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Key Events In The Coming Extremely Busy Week: Jobs, Fed, Earnings And Much More

Courtesy of ZeroHedge. View original post here.

It’s an extremely busy week of US data/earnings/events with plenty to keep US yields in the spotlight after a notable sell-off in the first half of the week followed by a notable rally over the last couple of days (US 10yr -2.4bp Friday to 2.958%, -7.5bps from intra week highs on Wednesday) as the focus will remain on the US. There are a number of important data releases in the US including payrolls and PCE. In addition, the Fed is expected to keep the target rate unchanged at the Wednesday FOMC meeting with no changes to the policy statement. At the Treasury quarterly refunding we look for a continued increase in auction sizes, concentrated at the front end.

As Deutsche's Jim Reid writes, the week's highlights are a Fed meeting (Wednesday), US Treasury quarterly refunding plan announcement (Wednesday), PCE inflation data (today) and the April employment report (Friday). Inflation data in Europe (Thursday) is also due out along with a first look at Q1 GDP (Wednesday), while the final PMI revisions are also due.

Earnings will also continue with 147 S&P 500 companies reporting and 55 Stoxx 600 companies. In the US, 268  companies in the S&P 500 have reported their 1Q results so far (54% of market cap). So far 78% of the companies have beat on EPS, which is the highest ratio since 2010, while the aggregate earnings beat (8.9%) is also more than double the historical average. Further, growth appears to be broad based with all sectors on track to post double digit EPS growth, led by Energy (91%), Technology (34%) and the Financials (28%). In aggregate, corporate earnings are on track to be up at least 24% yoy in the quarter.

As DB's Craig Nicol adds, in terms of the Fed on Wednesday, the consensus is for no change in policy which is a view also shared by the market with futures pricing implying odds of just 5% for a hike. That said market pricing for 4 rate hikes this year (ie a further 3) have nudged up above 40% from a low of just 18% at the start of this month so it'll be interesting to see how or if that changes post next week's meeting. The meeting will not be accompanied by a press conference from Fed Chair Powell so it'll be likely fairly limited in terms of new news for the market.

Away from the Fed, the week is bookended by two big data prints in the US. On Monday we'll get the March PCE data with the consensus pegged at a +0.2% mom core reading and 0.0% deflator print. Base effects should help push the YoY core PCE reading to +2.0% yoy from +1.6%, a level we've not seen since April 2012. For payrolls on Friday, the consensus expect a 185k nonfarm reading following the 103k print in March. Average hourly earnings are also expected to have risen +0.2% mom while the unemployment rate is forecast to fall a tenth to 4.0%, and hours hold steady at 34.5 hours. The other notable data worth noting in the US next week is the April ISM manufacturing print on Tuesday which is expected to fall nearly a point to 58.5.

As well as the Fed and data releases next week, expect the bond market to also be fixated by Wednesday's US Treasury quarterly refunding plan with the expectation for another across the board boost to auction sizes in light of the tax cut announcement and increased spending. As a reminder, the latest CBO budget outlook has the US deficit passing $1tn by 2020.

In Europe next week GDP and CPI data dominates the agenda. With regards to the former, on Wednesday we'll get a first look at Q1 GDP for the Euro area with the consensus currently expecting +0.4% qoq growth. Our European economists believe that the flow of data released over the past few months suggest that the Euro area has lost some momentum in Q1 and on Wednesday revised down their forecast for the quarter to +0.4% qoq from +0.6%, although at the same expect some lost activity to be probably clawed back in subsequent quarters. As a reminder, the Euro area expanded by an average of almost +0.7% qoq through 2017. For CPI, we'll get the April report for the Euro area on Thursday with the consensus expecting a +0.9% yoy print for the core, having held at +1.0% yoy for the last 3 months. Also worth highlighting in Europe next week are the final revisions to the April PMIs including a first look at the data for the non-core and UK. Away from the data in Europe expect Brexit headlines to come back to the fore with EU and UK negotiators undergoing another round of talks from Wednesday.

Over in Asia it's a little quieter next week with the most notable data prints being the Caixin PMIs in China (manufacturing on Wednesday and services/ composite on Friday) and Nikkei PMIs in Japan (manufacturing Tuesday and services/composite Wednesday).

A visual summary of key events:

A breakdown of main events by day:

Monday: Inflation data should be the overwhelming focus for markets on Monday with preliminary April CPI reports due in Germany and Italy, and the March PCE core and deflator readings along with personal income and spending due in the US. Other data worth highlighting is the official April PMIs in China along with the April Chicago PMI, March pending home sales and April Dallas Fed PMI in the US. Earnings highlights on Monday include McDonalds and Allergan.

Tuesday: Overnight we'll receive the final April manufacturing PMI in Japan. In Europe the focus is on the UK with March money and credit aggregates data, along with the April manufacturing PMI. In the US we'll also receive the final April manufacturing PMI print along with the April ISM manufacturing, March construction spending and April vehicle sales data. The headline earnings release on Tuesday is Apple, while results from Pfizer, Merck and BP will also be closely watched.

