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Key Events This Week: It’s Quiet But Nobody Will Notice

Courtesy of ZeroHedge. View original post here.

With earnings season gradually dying down, and little notable macro news this week, it will hardly be a boring five days now that all day, every day we will be talking about trade war and currency war after the historic plunge in the Chinese yuan below the psychological 7.00 barrier, but hopefully not real war, as a result of ever escalating Hong Kong riots. In short, those traders who are currently on vacation are planning their early returns, while those who were on the fence about taking some time off… well, China made their decision for them.

As Dfeutsche's Craig Nicol writes, as markets move into a summer lull after the major events of the past week, the schedule for this week is a lot calmer even if the news from the last couple of days will resonate through August. Earnings season continues, albeit at a reduced pace, while data highlights include services PMIs, Q2 GDP from Japan and the UK, as well as the Chinese trade balance for July. We’ll also get monetary policy decisions from the Reserve Bank of India and the Reserve Bank of Australia. Amidst heightened global trade tensions following the escalation in the US-China trade war, one of the data releases to pay attention to this week will be the Chinese trade balance for July on Thursday, where the consensus is expecting a +$44.23bn reading. From China there’ll also be CPI and PPI data on Friday. Staying with Asia, on Friday Japan’s Q2 GDP will be released, which is expected to show a qoq reading of +0.1%, down from +0.6% in Q1. The other data highlight next week will be on Monday, when the week kicks off with services PMIs for July, with releases starting in Asia with Japan, China and India, before Russia, Italy, France, Germany, the Eurozone, the UK, Brazil and the US  report later in the day.

Turning to Europe, we’ll get some more information on Germany’s economic performance over the coming week. Tuesday sees the release of data on factory orders, where last month’s reading showed a yoy decline of 8.6%, which was the steepest yoy fall since September 2009. However, the consensus is expecting a rise of 0.2% mom in June, with the yoy reading rising to -5.5%. Then on Wednesday, June’s industrial production data will be released, before trade balance data for June on Friday. Elsewhere in Europe, UK GDP for Q2 is being released on Friday, where the consensus is expecting a stagnant reading, following growth of 0.5% in Q1. Also on Friday, we’ll get industrial production data for France in June.

Having had the Federal Reserve, Bank of Japan and the Bank of England last week, this week will be comparatively quiet in terms of central bank news. However, we will have the Reserve Bank of Australia announcing their latest decision on  Tuesday. Although the RBA have cut rates by 25bps at the last two meetings, markets are expecting that they’ll be kept on hold this week. The other central bank decision comes from India, where the consensus expectation is that the RBI will cut the repurchase rate by 25bps, down to 5.50%, continuing the easing cycle under way. In terms of speakers, St Louis Fed President Bullard will be speaking on Tuesday, followed by Chicago Fed President Evans on Wednesday. Meanwhile on Thursday, the ECB will release their Economic Bulletin.

Earnings season continues next week, although at a slower pace than last week, with 62 S&P 500 companies reporting, along with a further 78 in the STOXX 600. Of the 374 companies in the S&P 500 that have reported so far, 77% have  beat on earnings and 60% have beat on sales. The highlights this week include HSBC and Linde on Monday; Walt Disney on Tuesday; Unicredit, AIG, Commerzbank, Glencore and Booking Holdings on Wednesday; Deutsche Telekom, Zurich Insurance Group and Aviva on Thursday; and Novo Nordisk on Friday.

Summary of key events by day:

  • Monday: The main highlight of the day is the release of the final July services and composite PMIs in Japan, China, Spain, Italy, France, Germany, the Eurozone, UK and the US. We will also get the UK's July new car registrations and official reserves along with the Eurozone's August investor confidence data while, in the US, we will get July ISM non-manufacturing index. HSBC and Linde will be reporting earnings.
  • Tuesday: It's a fairly light day for data with releases including Japan's June labour earnings, Germany's June factory orders and July construction PMI, and June Jolts job openings in the US. Aside from the data, the Fed's Bullard is due to speak on the US economy in Washington while Walt Disney will be reporting earnings.
  • Wednesday: It's another light day for data with releases of note being China’s July foreign reserves, Germany's June industrial production and the UK's July Halifax house prices. In the US we are due to get latest mortgage approvals and  June consumer credit data. We'll also get the BoJ's summary of opinions for the July policy decision while Unicredit, AIG, Commerzbank, Glencore and Booking Holdings will be reporting earnings.
  • Thursday: The key highlight of the day is likely to be China's July trade balance data and the ECB will publish its latest economic bulletin. Besides, we will also get Japan's June current account and trade balance data, France's July industry  sentiment and in the US, we'll get June wholesale trade sales and wholesale inventories data along with the latest initial and continuing claims. Deutsche Telekom, Zurich Insurance Group and Aviva will be reporting earnings.
  • Friday: It’s a busy Friday with a host of data releases lined up including China's July CPI and the release of preliminary Q2 GDP due in Japan and the UK. Other releases include Germany's June trade balance and current account balance, Italy's final July CPI, France's preliminary Q2 wage data and June industrial production along with the UK's monthly GDP for June, trade balance, index of services, industrial production and construction output data. In the US, we are due to get July PPI data. Novo Nordisk will be reporting earnings.

Finally, looking at just the US, the key economic data release this week is the ISM non-manufacturing report on Monday. There are several scheduled speaking engagements from Fed officials this week

Monday, August 5

  • 09:45 AM Markit Flash US services PMI, July final (consensus 52.2, last 52.2)
  • 10:00 AM ISM non-manufacturing index, July (GS 55.1, consensus 55.5, last 55.1): Our non-manufacturing survey tracker increased by 0.8pt to 54.6 in July, following somewhat stronger regional service sector surveys. Despite the sequential improvement in our survey tracker, we expect the ISM non-manufacturing index to remain unchanged at 55.1 in the July report, as the index appears elevated relative to other service sector surveys.
  • 1:30 PM Fed Governor Brainard (FOMC voter) speaks: Fed Governor Lael Brainard will discuss the payments system at a town hall meeting at the Kansas City Fed. Prepared text and audience Q&A are expected.
  • 2:00 PM July Senior Loan Officer Opinion Survey

Tuesday, August 6

  • 10:00 AM JOLTS Job Openings, June (consensus 7,400k, last 7,323k)
  • 12:00 PM St. Louis Fed President James Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will speak to the National Press Club in Washington, D.C.

Wednesday, August 7

  • Time TBA Chicago Fed President Evans (FOMC voter) speaks: Chicago Fed President Charles Evans will host members of the media with an on-the-record conversation on the economy at the Chicago Fed.

Thursday, August 8

  • 08:30 AM Initial jobless claims, week ended August 3 (GS 215k, consensus 215k, last 215k); Continuing jobless claims, week ended July 27 (consensus 1,691k, last 1,699k): We estimate jobless claims remained at 215k in the week ended August 3, after increasing by 8k in the prior week.
  • 10:00 AM Wholesale inventories, June final (consensus +0.2%, last +0.2%)

Friday, August 9

  • 08:30 AM PPI final demand, July (GS +0.2%, consensus +0.2%, last +0.1%); PPI ex-food and energy, July (GS +0.2%, consensus +0.2, last +0.3%); PPI ex-food, energy, and trade, July (GS +0.2%, consensus +0.2%, last flat): We estimate a 0.2% increase in headline PPI in June, reflecting relatively firm core prices and energy prices. We expect a 0.2% increase in the core measure excluding food and energy, and also a 0.2% increase in the core measure excluding food, energy, and trade.

Source: Deutsche Bank, Goldman Sachs, BofA


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