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Key Events In The Coming “Huge” Week

Courtesy of ZeroHedge View original post here.

After a quiet start on Monday, this week we’ll be bombarded with a peak week of Q1 earnings, the Federal Reserve and ECB due to announce policy decisions following the BOJ as the battle against the pandemic continues, China PMIs and Q1 GDP growth in Europe/US.

"This coming week will be huge from a macro data perspective and the extent to which the global economy has been floored by Covid-19," said Simon Ballard, chief economist at First Abu Dhabi Bank. “Until we are clearly past the peak of the outbreak, on a global scale, and can feasibly deem the pathogen to be contained and there to be no meaningful risk of a second wave of infection, we believe a defensive investment strategy will remain the most appropriate."

Starting with earnings, DB's Jim Reid notes that the first quarter earnings season hits a climax this week, with a third, or some 173 companies in the S&P 500 reporting, along with a further 95 in the STOXX 600. Looking at the highlights we begin today with Adidas. Then tomorrow things move into full flow, with Alphabet, Novartis, Merck & Co., Pfizer, PepsiCo, HSBC, Starbucks, BP, Caterpillar, UBS, Santander and Ford all reporting. Then on Wednesday, we’ll hear from Microsoft, Facebook, Mastercard, AstraZeneca, American Tower, GlaxoSmithKline, Boeing, Volkswagen, General Electric, Daimler, Barclays, Samsung and Tesla. Thursday sees Apple, Amazon, Visa, Comcast, McDonald’s, Amgen, Royal Dutch Shell, Gilead Sciences, Lloyds Banking Group, Nokia, Twitter all reporting. And finally on Friday, we’ll get ExxonMobil, Chevron, Charter Communications, AbbVie, Honeywell International and RBS.

Overall analysts expect a decline of nearly 15% in first-quarter earnings of S&P 500 companies -  a number which so far is roughly 25% – with profits for the energy sector estimated to have slumped 68%. While 65% of US companies that have reported beat estimates (vs 50% in Europe and Japan), this represents the worst margin in a decade. Meanwhile, those hoping for some guidance will have to keep waiting as visibility from the C-suite is so poor that almost 90% of reporting companies have withdrawn guidance.

Back to central banks, after the BOJ went all-in on BRRRR this morning, we’ll hear from the Federal Reserve on Wednesday and the ECB on Thursday. Economists expect this Fed this meeting will primarily provide a status update on the Fed’s actions to date and the Committee’s evolving views about the economic outlook; after all the Fed is already at zero and QE is unlimited so there is nothing more it can do absent buying stocks. Attention will then turn to the ECB the following day. While they have been super active of late, the last time they met near the start of the market sell-off there was a big communication error with the ‘we’re not here to close spreads’ type comment. So expect this to be a very carefully worded statement and press conference. Some attention will be as to whether they include fallen angels in their list of purchases following the Fed earlier this com month.

Turning to economic data, this week sees a number of high profile releases that will be of interest to investors. The first look at Q1 GDP readings will be closely watched, with the US (DB at -2.3%) reporting on Wednesday, and the Euro Area then following on Thursday. Even though lockdowns only started in March expect the numbers to help shape economists as they refine their 2020 and 2021 growth forecasts. Attention will also fall on initial jobless claims which are likely to increase another 3.5mn for the week ending April 25, bringing the total for the past 6 weeks to 30 million workers laid off. Sentiment should continue to weaken in April with ISM manufacturing tumbling to 37.0 from 49.1 previously and consumer confidence dropping by 40 points to 80. Looking at GDP, BofA expects real GDP to plunge 7% in 1Q. Consumption and business capex should plummet. Meanwhile, monthly core PCE inflation should be little changed in March, edging down the % yoy rate to 1.7%

Also of interest will be a number of PMI readings out towards the end of the week. On Thursday we’ll get the composite, manufacturing and nonmanufacturing PMIs from China, which will give us an indication of how their economy has recovered as lockdown measures have been eased, and what that might mean for elsewhere. Friday sees the release of the final PMIs from Japan, the UK and the US, and there’s also the ISM manufacturing reading from the US on Friday as well. Europe is on holiday so its PMIs are delayed until next week. The rest of the data is in the day by day guide at the end. China is also on holiday on Friday.

Courtesy of DB, here is a day-by-day calendar of events:

Monday

  • Data: France Q1 total jobseekers, US April Dallas Fed manufacturing activity
  • Central Banks: Bank of Japan monetary policy decision
  • Earnings: Adidas

Tuesday

  • Data: Japan March jobless rate, France April consumer confidence, UK April CBI distributive trades survey, US March advance goods trade balance, preliminary March wholesale inventories, April Conference Board consumer confidence, Richmond Fed manufacturing index
  • Earnings: Alphabet, Novartis, Merck & Co., Pfizer, PepsiCo, HSBC, Starbucks, BP, Caterpillar, UBS, Santander, Ford

Wednesday

  • Data: Euro Area March M3 money supply, final April consumer confidence, April economic confidence, Italy March PPI, US weekly MBA mortgage applications, advance Q1 GDP, personal consumption, core PCE, March pending home sales, Germany preliminary April CPI
  • Central Banks: Federal Reserve monetary policy decision
  • Earnings: Microsoft, Facebook, Mastercard, AstraZeneca, American Tower, GlaxoSmithKline, Boeing, Volkswagen, General Electric, Daimler, Barclays, Samsung, Tesla

Thursday

  • Data: Japan March retail sales, housing starts, preliminary March industrial production, February vehicle production, China April composite PMI, manufacturing PMI, non-manufacturing PMI, France preliminary Q1 GDP, preliminary April CPI, March PPI, Germany April unemployment change, Italy preliminary Q1 GDP, March unemployment rate, preliminary April CPI, Euro Area March unemployment rate, advance Q1 GDP, April flash CPI, Canada February GDP, US March personal income, personal spending, weekly initial jobless claims, Q1 employment cost index, April MNI Chicago PMI
  • Central Banks: ECB monetary policy decision
  • Earnings: Apple, Amazon, Visa, Comcast, McDonald’s, Amgen, Royal Dutch Shell, Gilead Sciences, Lloyds Banking Group, Nokia, Twitter

Friday

  • Data: April manufacturing PMIs from Australia, Japan, UK, South Africa, Canada and US, Japan April vehicle sales, UK March consumer credit, mortgage approvals, M4 money supply, US March construction spending, April ISM manufacturing
  • Earnings: ExxonMobil, Chevron, Charter Communications, AbbVie, Honeywell International, RBS
  • Other: OPEC+ supply cuts take effect, Labour Day public holiday in numerous countries

Finally, looking at just the US, Goldman writes that the key event this week is the April FOMC meeting with the release of the statement and Summary of Economic Projections at 2:00 PM ET on Wednesday, followed by Chair Powell’s press conference at 2:30 PM. The key economic data releases this week are the initial Q1 GDP estimate on Wednesday, the jobless claims and personal income and spending reports on Thursday, and the ISM manufacturing report on Friday.

Monday, April 27

  • 10:30 AM Dallas Fed manufacturing index, April (consensus -75.0, last -70.0)

Tuesday, April 28

  • 08:30 AM Advance goods trade balance, March (GS -$71.0bn, consensus -$55.0bn, last -$59.9bn); We estimate that the goods trade deficit increased to $71.0bn in March, with a sharp drop in exports due to manufacturing downtime and reduced foreign demand related to the coronavirus sudden stop, but a smaller drop in imports given the multi-week lag between foreign shipments and their arrivals at US ports.
  • 08:30 AM Wholesale inventories, March (consensus -0.5%, last -0.7%); Retail inventories, March (last -0.3%)
  • 09:00 AM S&P/Case-Shiller 20-city home price index, February (GS +0.2%, consensus +0.35%, last +0.30%); We estimate the S&P/Case-Shiller 20-city home price index increased by 0.2% in February, following a 0.3% increase in January.
  • 10:00 AM Conference Board consumer confidence, April (GS 90.0, consensus 87.9, last 120.0): We estimate that the Conference Board consumer confidence index fell by 30.0pt to 90.0 in April, reflecting ongoing concerns related to the coronavirus and a pullback in other measures of consumer sentiment.
  • 10:00 AM Richmond Fed manufacturing index, April (consensus -40, last +2)

Wednesday, April 29

  • 08:30 AM GDP, Q1 advance (GS -4.8%, consensus -3.9%, last +2.1%); Personal consumption, Q1 advance (GS -3.5%, consensus -2.7%, last +1.8%): We estimate a 4.8% drop in the initial release of Q1 GDP (qoq ar), the weakest in a decade. Our forecast reflects a 3.5% drop in personal consumption from a virus-driven collapse in services activity in the second half of March. We also expect double-digit declines in structures investment (-15%) and equipment investment (-13%). Housing is set to be the sole bright spot, with residential investment (+14%) supported by strength early in the quarter. Despite the large expected GDP decline, we believe economic reality during the quarter was even worse: we expect a first-print bias caused by incomplete source data and survey non-response worth around 3-4pp to conceal an underlying GDP decline of closer to -8¼%. Please see our upcoming GDP preview for more information about these biases and the underlying pace of Q1 growth. We will finalize our GDP forecast after Tuesday morning’s trade balance and inventory data.
  • 10:00 AM Pending home sales, March (GS -19.0%, consensus -13.0%, last +2.4%); We estimate that pending home sales dropped by 19.0% in March based on regional home sales data, following a 2.4% rise in February. We have found pending home sales to be a useful leading indicator of existing home sales with a one-to-two-month lag.
  • 02:00 PM FOMC statement, April 28-29 meeting; As discussed in our FOMC preview, we do not expect any major policy changes at the April FOMC meeting. While we expect the FOMC to move to a regular pace of asset purchases eventually, we think it is unlikely to happen in the upcoming meeting. We also note that the new facilities to support credit market functioning appear sufficient for now, though Chair Powell will likely emphasize that the Fed is ready to intervene further if the need arises.

Thursday, April 30

  • 08:30 AM Personal income, March (GS -1.1%, consensus -1.6%, last +0.6%); Personal spending, March (GS -3.5%, consensus -5.0%, last +0.2%); PCE price index, March (GS -0.20%, consensus -0.3%, last +0.09%); Core PCE price index, March (GS -0.01%, consensus -0.1%, last +0.16%); PCE price index (yoy), March (GS +1.37%, consensus +1.3%, last +1.79%); Core PCE price index (yoy), March (GS +1.76%, consensus +1.6%, last +1.82%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index edged down by 0.01% month-over-month in March, corresponding to a 1.76% increase from a year earlier. Additionally, we expect that the headline PCE price index decreased 0.20% in March, corresponding to a 1.37% increase from a year earlier. We expect a 1.1% decline in personal income in March and a 3.5% decrease in personal spending.
  • 08:30 AM Initial jobless claims, week ended April 25 (GS 3,600k, consensus 3,500k, last 4,427k); Continuing jobless claims, week ended April 18 (consensus 19,000k, last 15,976k); We estimate initial jobless claims declined but remain elevated at 3,600k in the week ended April 25.
  • 08:30 AM Employment cost index, Q1 (GS +0.6%, consensus +0.6%, prior +0.7%); We estimate that the employment cost index rose 0.6% in Q1 (qoq sa). Wage growth measures generally decelerated in the quarter, but we expect little coronavirus impact on March straight-time wage rates.
  • 09:45 AM Chicago PMI, April (GS 39.0, consensus 38.2, last 47.8); We estimate that the Chicago PMI fell by 8.8pt to 39.0 in April – following a 1.2pt decline in March – reflecting significantly weaker readings for other manufacturing surveys.

Friday, Month 1

  • 09:45 AM Markit Flash US manufacturing PMI, April final (consensus 36.7, last 36.9)
  • 10:00 AM Construction spending, March (GS -3.0%, consensus -3.5%, last -1.3%); We estimate a 3.0% decline in construction spending in March, with scope for declines in private residential and nonresidential construction but potential for some increase in public construction.
  • 10:00 AM ISM manufacturing index, April (GS 37.0, consensus 36.1, last 49.1); Our manufacturing survey tracker fell by 11.3pt to 33.9 in April, following significantly weaker regional manufacturing surveys. We expect the ISM manufacturing index to drop by 12.1pt to 37.0.
  • 5:00 PM Lightweight motor vehicle sales (GS 7.5m, consensus 6.5m, last 11.4m)

Source: Deutsche Bank, Goldman, BofA,


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