Wednesday: A busy day headlined by the FOMC meeting outcome in the evening. Prior to that we'll get the April ADP employment change print in the US, while in Europe a first look at Q1 GDP for the Euro area and Italy is due. The remaining April manufacturing PMIs will also be out in Europe while in China we'll get the April Caixin manufacturing PMI. Japan will also release its April services and composite PMIs. The other big event on Wednesday is the US Treasury announcement of its debt issuance plans. EU and UK Brexit negotiators will also begin the next round of Brexit talks, continuing through to Friday. Kraft Heinz and Tesla results are due on Wednesday.

Thursday: Another busy day for data headlined by the April CPI report for the Euro area. March PPI data for the Euro area will also be out while the latest European Commission forecast updates will be released. The final April services and composite PMIs in the UK will also be out in the morning. In the US preliminary Q1 nonfarm productivity and unit labour costs data are due, along with the March trade balance print, April ISM non-manufacturing, weekly initial jobless claims, March factory orders and the final March durable and capital goods orders data. Away from the data, the ECB's Constancio and Coeure are due to speak in Frankfurt.

Friday: The big highlight at the end of the week is in the US with the April employment report due to be released. In Europe the final April services and composite PMIs will be released, while France's March trade balance and the Euro area's March retail sales data will also be out. In China we'll also get the remaining April Caixin PMIs (services and composite). The Fed's Dudley is scheduled to speak in the early evening. Berkshire Hathaway, Alibaba, HSBC, BNP Paribas and Societe Generale are due to report earnings.

* * *

Focusing only on the US, the key economic releases for the coming week include the personal income and spending  report on Monday, ISM manufacturing on Tuesday, ISM nonmanufacturing on Thursday, and the employment report on Friday. The statement from the May FOMC meeting will be released on Wednesday. Additionally, there are a few scheduled speeches from Fed officials this week.

And here is Goldman with a detailed breakdown including Wall Street estimates

Monday, April 30

  • 8:30 AM Personal income, March (GS +0.4%, consensus +0.4%, last +0.4%); Personal spending, March (GS +0.6%, consensus +0.4%, last +0.2%); PCE price index, March (GS +0.01%, consensus flat, last +0.19%); Core PCE price index, March (GS +0.16%, consensus +0.2%, last +0.23%); PCE price index (yoy), March (GS +1.99%, consensus +2.0%, last +1.75%); Core PCE price index (yoy), March (GS +1.89%, consensus +1.9%, last +1.60%): Based on details in the PPI and CPI reports and last week’s GDP report, we forecast that the core PCE price index rose +0.16% month-over-month in March, or 1.89% from a year ago. Additionally, we expect that the headline PCE price index increased 0.01% in March, or 1.99% from a year earlier. We expect a 0.4% increase in March personal income and a 0.6% rise in personal spending.
  • 09:45 AM Chicago PMI, April (GS 57.9, consensus 58.0, last 57.4): Regional manufacturing surveys were mixed in April, and we estimate that the Chicago PMI increased 0.5pt to 57.9 following a sizeable 4.5pt drop in March.
  • 10:00 AM Pending home sales, March (GS +1.2%, consensus +0.5%, last +3.1%): Regional housing data released so far suggested the rebound in contract signings continued in March, and we estimate pending home sales rose 1.2%. If realized, this would suggest scope for existing homes sales to rise for a third month in April (pending home sales are a useful leading indicator of existing home sales with a one- to two-month lag).
  • 10:30 AM Dallas Fed manufacturing index, April (consensus 25.0, last 21.4)
  • 09:45 AM Markit Flash US Manufacturing PMI, April final (consensus 56.5, last 56.5)
  • 10:00 AM ISM manufacturing, April (GS 58.3, consensus 58.5, last 59.3): We estimate a 1.0pt decline in the ISM manufacturing index to 58.3 in April. Our forecast reflects mixed reports from business activity surveys in April, as declines in the Richmond Fed and Empire State manufacturing indices offset strong readings from the Markit PMI, Kansas City Fed, and Philly Fed surveys. On net, our manufacturing survey tracker, which distills the signal from regional manufacturing reports and is scaled to the ISM index, edged down to 58.3. Still the survey is likely to remain at levels consistent with a solid pace of expansion in the manufacturing sector.
  • 10:00 AM Construction spending, March (GS +0.6%, consensus +0.5%, last +0.1%): We estimate construction spending increased +0.6% in March, following a slight increase in February that reflected relatively firm private single family and multifamily but weaker public residential construction.
  • 4:00 PM Total vehicle sales, April (GS 17.1mn, consensus 17.1mn, last 17.4mn); Domestic vehicle sales, April (GS 13.3mn, consensus 13.3mn, last 13.4mn); Our auto analysts expect total vehicle sales to increase on a year-over-year basis, reflecting higher fleet sales.

Wednesday, May 2

  • 08:15 AM ADP employment report, April (GS +185k, consensus +198k, last +241k); We estimate a 185k increase in ADP payroll employment in April, reflecting the drop in March payrolls growth and the pickup in jobless claims, two inputs utilized in the ADP model. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
  • 02:00 PM FOMC statement, January 30-31 meeting; As discussed in our preview, the FOMC looks very likely to keep policy unchanged. The Committee will likely signal that it is firmly on track for a June hike given continued solid growth and firming inflation data. We look for an upgrade of the inflation description in the statement and expect the committee to signal that core inflation on a 12-month basis is now near the 2% target. We upgraded our own subjective probability of a hike at the June meeting to 90%.
  • 08:30 AM Initial jobless claims, week ended April 28 (GS 225k, consensus 224k, last 209k; Continuing jobless claims, week ended April 21 (consensus 1,838k, last 1,837k): We estimate initial jobless claims rebounded 16k to 225k in the week ending April 28. We note that the level of claims looks depressed in New York and New Jersey, possibly related to the timing of school holidays. Continuing claims—the number of persons receiving benefits through standard programs—have trended down in recent weeks, though they remain above the cycle low in late March.
  • 08:30 AM Nonfarm productivity (qoq saar), Q1 preliminary (GS +0.9%, consensus +1.0%, last flat); Unit labor costs, Q1 preliminary (GS +2.9%, consensus +3.0%, last +2.5%): We estimate non-farm productivity rose +0.9% in Q1, slightly above the +0.75% trend achieved on average during this expansion. We expect Q1 unit labor costs—compensation per hour divided by output per hour—to rise at a firm 2.9% pace (qoq saar).
  • 08:30 AM Trade balance, March (GS -$49.6bn, consensus -$50.0bn, last -$57.6bn): We estimate the trade deficit declined sharply in March. The Advance Economic Indicators report showed a larger-than-expected improvement in the goods deficit that we believe reflected the reversal of Chinese New Year effects. We note that the level of services imports also appeared elevated in February, and may normalize with this report.
  • 09:45 AM Markit services PMI (final), April (consensus 54.5, preliminary 54.4)
  • 10:00 AM ISM non-manufacturing, April (GS 57.5, consensus 58.1, last 58.8): We expect the ISM non-manufacturing index to move down 1.3pt to 57.5 in April following mostly weaker service sector surveys in April. On net, our nonmanufacturing survey tracker dropped by 2.2pt to 54.8, led by declines in the Richmond Fed and New York Fed service sector surveys. The survey is still likely to remain at levels consistent with a solid pace of growth.
  • 10:00 AM Factory orders, March (GS +1.4%, consensus +1.2%, last +1.2%); Durable goods orders, March final (last +2.6%); Durable goods orders ex-transportation, March final (last flat); Core capital goods orders, March final (last -0.1%); Core capital goods shipments, March final (last -0.7%): We estimate factory orders rose 1.4% in March following a 1.2% increase in February. Headline durable goods orders were strong in the March advance report, largely driven by a surge in non-defense aircraft orders. Core measures were weak, however, with decreases in both core capital goods orders and core capital goods shipments.
  • 8:30 AM Nonfarm payroll employment, April (GS +180k, consensus +195k, last +103k); Private payroll employment, April (GS +180k, consensus +194k, last +102k); Average hourly earnings (mom), April (GS +0.2%, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), April (GS +2.6%, consensus +2.7%, last +2.7%); Unemployment rate, April (GS 4.0%, consensus 4.0%, last 4.1%): We estimate nonfarm payrolls increased 180k in April. Our forecast reflects a rebound in job growth following a weather-influenced slowdown in March (+103k). However, we note that labor market fundamentals may have softened at the margin. April snowstorms in the Midwest may also limit the extent of the reacceleration in payroll gains, in our view.

    • We estimate the unemployment rate declined by one tenth to 4.0% (from 4.07% previously), as continuing claims have continued to fall and the surge in labor force participation in February (+0.3pp) is typically associated with a decline in the jobless rate over the following three months. Finally, we expect average hourly earnings to increase 0.2% month over month with risks skewed to the downside (we forecast 2.6% year over year), reflecting somewhat unfavorable calendar effects.
  • 12:45 PM New York Fed President Dudley (FOMC voter) speaks; New York Federal Reserve President William Dudley will participate in a moderated conversation at an event, “Financial Tumult of Our Times and Challenges Ahead” in New York. Audience Q&A is expected.
  • 05:30 PM Vice Chairman for Supervision Quarles (FOMC voter) speaks: Federal Reserve Vice Chairman for Supervision Randal Quarles will give a speech on liquidity regulation and the Fed’s balance sheet at the Hoover Institution at Stanford University. Audience Q&A is expected.

Source: DB, BofA, Goldman

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