This is a Global Week Ahead full of major central bank decisions.

Policymakers in the United States, Japan, and Britain are all due to reconsider their policy lending rates.

Meanwhile, share markets will be on edge, over more earnings from 4 U.S. tech giants.

In Venezuela, voters headed to the polls on Sunday, to try elect a new President.

Next are Reuters’ five world market themes, reordered for equity traders—

(1) On Wednesday, the FOMC and Powell Supply Guidance. Plus, on Friday, July Nonfarm Payrolls Come Out.

The steep selloff in markets in recent days is shining a spotlight on the Federal Reserve, which concludes its July monetary policy meeting on Wednesday.

Signs of economic concern from the Fed could give investors — already unnerved by turbulence in U.S. tech stocks — yet another reason to worry.

As it is, investors believe the time to ease monetary policy is swiftly approaching: futures tied to the Fed funds rate show investors pricing in a more than 90% chance of a September rate cut amid evidence of cooling inflation and a nascent downshift in the jobs market.

U.S. employment data due Aug. 2nd will give investors the opportunity to assess whether the gradual signs of slowing that bolstered rate cut expectations have continued in July.

Economists polled by Reuters expect the U.S. to have created +185K jobs in July, compared with +206K in the prior month.

(2) Four Mega-cap Tech Stocks Report Q2-24 Earnings.

Spooked investors also face a minefield of Big Tech earnings, with misses threatening to further upend a market roiled by worries over stretched stock valuations.

Microsoft is scheduled to report earnings on Tuesday, followed by Facebook-parent Meta on Wednesday and Apple and Amazon on Thursday.

Disappointing numbers could re-ignite the worries that caused a crushing selloff in U.S. stocks on Wednesday, when both the S&P 500 and Nasdaq suffered their worst day since late 2022.

The huge run-up in tech stocks may have set a high bar for their results. Google-parent Alphabet, whose earnings were one of the triggers for the recent selloff, actually reported better-than-expected revenue.

But investors grew wary that rising spending on AI infrastructure could squeeze margins, sending the shares -5% lower.

(3) On Wednesday, Will the Bank of Japan (BoJ) Hike its Policy Rate?

Speculation is growing that the Bank of Japan could hike rates on Wednesday after high-profile politicians — including the prime minister — hinted at the need for near-term policy normalization.

It's not the need to end decades of extraordinary stimulus, per se, that is at the heart of their arguments.

Rather, the weak yen's choking effect on households and businesses that looks to be turning the exchange rate into a central issue for the ruling Liberal Democratic Party's leadership convention in September.

The fact that the currency has rebounded by a staggering 10 yen per dollar from three-decade lows at the start of the month hasn't deterred some from predicting a July hike.

They argue the BOJ can get the most bang for its buck by hiking into a rallying yen.

Others worry a fragile economy and weak consumer sentiment couldn't weather higher borrowing costs, with slowing U.S. growth set to have a knock-on effect already.

(4) On Thursday, the Bank of England (BoE) Meets.

The Bank of England meets on Thursday and right now, markets see a roughly 48% chance that rates will fall for the first time since March 2020.

Growth is modest and consumer inflation has returned to 2%. Yet wage growth and service-sector inflation are proving sticky and running hotter than a number of policy-setters at the Old Lady of Threadneedle Street, as the Bank of England is known, would like.

Clare Lombardelli, the new deputy governor, may hold the deciding vote, as the other eight Monetary Policy Committee members are split evenly on whether to hold or cut.

British consumers might be feeling the pinch of interest rates at more than 14-year highs, but banks have certainly reaped the benefits.

Markets will watch results from HSBC (HSBC Quick QuoteHSBC - Free Report) , Barclays (BCS Quick QuoteBCS - Free Report) and Standard Chartered to get a sense of how well they are likely to fare when borrowing costs, and the profit they make on them, start to fall.

(5) On Sunday, Venezuelans Vote for a President.

Venezuelans tried to elect a new president on Sunday.

Opposition candidate Edmundo Gonzalez led polls by 20 points over incumbent Nicolas Maduro, who pledged the election will be transparent, but forced the winner of the opposition primary, Maria Corina Machado, out of the race.

The results and handling of the vote is one half of the puzzle determining future U.S. sanctions on Venezuela — the battle for the White House is, of course, yet to come in November.

Current curbs include a ban on buying bonds directly from Venezuela's government. That precludes, for now, a restructuring of some $60 billion in international bonds owed by the government and state-owned oil firm PDVSA.

Venezuela's and PDVSA's defaulted bonds trade at deeply distressed levels of 13-22 cents, but have rallied sharply from late last year's single-digits.

Investors are watching Maduro's handling of the election very closely…

On Monday, President Nicolas Maduro and opposition rival Edmundo Gonzalez both claimed victory in Venezuela's presidential election as Washington and other foreign governments cast doubt on official results that kept the incumbent in power.

The national electoral authority said just after midnight that Maduro had won a third term with 51% of the vote - a result that would extend a quarter-century of socialist rule.

Zacks #1 Rank (STRONG BUY) Stocks

(1) Plains All American Pipeline (PAA Quick QuotePAA - Free Report) : This is an $18 a share stock with a market cap of $12.9B. It is found in the Oil & Gas – Production Pipeline industry. I see a Zacks Value score of A, a Zacks Growth score of A and a Zacks Momentum score of C.

