis in July, the largest month-on-month deceleration of price increases since 1973, a result that heartened stock investors.
In the 12 months through June, the PCE price index advanced 6.8%, the largest increase since January 1982.
With recession fears lingering and investors eager for any clues about the economy's strength, data on New Home Sales hits on Tuesday and Durable Goods on Wednesday.
(5) Six months of war in Ukraine
Wednesday marks the six-month anniversary of Russia's invasion of Ukraine, or “special military operation,” as Moscow called it.
Not only has it been a humanitarian tragedy and plunged the world into a new Cold War, it has also been a key driver of mounting recession worries, especially in Europe where a gas crisis looms large.
The region's gas prices have nearly tripled since June alone. Rationing in powerhouse economies like Germany may well be needed, but the ECB, Bank of England and others are adamant they simply must crush the inflation it is fueling.
Other highly sensitive markets have proved remarkably elastic. Wheat and corn — of which Ukraine and Russia are both huge suppliers — have swooped right back down, while Moscow's main source of income, oil, is now selling for less than when the invasion started.
Top Zacks #1 Rank (STRONG BUY) stocks
(1) Arista Networks (ANET - Free Report) : This is a $129 communication components tech stock, with a market cap of $40.3B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) STMicroelectronics (STM - Free Report) : This is a $37 general semi chip stock, with a market cap of $34.4B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of B.
(3) Extra Space Storage (EXR - Free Report) : This is a $212 REIT and Equity Trust stock, with a market cap of $28.5B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of B.
Key Global Macro
On Friday, I would look into what Fed Chair Powell actually says at Jackson Hole. His paper will come out in advance, sometime during the latter part of the week.
On Monday, the People’s Bank of China (PBoC) rate decision happens. The prior level was 3.7% on the key policy loan rate there.
On Tuesday, Japan’s Jibun Bank manufacturing PMI should be 51.8 in a flash preliminary reading, down slightly from a 52.1 reading prior.
The Eurozone global manufacturing PMI should be 49 in July in a flash preliminary reading, down from 49.8 prior.
The U.S. global manufacturing PMI should be 51.5 in a flash preliminary reading, down from 52.2 prior.
On Wednesday, U.S. Durable Goods Orders, ex-defense, should be flat (0.0%) after showing a +0.5% reading prior.
U.S. pending home sales data comes out for July. The prior reading in y/y terms, was off -20%.
On Thursday, the U.S. core Personal Consumption Expenditures (PCE) data in y/y terms should be +4.4%.
Q2 U.S. GDP growth should be -0.8%, in a second reading. It was -0.9% in the first reading.
On Friday, the core PCE price index (y/y for July) should be +4.8%, down slightly from 4.9%.
The Jackson Hole Symposium happens.
Conclusion
Nothing spells out summer recess — for stock and bond traders — better than hearing about the annual Jackson Hole Fed conference.
According to information put out—
The Federal Reserve Bank of Kansas City hosts dozens of central bankers, policymakers, academics and economists from around the world at its annual economic policy symposium in Jackson Hole, WY.
Symposium participants include:
prominent central bankers
finance ministers
academics, and
financial market participants from around the world
The participants convene to discuss the economic issues, implications, and policy options pertaining to the symposium topic. The symposium proceedings include papers, commentary, and discussion.
The goal of the Economic Policy Symposium (when it began four decades ago) was to provide a vehicle for promoting public discussion and exchanging ideas (and to attract inflation hawk and Fed Chair Paul Volcker, who liked to go fly fishing).
Throughout the event’s history in Jackson Hole, attendees from 70 countries have gathered to share their diverse perspectives and experiences.
The 2022 Economic Policy Symposium, "Reassessing Constraints on the Economy and Policy," will be held August 25th to August 27th.
That’s it for me.
Have a nice trading week.
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
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Jackson Hole: Global Week Ahead
In the Global Week Ahead, Jackson Hole, Wyoming, is the focal point for markets.
Both stock traders and long-term investors alike will zero in on the Fed's annual confab.
Business activity (manufacturing PMI) indicators in the Euro Zone, and a key inflation gauge (core PCE) in the United States, are also on tap.
Meanwhile, policy rate cuts could start the week, coming from Mainland China’s PBoC.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) The KC Fed’s Jackson Hole summer conference is the top attraction
How big will future rate hikes be? How strong is the economy? What about quantitative tightening?
Investors hope the Federal Reserve may shed light on those questions when central banking heavyweights meet on Aug. 25-27 for their annual symposium in Jackson Hole, Wyoming.
U.S. stocks have screamed higher this summer, despite Fed warnings that expectations of a peak in inflation and a so-called dovish pivot from the central bank may be premature.
Some investors believe Chairman Jerome Powell will push back against the market’s optimism again, reminding investors that there is one more inflation report and another jobs number before the Fed’s September meeting.
Also in demand are further details on the Fed’s reduction of its $9 trillion balance sheet, known as quantitative tightening, which some investors have flagged as a potential risk to market liquidity.
(2) Flash PMI data will show how badly the Eurozone is hurting
Concerns the Eurozone economy is hurtling toward recession are building. Flash purchasing managers index survey data should shed some light on how soon that might happen.
The August numbers, due on Tuesday, may show another month of business activity contraction after S&P Global's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, fell to a 17-month low of 49.9 in July.
Eurozone businesses are struggling from soaring energy prices and shortages, surging inflation and expectations of higher interest rates. An economic sentiment index for Eurozone powerhouse Germany recently showed investor sentiment falling in August as fears grow that the rising cost of living will hit private consumption.
Tuesday will also include the release of flash PMI numbers for the United States and Britain.
(3) On Monday, the People’s Bank of China (PBoC) sets policy rates
More rate cuts loom in China, but analysts and investors doubt they will give any support to an economy ravaged by a property crisis and strangling COVID-19 lockdowns.
The People's Bank of China sets the so-called Loan Prime Rate for one-year and five-year borrowing on Monday — the basis for business loans and mortgages, respectively — after recently surprising markets by cutting key bank lending rates.
The move stoked slowdown fears that sent the yuan sliding to a two-month low.
The PBOC is prodding banks to lend more, and pouring money into the financial system. But demand to borrow simply is not there, with corporates fretting about the economic outlook and consumers wary with property prices plunging.
(4) The release of Personal Consumption Expenditure (PCE) data will draw focus from inflation worriers this week
With markets twitching on any inkling that surging inflation has peaked or remains at four-decade highs, the U.S. Federal Reserve's preferred measure of prices is due on Aug. 26.
The release of the Personal Consumption Expenditures (PCE) price index for July comes after another key inflation measure, the Consumer Price Index (CPI), was flat on a monthly basis in July, the largest month-on-month deceleration of price increases since 1973, a result that heartened stock investors.
In the 12 months through June, the PCE price index advanced 6.8%, the largest increase since January 1982.
With recession fears lingering and investors eager for any clues about the economy's strength, data on New Home Sales hits on Tuesday and Durable Goods on Wednesday.
(5) Six months of war in Ukraine
Wednesday marks the six-month anniversary of Russia's invasion of Ukraine, or “special military operation,” as Moscow called it.
Not only has it been a humanitarian tragedy and plunged the world into a new Cold War, it has also been a key driver of mounting recession worries, especially in Europe where a gas crisis looms large.
The region's gas prices have nearly tripled since June alone. Rationing in powerhouse economies like Germany may well be needed, but the ECB, Bank of England and others are adamant they simply must crush the inflation it is fueling.
Other highly sensitive markets have proved remarkably elastic. Wheat and corn — of which Ukraine and Russia are both huge suppliers — have swooped right back down, while Moscow's main source of income, oil, is now selling for less than when the invasion started.
Top Zacks #1 Rank (STRONG BUY) stocks
(1) Arista Networks (ANET - Free Report) : This is a $129 communication components tech stock, with a market cap of $40.3B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) STMicroelectronics (STM - Free Report) : This is a $37 general semi chip stock, with a market cap of $34.4B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of B.
(3) Extra Space Storage (EXR - Free Report) : This is a $212 REIT and Equity Trust stock, with a market cap of $28.5B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of B.
Key Global Macro
On Friday, I would look into what Fed Chair Powell actually says at Jackson Hole. His paper will come out in advance, sometime during the latter part of the week.
On Monday, the People’s Bank of China (PBoC) rate decision happens. The prior level was 3.7% on the key policy loan rate there.
On Tuesday, Japan’s Jibun Bank manufacturing PMI should be 51.8 in a flash preliminary reading, down slightly from a 52.1 reading prior.
The Eurozone global manufacturing PMI should be 49 in July in a flash preliminary reading, down from 49.8 prior.
The U.S. global manufacturing PMI should be 51.5 in a flash preliminary reading, down from 52.2 prior.
On Wednesday, U.S. Durable Goods Orders, ex-defense, should be flat (0.0%) after showing a +0.5% reading prior.
U.S. pending home sales data comes out for July. The prior reading in y/y terms, was off -20%.
On Thursday, the U.S. core Personal Consumption Expenditures (PCE) data in y/y terms should be +4.4%.
Q2 U.S. GDP growth should be -0.8%, in a second reading. It was -0.9% in the first reading.
On Friday, the core PCE price index (y/y for July) should be +4.8%, down slightly from 4.9%.
The Jackson Hole Symposium happens.
Conclusion
Nothing spells out summer recess — for stock and bond traders — better than hearing about the annual Jackson Hole Fed conference.
According to information put out—
The Federal Reserve Bank of Kansas City hosts dozens of central bankers, policymakers, academics and economists from around the world at its annual economic policy symposium in Jackson Hole, WY.
Symposium participants include:
The participants convene to discuss the economic issues, implications, and policy options pertaining to the symposium topic. The symposium proceedings include papers, commentary, and discussion.
The goal of the Economic Policy Symposium (when it began four decades ago) was to provide a vehicle for promoting public discussion and exchanging ideas (and to attract inflation hawk and Fed Chair Paul Volcker, who liked to go fly fishing).
Throughout the event’s history in Jackson Hole, attendees from 70 countries have gathered to share their diverse perspectives and experiences.
The 2022 Economic Policy Symposium, "Reassessing Constraints on the Economy and Policy," will be held August 25th to August 27th.
That’s it for me.
Have a nice trading week.
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist