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The World Enjoys the Cheap Seats: Global Week Ahead
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I think globally each week. Do you? Follow me on twitter @johnblank100
Obvious to all, the U.K.’s Brexit vote trumps all indicators. That controversial direct democracy vote determines the U.K’s status as a European Union country this Thursday, and likely much else down the road. Don’t underestimate the consequences.
While the actual Brexit referendum vote dominates this Global Week Ahead, polls and bookies will actively and fiercely trade the result beforehand. That makes any share buying this week a tricky -- but not unworthy -- task. Expect most long-term Europe and U.K. hands to sit on their hands.
I found it interesting to note the damage control going on around the Brexit event.
Mario Draghi speaks to the European Parliament on Tuesday.
Janet Yellen speaks to a Senate Banking Committee on Tuesday too.
The ECB governing council will meet in Frankfurt on Thursday.
There are, equally obviously, plenty of centrally organized plans to handle any fallout inside the U.K. These will be discussed openly during the week. I haven’t seen any listing of the Bank of England’s schedule. That groups’ vigilance is a foregone conclusion.
The BoE will surely act in some way if the Brexit vote is for “leave” and swift consequences are seen in the U.K. financial markets, particularly trading on the U.K. pound. They will breath a sigh of relief for a “stay” status quo. So too will David Cameron and George Osborne.
One can’t help but wonder if the remaining Brexit theatre is a tragic comedy, a drawn-out drama, or more like a short-term action movie, with lots of explosions and no deaths.
The 3-month U.K. pound low is $1.40. News about a turn up in Brexit “stay” polling sent it back above $1.46 on Monday, June 20th. That’s the top of the recent U.K. pound trading range. It’s anyone’s guess where it heads if “leave” wins the actual vote on Thursday, June 23rd. U.K. pound bears bandy about a FX rate of $1.25. That sounds too low. Most fast money is already parked outside the pound. A “stay” vote likely gets it above $1.50.
This latest Brexit ‘risk-off’ pullback means the moment is timely for non-U.S. share shopping -- away from Europe and the U.K.
3 non-U.S. Materials and Energy sector stocks look good to me. Each pick offers great share valuations and a nice dividend. Strengthening seen in underlying commodity prices firms up fundamental EPS and revenue growth support.
(1) Brazil’s Vale (VALE - Free Report) trades at $4.46 a share. This iron miner is back to a Zacks #1 Rank (Strong Buy). That bodes well for iron mining more globally. The stock has a Zacks VGM score of B, largely driven by a B in Zacks Value. The dividend is 2.04%. This pick depends on the China outlook more than the others.
(2) Brazil’s Braskem (BAK - Free Report) is trading back at $11.32 a share. It is back to a Zacks #1 Rank too. This is Latin America’s largest chemical conglomerate. The Zacks VGM score of A is good. This stock has been range trading in recent months. Shares could be heading back to $15 a share in the next ‘risk-on’ market surge. The dividend of 5.94% is attractive for long-term income portfolios.
(3) Canada’s Enbridge (ENB - Free Report) operates the world’s longest crude oil and liquids pipeline system. I have mentioned this stock before. The Zacks VGM score is B. There is a nice upward trading trend setting up, giving it a Zacks Momentum score of A. The dividend of 4.11% is very attractive.
Key Global/Macro indicators Out This Week—
On Monday, the German PPI came in at -2.7% y/y, better than a prior -3.1%. The m/m data came in at +0.4%.
The BoJ’s Kuroda speaks in Tokyo after the release of the latest BoJ minutes.
Mexico’s proxy GDP looks to get to +2.8% from +2.4%.
The Fed’s Powell and Kashkari speak.
On Tuesday, the Eurozone ZEW indices come out. Some forecasters expect economic sentiment to get to 20 from 16.8, current conditions to 55 from 53.1, and economic sentiment to 10 from 6.4. Others see stability. No ZEW calls are for the Eurozone outlook getting worse.
Australia’s RBA minutes come out.
The ECB’s Draghi speaks to the European Parliament.
The Fed’s Yellen speaks to a Senate banking panel.
On Wednesday, Sweden’s unemployment rate should be stable at 7.3%. Consumer confidence at 103.1, manufacturing confidence at 105.3, and the economic tendency at 103.1 -- all point to expansion.
Canada’s retail sales ex-auto should bounce back to +0.6% m/m, up from -0.3% m/m last month.
The U.S. existing home sales number should be stronger at 5.55 million from 5.45 million.
On Thursday, France’s preliminary manufacturing PMI should be 48.7 vs. a 48.4 prior. France’s preliminary services PMI should be 55 vs. 55.2 prior.
The Eurozone (preliminary) composite PMI looks to be 53. The Eurozone manufacturing PMI should be 51.4. The Eurozone services PMI 53.2.
U.S. initial claims should be strong at 270K.
U.S. flash manufacturing PMI should be 50.9 from 50.7.
The ECB governing council will meet in Frankfurt.
On Friday, France’s final GDP should be +1.4% y/y. The Netherlands GDP growth rate should be +1.4% y/y too.
German IFO business climate should be 107.4, current conditions 114 and expectations 101.2. All German indicators look strong.
U.S. durable goods ex-transport looks to be up +0.4% m/m.
Mexico’s retail sales look strong at +8.5% y/y from +6.4% y/y in a prior reading.
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The World Enjoys the Cheap Seats: Global Week Ahead
I think globally each week. Do you? Follow me on twitter @johnblank100
Obvious to all, the U.K.’s Brexit vote trumps all indicators. That controversial direct democracy vote determines the U.K’s status as a European Union country this Thursday, and likely much else down the road. Don’t underestimate the consequences.
While the actual Brexit referendum vote dominates this Global Week Ahead, polls and bookies will actively and fiercely trade the result beforehand. That makes any share buying this week a tricky -- but not unworthy -- task. Expect most long-term Europe and U.K. hands to sit on their hands.
I found it interesting to note the damage control going on around the Brexit event.
There are, equally obviously, plenty of centrally organized plans to handle any fallout inside the U.K. These will be discussed openly during the week. I haven’t seen any listing of the Bank of England’s schedule. That groups’ vigilance is a foregone conclusion.
The BoE will surely act in some way if the Brexit vote is for “leave” and swift consequences are seen in the U.K. financial markets, particularly trading on the U.K. pound. They will breath a sigh of relief for a “stay” status quo. So too will David Cameron and George Osborne.
One can’t help but wonder if the remaining Brexit theatre is a tragic comedy, a drawn-out drama, or more like a short-term action movie, with lots of explosions and no deaths.
The 3-month U.K. pound low is $1.40. News about a turn up in Brexit “stay” polling sent it back above $1.46 on Monday, June 20th. That’s the top of the recent U.K. pound trading range. It’s anyone’s guess where it heads if “leave” wins the actual vote on Thursday, June 23rd. U.K. pound bears bandy about a FX rate of $1.25. That sounds too low. Most fast money is already parked outside the pound. A “stay” vote likely gets it above $1.50.
This latest Brexit ‘risk-off’ pullback means the moment is timely for non-U.S. share shopping -- away from Europe and the U.K.
3 non-U.S. Materials and Energy sector stocks look good to me. Each pick offers great share valuations and a nice dividend. Strengthening seen in underlying commodity prices firms up fundamental EPS and revenue growth support.
(1) Brazil’s Vale (VALE - Free Report) trades at $4.46 a share. This iron miner is back to a Zacks #1 Rank (Strong Buy). That bodes well for iron mining more globally. The stock has a Zacks VGM score of B, largely driven by a B in Zacks Value. The dividend is 2.04%. This pick depends on the China outlook more than the others.
(2) Brazil’s Braskem (BAK - Free Report) is trading back at $11.32 a share. It is back to a Zacks #1 Rank too. This is Latin America’s largest chemical conglomerate. The Zacks VGM score of A is good. This stock has been range trading in recent months. Shares could be heading back to $15 a share in the next ‘risk-on’ market surge. The dividend of 5.94% is attractive for long-term income portfolios.
(3) Canada’s Enbridge (ENB - Free Report) operates the world’s longest crude oil and liquids pipeline system. I have mentioned this stock before. The Zacks VGM score is B. There is a nice upward trading trend setting up, giving it a Zacks Momentum score of A. The dividend of 4.11% is very attractive.
Key Global/Macro indicators Out This Week—
On Monday, the German PPI came in at -2.7% y/y, better than a prior -3.1%. The m/m data came in at +0.4%.
The BoJ’s Kuroda speaks in Tokyo after the release of the latest BoJ minutes.
Mexico’s proxy GDP looks to get to +2.8% from +2.4%.
The Fed’s Powell and Kashkari speak.
On Tuesday, the Eurozone ZEW indices come out. Some forecasters expect economic sentiment to get to 20 from 16.8, current conditions to 55 from 53.1, and economic sentiment to 10 from 6.4. Others see stability. No ZEW calls are for the Eurozone outlook getting worse.
Australia’s RBA minutes come out.
The ECB’s Draghi speaks to the European Parliament.
The Fed’s Yellen speaks to a Senate banking panel.
On Wednesday, Sweden’s unemployment rate should be stable at 7.3%. Consumer confidence at 103.1, manufacturing confidence at 105.3, and the economic tendency at 103.1 -- all point to expansion.
Canada’s retail sales ex-auto should bounce back to +0.6% m/m, up from -0.3% m/m last month.
The U.S. existing home sales number should be stronger at 5.55 million from 5.45 million.
On Thursday, France’s preliminary manufacturing PMI should be 48.7 vs. a 48.4 prior. France’s preliminary services PMI should be 55 vs. 55.2 prior.
The Eurozone (preliminary) composite PMI looks to be 53. The Eurozone manufacturing PMI should be 51.4. The Eurozone services PMI 53.2.
U.S. initial claims should be strong at 270K.
U.S. flash manufacturing PMI should be 50.9 from 50.7.
The ECB governing council will meet in Frankfurt.
On Friday, France’s final GDP should be +1.4% y/y. The Netherlands GDP growth rate should be +1.4% y/y too.
German IFO business climate should be 107.4, current conditions 114 and expectations 101.2. All German indicators look strong.
U.S. durable goods ex-transport looks to be up +0.4% m/m.
Mexico’s retail sales look strong at +8.5% y/y from +6.4% y/y in a prior reading.