Image Source: Zacks Investment Research

Founded in 1998, Houston, TX-based Plains All American Pipeline, L.P., a master limited partnership (MLP), is involved in the transportation, storage and marketing of crude oil, natural gas, natural gas liquids (NGL) and refined products in the U.S. and Canada.

The partnership has operations in the Permian Basin, South Texas/Eagle Ford area, Rocky Mountain and Gulf Coast in the U.S., and Manito, South Saskatchewan, Rainbow in Canada.

The firm reorganized the historical operating segments — namely Transportation, Facilities and Supply and Logistics — into two operating segments: Crude Oil and Natural gas liquids (NGL).

The reorganization of segments was done, due to several reasons including a multi-year transition in the midstream energy industry driven by increased competition.

That has reduced stand-alone earnings opportunities of the firm’s supply and logistics activities, as well as internal changes regarding the oversight and reporting of its assets, and related results of operations.

The new segments will provide better visibility and transparency into the drivers of the firm’s overall business and reduce inter-segment activity.

Crude Oil segment assets include pipelines, storage, terminalling and trucks. This segment generates revenues from long-term minimum volume commitments, acreage dedications, leased capacity & spot utilization.

The Crude Oil segment will be driven by an increase in production volumes and rise in volume throughput.

NGL segment asset include fractionation, straddle, pipelines, storage, terminalling & rail capacity. This segment generates revenues from leased capacity, throughput, processing agreements & spot utilization.

The segment’s growth will be driven by Frac spread, supply volumes and regional pricing differentials.

In 2023, the Crude Oil and NGL segment contributed 96.1% and 3.9%, respectively, to total revenues. In 2022, the segments contributed 95.2% and 4.8%, respectively, to total revenues.

(2) Chewy (CHWY Quick QuoteCHWY - Free Report) : This is an $25 a share stock with a market cap of $11B. It is found in the Internet Commerce industry. I see a Zacks Value score of C, a Zacks Growth score of A and a Zacks Momentum score of B.
 

Image Source: Zacks Investment Research

Chewy Inc. operates as an online pet retailer.

The company offers pet products which include dry and wet food, toys, mats, biscuits, vitamins and supplements.

Chewy Inc. is based in Dania Beach, Florida, United States.

(3) FTAI Aviation Ltd. (FTAI Quick QuoteFTAI - Free Report) : This is an $105 a share stock with a market cap of $10.95B. It is found in the Aerospace-Defense Equipment industry. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.

Image Source: Zacks Investment Research

FTAI Aviation Ltd. owns and maintains commercial jet engines with a focus on CFM56 engines.

Its propriety portfolio of products, including The Module Factory and a JV to manufacture engine PMA.

FTAI Aviation Ltd., formerly known as Fortress Transportation and Infrastructure Investors LLC, is based in New York.

Key Global Macro

Central Bank decisions dominate the week’s agenda.

But don’t forget about the July U.S. Nonfarm Payroll number on Friday.

On Monday, Japan’s household unemployment rate is 2.6%. We get the June numbers.

On Tuesday, the Eurozone economic sentiment indicator for July comes out. I see a 95.9 prior reading, with business climate at -0.46, and consumer confidence at -13.

Eurozone Q2 GDP comes out. The prior Q1 y/y reading was +0.4%. A +0.2% m/m print is what to expect, following a +0.3% m/m reading in the prior effort.

U.S. JOLTS job openings come out for June. 8.14M was the prior print.

On Wednesday, Mainland China’s NBS manufacturing PMI comes out for July. I see a 49.5 prior print.

Eurozone core HICP consumer price inflation comes out for July. The prior reading was +2.9% y/y. Broad HICP was +2.5% y/y.

There is a Bank of Japan (BoJ) rate decision (now a 0%), a monetary policy statement, and an outlook report.

U.S. ADP job additions for July come out. +150K was the June data.

The FOMC concludes its 2-day meeting. Powell and Co. should keep a 5.5% policy rate. There is a monetary policy statement, and a Powell presser.

On Thursday, the Bank of England (BoE) delivers its policy rate decision, and is likely to move Bank Rate to 5.0% from 5.25%. BoE Governor Bailey will give a speech.

On Friday, U.S. Nonfarm Payrolls for July should be +185K, after +206K in June. The U.S. household unemployment rate should be 4.1%.

Conclusion

On July 24th, Zacks Research Director Sheraz Mian produced his latest 4 key earnings points:

(1) For the 134 S&P500 companies that have reported Q2-24 results --26.8% of the index’s total membership-- total earnings are up +7.6% from the same period last year, on +4.7% higher revenues.

81.3% companies beat EPS estimates. Only 57.5% beat revenue estimates.

(2) Except for the revenue beats percentage, which at 57.5% is the lowest for this group of 134 S&P500 index members over the preceding 20-quarter period, all of the other performance metrics are tracking better, relative to what we have seen in other recent periods.

(3) Looking at Q2-24 as a whole, total earnings for the index are expected to be up +9.6% from the same period last year on +4.9% higher revenues.

This will be the highest earnings growth pace since the +10% earnings growth in Q1-22.

(4) Q2-24 earnings for the ‘Magnificent 7’ companies are expected to be up +26.6% from the same period last year on +13.6% higher revenues.

Excluding the ‘Mag 7’, Q2-24 earnings growth for the rest of the S&P500 index drops to +6.1% (from +9.6%).

Have an excellent trading week!

John Blank, PhD
Zacks Chief Equity Strategist and Economist