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They center on major central banks, with the U.S. Fed, the European Central Bank (ECB) and the Bank of Japan (BoJ) meeting.
The FOMC is tipped to stop with Fed Funds rate hikes (for now).
The ECB should keep going higher (for now).
The BOJ remains in stop mode (for now).
Stock traders get U.S. consumer price inflation (CPI) data on Tuesday at 8:30 am ET.
A trove of Mainland Chinese macro data comes out across the week.
A crunch moment for the UBS and Credit Suisse merger means there's plenty happening in Swiss banking.
Next are Reuters’ five world market themes, ordered for equity traders—
(1) U.S. May CPI Out on Tuesday, and the Fed Meets Tuesday & Wednesday.
Markets get not one but two headline events with U.S. May inflation data out on Tuesday as the Fed kicks off its two-day meeting.
Signs that U.S. inflation continued to cool in May would likely be welcomed by markets, after strong jobs data bolstered the case for those betting rate hikes are easing price pressures without badly hurting growth.
Headline consumer prices are expected to rise by +0.3% on a monthly basis, after a +0.4% increase in April.
The Fed is tipped to keep borrowing costs unchanged on Wednesday, and investors will be trying to gauge appetite for more hikes ahead.
For now, markets price in just one more increase this year, an outlook investors seem comfortable with, judging by the recent strong performance of U.S. stocks.
Economists expect the Federal Reserve to pause on its tightening cycle at its June 13-14 meeting as price pressures soften and as its key rate rises above inflation for the first time since mid-2020.
(2) The European Central Bank (ECB) Meets on Thursday.
On Thursday, another 25 basis-point ECB rate hike looks likely, and traders want clues from the euro zone's central bank on what comes next. The case for the fastest hiking cycle in its history to end soon is growing.
Euro area inflation fell faster than expected in May and core inflation - stripping out volatile prices - slowed for a second month. The bloc's economy has slipped into recession and bank lending is slowing fast.
Markets reckon the ECB will be done and dusted after one further 25 bps move, which economists polled by Reuters expect in July.
But rate setters will have to be careful to keep their options open. Core inflation, only just below a record, is still high, so some hawks are keeping a post-summer hike on the table.
(3) The Bank of Japan (BoJ) Meets on Friday.
Recently-appointed BOJ Governor Kazuo Ueda says Japan's collective mindset is gradually shifting away from its decades-long belief that consumer prices and wages will stay low.
However, emerging animal spirits were nowhere to be seen in April, when a big drop in household spending exceeded even the most bearish economists' forecast.
That makes sense considering other data showed real wages sliding for a 13th straight month, even as labor unions negotiated the biggest pay increase for three decades at spring wage talks.
It all cements the market's view that it's too soon for BOJ stimulus tweaks on Friday.
Ueda has signaled ultra-easy policy will remain until wage gains and inflation are stable and sustainable.
But the BOJ has a penchant for policy surprises, meaning complacency could prove painful.
(4) Has Peak Pessimism Passed on Mainland China’s Economy?
Hopes that China could soon roll out further stimulus measures are running high, putting a floor under pessimism over a lackluster post-COVID economic recovery.
Property developer shares have rallied on speculation of a new property support package. A huge miss in China's May exports barely caused a dent in the market, as investors bet the weak data strengthens the case for stimulus.
May new home price data is due Thursday, after a private survey showed new home prices fell for the first time in four months in May and home sales slumped.
Other data released on Thursday could shed light on rising unemployment and cautious consumer sentiment, which have also hurt the economy.
As each data point bolsters expectations for fresh stimulus, peak pessimism on China's economy has perhaps passed.
(5) The Swiss May Finalize the UBS-Credit Suisse Deal.
The rush to finalize a deal between Switzerland's largest banks may soon be over, withUBS expecting to complete the acquisition of rival Credit Suisse as early as June 12.
With it come questions of what the newly created super-bank, with a balance sheet of $1.6 trillion and overseeing assets of $5 trillion, will look like.
Many Swiss fear the combined bank will be too big and risky for the small, albeit wealthy, country.
They are worried it will be hard to regulate and, if it ran into trouble, it could suck in the state. Swiss regulators already failed to avert disaster at Credit Suisse.
And what will happen to Credit Suisse's domestic business, seen as the collapsed bank's crown jewel, along with the thousands it employs?
UBS already said culls to the combined bank's workforce of 120,000 are coming.
Zacks #1 Rank (STRONG BUY) stocks
There are two large Building Products-Materials stocks in our latest Zacks #1 Rank list to look into…and one large Medical Products Company.
(1) Zimmer Biomet ((ZBH - Free Report) ): This Medical Products company’s stock has a market cap of $27.5B.
I see a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of F.
Headquartered in Warsaw, IN, Zimmer Biomet is a leading musculoskeletal healthcare company that designs, manufactures and markets orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
With operations in over 25 countries, Zimmer markets products in more than 100 countries.
In 2015, Zimmer Holdings, Inc. (the legacy company) acquired Biomet, Inc. to form a new consolidated company.
Zimmer Biomet's Product Portfolio
Four Zimmer product categories were retained after the merger.
These are:
Knees (comprising 41.3% of total revenues in 2022; up 4.7% from 2021): Major products include Persona personalized knee system, NexGen complete knee solution, Vanguard Knee, Oxford Partial Knee.
Hips (26.8%; up 1.7%): Significant hip brands include Zimmer M/L Taper Hip Prosthesis, Taperloc Hip System, Arcos Modular Hip System, Continuum Acetabular System, G7 Acetabular System.
S.E.T. (23.2%; up 3.3%): This product category has been created comprising Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma. The brands include Intellicart System, A.T.S. Tourniquet Systems, JuggerKnot Soft Anchor System, Gel-One 1 Cross-linked Hyaluronate, Trabecular Metal TM Reverse Shoulder System, Comprehensive Shoulder among others.
In addition, there is a standalone Other category (8.7%, down 4.4%). That includes bone cement and office based technology products.
Zimmer Biomet completed the spinoff of its Spine and dental businesses on March 1st, 2022.
Zimmer Biomet's geographic segments are the Americas, Europe, Middle East & Africa (EMEA) and Asia Pacific.
(2) Vulcan Materials ((VMC - Free Report) ): This is a $206 stock found in the Building Products-Concrete and Aggregates industry.
This company’s stock has a market cap of $27.3B.
I see a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of B.
Based in Birmingham, AL, Vulcan Materials Company is engaged in the production, distribution and sale of construction aggregates and other construction materials in the U.S. and Mexico.
As of Dec 31st, 2023, it had 404 active aggregates facilities, 71 asphalt facilities, 142 concrete facilities and 1 calcium facility.
The company has four operating segments going by the principal product lines: Aggregates, Concrete, Asphalt mix and Calcium.
Aggregates (64.6% of 2022 total revenues): The segment produces and sells aggregates like crushed stone, sand and gravel and other aggregates. The segment mainly focuses on the U.S. markets. The end uses of Vulcan’s aggregates include public construction (such as highways, walkways, airport runways, parking lots and railroads) as well as private residential (single-family houses, duplexes, apartment buildings and condominiums) and private non-residential (manufacturing, retail, offices, industrial and institutional) construction. Aggregates inter-segment sales accounted for 7.5% of its total revenues.
Asphalt Mix (13.5%): The Asphalt Mix segment produces and sells asphalt mix in Alabama, Arizona, California, New Mexico, Tennessee and Texas. Aggregates are a major component in asphalt mix, comprising approximately 95% by weight of this product.
Concrete (21.8%): The Concrete segment deals with the production and sale of ready-mix concrete in California, Maryland, New Jersey, New York, Oklahoma, Pennsylvania, Texas, Virginia, the U.S. Virgin Islands, and Washington DC. This segment functions as a customer of the Aggregates segment, as aggregates are a major component in ready-mix concrete (comprising nearly 80% of the weight of this product).
Calcium (0.1%): The Calcium segment is composed of a single operation in Brooksville, FL. This facility produces calcium products for the animal feed, plastics and water treatment industries with high-quality calcium carbonate material mined at the Brooksville quarry.
(3) Martin Marietta Materials ((MLM - Free Report) ): This is a $425 stock also found in the Building Products and Concrete Aggregates industry.
This company’s stock has a market cap of $26.2B.
I see a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of B.
Based in Raleigh, NC, Martin Marietta Materials, Inc. produces and supplies construction aggregates and other heavy building materials, mainly cement, in the United States.
The end uses of the company’s aggregates and cement are infrastructure, private residential and private non-residential construction. Railroad, agricultural, utility and environmental industries also use these products.
The company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 350 quarries, mines and distribution yards in 28 states, Canada and the Bahamas.
The company’s total revenues include sales of products and services to customers (net of any discounts or allowances) and freight revenues.
Building Materials (accounting for 95.1% of 2022 total revenues): The Building Materials business includes aggregates, cement, ready mixed concrete, asphalt and paving product lines.
Within the Building Materials business segment, the company modified the reportable segments to the East Group — previously reported in the Mid-America and Southeast — and West Group, effective July 1st, 2020.
Magnesia Specialties (4.9%): The segment produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.
Consistent with its SOAR (Strategic Operating Analysis and Review) 2025 plan, Martin Marietta divested its Colorado and Central Texas ready-mixed concrete businesses and certain West Coast cement and ready-mixed concrete operations in 2022. The move helps MLM in refining its product mix and improving margin profiles, while providing balance sheet flexibility.
Key Global Macro
On Monday, Mainland China’s Foreign Direct Investment (FDI) for May comes out. It was up +2.2% y/y in the prior reading.
On Tuesday, the U.K.’s ILO unemployment rate comes out for April. I see a 3.9% prior reading, and a consensus of 4.0%.
The U.S. Consumer Price Index (CPI) for May should be +4.2% y/y, after printing +4.9% y/y in April.
The core ex food & energy CPI should e +5.6% y/y, after printing +5.5% in April.
On Wednesday, the U.S. Producer Price Index (PPI) should be +1.1% y/y for May, after printing +2.3% y/y in April.
The FOMC’s June monetary policy statement comes out, along with its latest economic projections. There is a Chair Powell presser too.
On Thursday, Mainland China’s fixed asset investment for May should be +4.8% y/y, after printing +4.7% y/y in April.
Mainland China’s Industrial productions for May should be up +2.9% y/y, with +5.6% the prior print.
Mainland China’s retail sales for May should be up +14.5% y/y, after printing +18.4% y/y in April.
The ECB monetary policy decision statement comes out.
On Friday, the BoJ monetary policy statement comes out.
The Eurozone HICP (their CPI) for May should be +6.1% y/y after +6.1% y/y printed in the prior month.
Conclusion
Stock traders: It is time for a repetitive statement.
You don’t fight the Fed.
And you certainly don’t fight the Fed, the ECB, and the BoJ.
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist.
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The FOMC, ECB, and BoJ: Global Week Ahead
Key risk market moments in the Global Week Ahead?
They center on major central banks, with the U.S. Fed, the European Central Bank (ECB) and the Bank of Japan (BoJ) meeting.
Stock traders get U.S. consumer price inflation (CPI) data on Tuesday at 8:30 am ET.
A trove of Mainland Chinese macro data comes out across the week.
A crunch moment for the UBS and Credit Suisse merger means there's plenty happening in Swiss banking.
Next are Reuters’ five world market themes, ordered for equity traders—
(1) U.S. May CPI Out on Tuesday, and the Fed Meets Tuesday & Wednesday.
Markets get not one but two headline events with U.S. May inflation data out on Tuesday as the Fed kicks off its two-day meeting.
Signs that U.S. inflation continued to cool in May would likely be welcomed by markets, after strong jobs data bolstered the case for those betting rate hikes are easing price pressures without badly hurting growth.
Headline consumer prices are expected to rise by +0.3% on a monthly basis, after a +0.4% increase in April.
The Fed is tipped to keep borrowing costs unchanged on Wednesday, and investors will be trying to gauge appetite for more hikes ahead.
For now, markets price in just one more increase this year, an outlook investors seem comfortable with, judging by the recent strong performance of U.S. stocks.
Economists expect the Federal Reserve to pause on its tightening cycle at its June 13-14 meeting as price pressures soften and as its key rate rises above inflation for the first time since mid-2020.
(2) The European Central Bank (ECB) Meets on Thursday.
On Thursday, another 25 basis-point ECB rate hike looks likely, and traders want clues from the euro zone's central bank on what comes next. The case for the fastest hiking cycle in its history to end soon is growing.
Euro area inflation fell faster than expected in May and core inflation - stripping out volatile prices - slowed for a second month. The bloc's economy has slipped into recession and bank lending is slowing fast.
Markets reckon the ECB will be done and dusted after one further 25 bps move, which economists polled by Reuters expect in July.
But rate setters will have to be careful to keep their options open. Core inflation, only just below a record, is still high, so some hawks are keeping a post-summer hike on the table.
(3) The Bank of Japan (BoJ) Meets on Friday.
Recently-appointed BOJ Governor Kazuo Ueda says Japan's collective mindset is gradually shifting away from its decades-long belief that consumer prices and wages will stay low.
However, emerging animal spirits were nowhere to be seen in April, when a big drop in household spending exceeded even the most bearish economists' forecast.
That makes sense considering other data showed real wages sliding for a 13th straight month, even as labor unions negotiated the biggest pay increase for three decades at spring wage talks.
It all cements the market's view that it's too soon for BOJ stimulus tweaks on Friday.
Ueda has signaled ultra-easy policy will remain until wage gains and inflation are stable and sustainable.
But the BOJ has a penchant for policy surprises, meaning complacency could prove painful.
(4) Has Peak Pessimism Passed on Mainland China’s Economy?
Hopes that China could soon roll out further stimulus measures are running high, putting a floor under pessimism over a lackluster post-COVID economic recovery.
Property developer shares have rallied on speculation of a new property support package. A huge miss in China's May exports barely caused a dent in the market, as investors bet the weak data strengthens the case for stimulus.
May new home price data is due Thursday, after a private survey showed new home prices fell for the first time in four months in May and home sales slumped.
Other data released on Thursday could shed light on rising unemployment and cautious consumer sentiment, which have also hurt the economy.
As each data point bolsters expectations for fresh stimulus, peak pessimism on China's economy has perhaps passed.
(5) The Swiss May Finalize the UBS-Credit Suisse Deal.
The rush to finalize a deal between Switzerland's largest banks may soon be over, with UBS expecting to complete the acquisition of rival Credit Suisse as early as June 12.
With it come questions of what the newly created super-bank, with a balance sheet of $1.6 trillion and overseeing assets of $5 trillion, will look like.
Many Swiss fear the combined bank will be too big and risky for the small, albeit wealthy, country.
They are worried it will be hard to regulate and, if it ran into trouble, it could suck in the state. Swiss regulators already failed to avert disaster at Credit Suisse.
And what will happen to Credit Suisse's domestic business, seen as the collapsed bank's crown jewel, along with the thousands it employs?
UBS already said culls to the combined bank's workforce of 120,000 are coming.
Zacks #1 Rank (STRONG BUY) stocks
There are two large Building Products-Materials stocks in our latest Zacks #1 Rank list to look into…and one large Medical Products Company.
(1) Zimmer Biomet ((ZBH - Free Report) ): This Medical Products company’s stock has a market cap of $27.5B.
I see a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of F.
Headquartered in Warsaw, IN, Zimmer Biomet is a leading musculoskeletal healthcare company that designs, manufactures and markets orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants; and related surgical products.
With operations in over 25 countries, Zimmer markets products in more than 100 countries.
In 2015, Zimmer Holdings, Inc. (the legacy company) acquired Biomet, Inc. to form a new consolidated company.
Zimmer Biomet's Product Portfolio
Four Zimmer product categories were retained after the merger.
These are:
Zimmer Biomet completed the spinoff of its Spine and dental businesses on March 1st, 2022.
Zimmer Biomet's geographic segments are the Americas, Europe, Middle East & Africa (EMEA) and Asia Pacific.
(2) Vulcan Materials ((VMC - Free Report) ): This is a $206 stock found in the Building Products-Concrete and Aggregates industry.
This company’s stock has a market cap of $27.3B.
I see a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of B.
Based in Birmingham, AL, Vulcan Materials Company is engaged in the production, distribution and sale of construction aggregates and other construction materials in the U.S. and Mexico.
As of Dec 31st, 2023, it had 404 active aggregates facilities, 71 asphalt facilities, 142 concrete facilities and 1 calcium facility.
The company has four operating segments going by the principal product lines: Aggregates, Concrete, Asphalt mix and Calcium.
(3) Martin Marietta Materials ((MLM - Free Report) ): This is a $425 stock also found in the Building Products and Concrete Aggregates industry.
This company’s stock has a market cap of $26.2B.
I see a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of B.
Based in Raleigh, NC, Martin Marietta Materials, Inc. produces and supplies construction aggregates and other heavy building materials, mainly cement, in the United States.
The end uses of the company’s aggregates and cement are infrastructure, private residential and private non-residential construction. Railroad, agricultural, utility and environmental industries also use these products.
The company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 350 quarries, mines and distribution yards in 28 states, Canada and the Bahamas.
The company’s total revenues include sales of products and services to customers (net of any discounts or allowances) and freight revenues.
Consistent with its SOAR (Strategic Operating Analysis and Review) 2025 plan, Martin Marietta divested its Colorado and Central Texas ready-mixed concrete businesses and certain West Coast cement and ready-mixed concrete operations in 2022. The move helps MLM in refining its product mix and improving margin profiles, while providing balance sheet flexibility.
Key Global Macro
On Monday, Mainland China’s Foreign Direct Investment (FDI) for May comes out. It was up +2.2% y/y in the prior reading.
On Tuesday, the U.K.’s ILO unemployment rate comes out for April. I see a 3.9% prior reading, and a consensus of 4.0%.
The U.S. Consumer Price Index (CPI) for May should be +4.2% y/y, after printing +4.9% y/y in April.
The core ex food & energy CPI should e +5.6% y/y, after printing +5.5% in April.
On Wednesday, the U.S. Producer Price Index (PPI) should be +1.1% y/y for May, after printing +2.3% y/y in April.
The FOMC’s June monetary policy statement comes out, along with its latest economic projections. There is a Chair Powell presser too.
On Thursday, Mainland China’s fixed asset investment for May should be +4.8% y/y, after printing +4.7% y/y in April.
Mainland China’s Industrial productions for May should be up +2.9% y/y, with +5.6% the prior print.
Mainland China’s retail sales for May should be up +14.5% y/y, after printing +18.4% y/y in April.
The ECB monetary policy decision statement comes out.
On Friday, the BoJ monetary policy statement comes out.
The Eurozone HICP (their CPI) for May should be +6.1% y/y after +6.1% y/y printed in the prior month.
Conclusion
Stock traders: It is time for a repetitive statement.
You don’t fight the Fed.
And you certainly don’t fight the Fed, the ECB, and the BoJ.
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist.