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Key Events In This Extremely Busy Week: FOMC, Payrolls, GDP, PMIs, And Peak Earnings

Courtesy of ZeroHedge View original post here.

With global markets facing a bumper week ahead, let's dive right in to the key events of the coming days.

As DB's Jim Reid lays out the main highlights, first and foremost we have the FOMC meeting on Wednesday where the Fed are expected to cut 25bps, a first look at Q3 GDP in the US (also on Wednesday) and the Euro-area (Thursday) are due and China (Thursday) and the RoW PMIs and US ISM (Friday) will be closely watched before US payrolls ends the week with a bang on Friday. Earnings season will also continue apace as a number of major global companies report on both sides of the pond.

Some more detail on a few of these:

Ahead of this Wednesday’s Fed meeting, a 25bps rate cut is just about fully priced now. Given the lack of pushback against that pricing by the recent parade of Fedspeak, it’s a relative safe prediction that they deliver another cut to take the fed funds target range to 1.50-1.75%. Looking forward though, the focus will be around the tone in the policy statement and in Chair Powell’s press conference. The statement could have some dovish-leaning edits, consistent with the deterioration in data since the September policy meeting. As for Powell, he’ll likely want to maintain his optionality moving forward, committing to neither another cut nor a halt to the cutting cycle. Wall Street economists think that he will emphasize that another cut would require further deterioration in the data, which however will likely materialize over the next few months, as opposed to a flatlining in conditions.

The Bank of Canada is also meeting that same day, though no change in policy is expected by markets. The Bank of Japan will be meeting the following day although it is expected to simply extend the period of its forward guidance and forego genuine easing action such as a deepening of its negative interest rate policy, as per DB. Staying with central banks, this Friday sees former IMF managing director Christine Lagarde succeed Mario Draghi as ECB President, with his 8-year term coming to a close the day before.

As for Brexit, this afternoon we are set to see a vote in Parliament on the Government’s motion (under the FTPA) for a general election on December 12th with added time until a potential dissolution of Parliament on November 6th to debate the Government’s Withdrawal Agreement Bill (WAB). Opposition parties have so far indicated they won’t vote for this and over the weekend the Lib Dems and the SNP have proposed a counter proposal to hold an election three days earlier as long as the Brexit extension to January 31st is legally cast iron. This follows overnight news that the EU would agree to an extension, including French support. The opposition Labour Party’s position on an election continues to confuse and they are now the only main party that doesn’t have an election act or bill to put in front of Parliament or indeed support one. We’ll see if that changes today. The Government’s plan requires a 2/3rds majority (very very unlikely if reports are to be believed) but the Lib Dem/SNP plan only a simple majority but is potentially subject to amendments so could be seen as a trap to the Government. According to No. 10 sources, if their plan fails the Government would “look at all options to get Brexit done, including ideas similar to that proposed by other opposition parties”. So they might still find a way to support it.

Elsewhere this week, the first look at Q3 GDP in the US sees expectations of 1.6%, which would be the slowest pace so far this year. Indeed, since President Trump’s election we’ve only seen one quarter of growth at a rate below 2%, and analysts will be looking out for what this might mean for the economy heading into next year’s election. Turning to Europe Q3 GDP, consensus expects just +0.1% growth, which would be the weakest quarterly growth since Q1 2013. The expectation is for the year-on-year pace to fall to +1.1%, which would also be the weakest since Q4 2013. So an interesting welcome to Lagarde on Friday.

The October US jobs report on Friday, sees a +90k consensus following the previous month’s +136k increase. If realised, that would be the weakest pace of monthly jobs growth since May but the recent GM strike complicates the analysis with a 46k hit expected from this. There is also a government census employment issue so private payrolls will be perhaps more closely watched (+83k expected). Later that day, we’ll also get the ISM manufacturing report, which fell to 47.8 last month, the weakest since June 2009 and below all analysts’ estimates. So Friday’s going to be an important day as markets assess the outlook for the US moving into November with the added interest of the final ISMs from around the globe.

It’s another big week for earnings this week, with 164 S&P 500 companies scheduled to report. In terms of releases to watch out for, today we have Alphabet, AT&T and HSBC (just out and missing expectations). On Tuesday, there’s Mastercard, Nomura, BP and General Motors. Wednesday sees releases from Apple, Bayer, Facebook, Total, Sony, Volkswagen, Airbus, Santander, General Electric and Credit Suisse. On Thursday there’s Royal Dutch Shell and BNP Paribas, while on Friday there’s Exxon Mobil, Chevron, AIG and Alibaba.

Courtesy of Deutsche Bank, here is a day by day calendar of upcoming events

Monday

  • Data: Euro Area September M3 money supply; UK CBI October distributive trades survey; US September Chicago Fed national activity index, preliminary September wholesale inventories, October Dallas Fed manufacturing index. Central Banks: BoE's Tenreyro speaks.
  • Politics: UK House of Commons votes on holding an early general election.
  • Earnings: Alphabet, AT&T, HSBC

Tuesday

  • Data: UK October Nationwide house prices, September consumer credit, September mortgage approvals; France October consumer confidence; Italy September PPI; US October Conference Board consumer confidence; Japan September retail sales.
  • Earnings: Mastercard, Nomura, BP, General Motors.

Wednesday

  • Data: Australia Q3 CPI; France preliminary Q3 GDP; German October unemployment change and preliminary October CPI; Italy October consumer confidence index, manufacturing confidence, economic sentiment; Euro Area final October consumer confidence; US weekly MBA mortgage applications, October ADP employment change, Q3 advance GDP, core PCE; South Korea September industrial production; Japan preliminary September industrial production.
  • Central Banks: Policy decisions from the Federal Reserve, Bank of Canada and Banco Central do Brasil; ECB's Lautenschläger, Rehn speak.
  • Earnings: Apple, Bayer, Facebook, Total, Sony, Volkswagen, Airbus, Santander, General Electric, Credit Suisse.

Thursday

  • Data: UK October GfK consumer confidence; China October manufacturing PMI, non-manufacturing PMI, composite PMI; Japan August vehicle production, September housing starts, September jobless rate; France preliminary October CPI; Italy preliminary September unemployment rate, preliminary October CPI, preliminary Q3 GDP; Euro Area September unemployment rate, Q3 GDP, October CPI estimate, preliminary October core CPI; US Q3 employment cost index, September personal income, personal spending, weekly initial jobless claims, October MNI Chicago PMI; Canada August GDP; South Korea October CPI
  • Central Banks: Bank of Japan policy decision.
  • Earnings: Royal Dutch Shell, BNP Paribas.

Friday

  • Data: South Korea October trade balance; Japan October vehicle sales; October manufacturing PMIs from Japan, South Korea, Indonesia, China, India, Russia, Turkey, South Africa, UK, Brazil, Canada, US, Mexico; US October nonfarm payrolls, unemployment rate, average hourly earnings, ISM manufacturing, September construction spending
  • Central Banks: Christine Lagarde succeeds Mario Draghi as President of the ECB; Fed's Clarida, Quarles and Williams speak.
  • Earnings: Exxon Mobil, Chevron, AIG, Alibaba

Here is a visual recap of the key US events this week, courtesy of Bank of America:

And here are the key global events to keep an eye on, courtesy of Goldman Sachs:

  • Wednesday, October 30: USA, FOMC Meeting Decision. Fed funds target rate (mid-point): GS 1.625%, consensus 1.625%, last 1.875%. As discussed in our FOMC preview, we expect the FOMC to deliver its third and final 25bp cut to the funds rate at the October meeting. We expect only minor changes to the FOMC statement’s growth characterization, as participants focus on the policy outlook section of the statement (as well as in the post-meeting press conference). We expect a somewhat hawkish rewording as the Committee likely replaces the “act as appropriate to sustain the expansion” clause.
  • Wednesday, October 30: USA, GDP (Q3 Advance). GS +1.6%, consensus +1.6%, last +2.0%, all %qoq ar. We estimate a 1.6% increase in the initial release of Q3 GDP (qoq ar). We expect strength in personal consumption (+2.7%), but a decline in equipment and structures investment as well as a drag from inventories.
  • Wednesday, October 30: Canada, BoC Meeting. GS 1.75%, consensus 1.75%, last 1.75%. We expect the BoC to keep the policy rate unchanged as solid domestic data will likely continue to outweigh external downside risks. The Autumn Business Outlook Survey showed a slight improvement in business sentiment and rising investment spending expectations. Taken together with domestic labor market strength, firm inflation data, and post-election prospects for modest fiscal stimulus, the BoC is likely to remain constructive on the baseline domestic outlook, continue to monitor external risks, and communicate a wait and see approach.
  • Wednesday, October 30: Japan, Industrial Production (Sep P). GS +0.3%, consensus +0.4%, last -1.2%, all %mom. We expect a limited rise in production of +0.3%mom in September (August: -1.2%mom) in line with METI's bias-adjusted estimate (+0.3%), with September real exports rising only +0.2%mom.
  • Wednesday, October 30: Australia, CPI Inflation (Q3). GS +0.6%, consensus +0.5%, last +0.6%, all %qoq. We expect headline consumer prices to rise +0.60%qoq in 2019Q3, with the annual rate edging up to +1.75%yoy. Compositionally, price growth is expected to be supported by the annual re-indexing of excise duty on tobacco products, as well as drought-related increases in food prices. But looking through seasonal and volatile components, we expect underlying price pressures to remain soft, with the key trimmed mean measure expected to rise +0.35%qoq (+1.55%yoy) in 2019Q3 – well below the RBA’s 2-3% inflation target.
  • Thursday, October 31: Euro Area, HICP Inflation (Flash) (Oct). Core HICP inflation: GS +1.02%, consensus +1.0%, last +1.0%, all %yoy. We expect Euro area headline HICP inflation of 0.71%yoy in October, 12bp lower than in September. We look for a 1bp increase in core inflation to 1.02%yoy. Across countries, we expect energy price inflation to continue to weigh on the headline rate, but we do not look for large changes in core inflation rates across the Euro area.
  • Thursday, October 31: Euro Area, GDP (Flash) (Q3). GS +0.1%, consensus +0.1%, last +0.2%, all %qoq. We expect the preliminary flash estimate of Euro area Q3 GDP to show that the area-wide growth rate was 0.1%qoq (non-annualised). Underlying this aggregate forecast is an expectation that moderate growth in France and Spain was offset by a contraction in Germany, and flat output in Italy. Three of the four major Euro area economies publish preliminary estimates this week, with the German estimate published on 14 November.
  • Thursday, October 31: USA, PCE Inflation (Sep). Core PCE Inflation: GS +0.12%, consensus +0.1%, last +0.14%, all %mom. Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose 0.12% month-over-month in September, or 1.74% from a year ago. Additionally, we expect that the headline PCE price index increased 0.08% in September, or 1.42% from a year earlier. We expect a 0.2% increase in personal income in September and a 0.3% increase in personal spending.
  • Thursday, October 31: USA, Employment Cost Index (Q3). GS +0.7%, consensus +0.7%, last +0.6%, all %qoq. We estimate that the employment cost index rose 0.7% in Q3 (qoq sa). Average hourly earnings data have been mixed, but we see scope for a rebound in benefits growth.
  • Thursday, October 31: Canada, GDP (August). GS +0.3%, consensus +0.3%, last flat, all %mom. We expect GDP to rise by +0.3% (mom) in August. Our forecast reflects a likely rebound in the mining sector, which subtracted three tenths from overall GDP growth in the prior month following maintenance shutdowns.
  • Thursday, October 31: Japan, BOJ Policy Meeting Decision. GS -0.1%, consensus -0.1%, last -0.1%. The BOJ will hold its Monetary Policy Meeting (MPM) on October 30-31. Our base case scenario is that the BOJ will refrain from taking its short-term rate target deeper into negative territory, while extending the timeframe for maintaining its ultra-low interest rate policy from "at least through around spring 2020" to “until at least around the end of 2020”.
  • Friday, November 1: USA, ISM Manufacturing (Oct). GS 49.6, consensus 49.0, last 47.8. Our manufacturing survey tracker rose by 1.3pt to 51.9 in October, following stronger regional manufacturing surveys on net. After six straight declines, we expect the ISM manufacturing index to rebound by 1.8pt to 49.6 in October.
  • Friday, November 1: USA, Employment Report (Oct). Nonfarm payrolls growth: GS +75k, consensus +85k, last +136k. We estimate nonfarm payrolls increased 75k in October, reflecting a 46k drag from the General Motors strike and weakness in service-sector business surveys. We also note that the payroll seasonal factors may have evolved to fit the post-hurricane rebounds of October 2017 and 2018, which would argue for a softer reading in the upcoming report. Also, September tariff escalation may have weighed on hiring in the manufacturing, retail, and transportation sectors. On the positive side, we expect a boost from very low jobless claims and labor supply constraints, which may have incentivized firms to pull forward some hiring into October.

Source: Deutsche Bank, Goldman, BofA.

 

 

 


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