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Leaders and Laggards on the Global Growth Team: Global Week Ahead
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I think globally to start each week. Do You? Follow me on Twitter @johnblank100
In recent days, we got handed a composite global GDP growth story -- with fresh leaders and fresh laggards.
In the leaders column, count the Germans first and foremost. German GDP growth data was better than expected. So was the surprise pick-up in Greece’s GDP growth. Crisis-ridden Greece is welcome news indeed.
However, two fresh GDP growth laggards, in particular, show us the secular stagnation holding back the entirety of the global economy.
To top off the laggards column, it looks like the Japanese economy will be at a standstill for the rest of this year. Will traders see further negative rate monetary policy action from the BoJ -- or some other action taken?
GDP in Japan grew at a paltry annualized rate of +0.2% in Q2, according to preliminary data released Monday. This missed economists’ forecasts for +0.7% growth. For Japan, it marked a sharp GDP slowdown compared with a +2.0% rate in Q1.
On top of that, Italy’s unexpected weak GDP growth performance in Q2 contributed to a slowing the GDP growth rate for the Eurozone as a whole.
According to macro data released by Istat -- Italy’s statistical agency -- on Friday, Italy’s GDP growth slowed from +0.3% in Q1 to a flat (0.0%) reading in Q2. This was well below economists’ forecasts for +0.2% Italian GDP growth in Q2.
Germany and Greece are the fresh leaders. Japan and Italy are the fresh laggards. To bust upward into a higher rate of global GDP growth, all of the world’s most significant economies must hit on all cylinders.
A solid column of notable laggards holds down the world’s GDP growth team. You can’t cut the laggards from the roster, bench them, or trade them away. That means the world economy growth rate limps along for a few more quarters.
What are the other big implications -- to a longer path with slow global growth?
First, this tepid condition is going to keep the fire hose of extraordinary QE monetary policy on for longer. Second, this mixed growth condition is going to start up a vigorous search for new solutions to secular growth problems in laggard countries like Japan and Italy. A bank bailout in Italy tops that list.
That is what a trader and an investor should watch for: novel targeted stimulus moves from authorities in laggard countries.
We got a few fresh Zacks Rank upgrades in the last few days.
My old Greek shipping stock pick friend Aegean Marine is back to a Zacks #1 Rank and holds a Zacks VGM score of A. A surprise GDP growth turnup in the Greek economy is playing out here. At $8 a share, with a forward P/E of just 8.5, this stock has plenty of room to run.
In the U.S., take a look at Sanderson Farms . This poultry producer stock is a fresh Zacks #1 Rank and holds a Zacks VGM score of A, too. The Zacks Industry rank for the Agricultural Producers is #20 out of 265. That looks strong. The stock also scored an A for Zacks Momentum.
With housing data out this week, keep a close eye on MDC Holdings (MDC - Free Report) . This is a U.S. residential building with a fresh Zacks #1 Rank and a Zacks VGM score of A.
The Zacks Industry rank for the Homebuilders is #32 out of 265. That means analysts are positive on the growth prospects for this key industry. With a PEG ratio of 0.47, this stock is a value. The Zacks Momentum grade shows an A at the moment.
The Big Global/Macro data prints this week—
The week’s schedule looks fairly tame.
The German ZEW indices on Tuesday and the U.S. housing data on starts and permits also on Tuesday look to be the big data prints.
The FOMC’s latest minutes released on Wednesday may move the rate and currency markets a bit.
On Monday, the unemployment rate in Turkey was 9.4%. After the coup, we shall see.
Tax collections in Brazil, a sign of economic strength, rose to 110.50 billion reals from 98.13 billion. And that is data from before the Olympics.
The U.S. NAHB builders survey should come in at 58 from a 59 prior.
On Tuesday, the Germany ZEW indices come out. Current conditions in Germany could get to 50.5 from 49.8. Economic sentiment in Germany could get to 2 from -6.8. For the Eurozone as a whole, economic sentiment could rise to -1 from -14.7.
U.S. building permits should get to 1.16 million from 1.153 million last time. U.S. housing starts should be 1.18 million from 1.189 million.
U.S. capacity utilization should come out at 76 from 75.40.
On Wednesday, the U.K. ILO unemployment rate should be 4.9%, the same as before.
South Africa’s retail sales growth should be +4.5% y/y.
Russia’s unemployment rate should be 5.4%. That’s near the US rate, by the way.
The latest FOMC minutes get released.
The Fed’s Bullard speaks.
On Thursday, Australia’s unemployment rate should be 5.9%, rising from 5.8% previously.
GDP growth in the Philippines looks strong at 6.8% y/y.
The U.K.’s latest retail sales number (ex-Auto and Fuel) should bounce to +4.1% from +4.9% y/y. That shows resilience after the Brexit vote.
U.S. initial claims should remain near rock bottom at 271K.
On Friday, the core rate of inflation in Canada looks to be near the target at 2.1%.
Canada’s retail sales should be up +0.6% from +0.2% m/m. Ex Auto, it should be up +0.3% from +0.9% before.
The Fed’s Kaplan speaks in Dallas.
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Leaders and Laggards on the Global Growth Team: Global Week Ahead
I think globally to start each week. Do You? Follow me on Twitter @johnblank100
In recent days, we got handed a composite global GDP growth story -- with fresh leaders and fresh laggards.
In the leaders column, count the Germans first and foremost. German GDP growth data was better than expected. So was the surprise pick-up in Greece’s GDP growth. Crisis-ridden Greece is welcome news indeed.
However, two fresh GDP growth laggards, in particular, show us the secular stagnation holding back the entirety of the global economy.
To top off the laggards column, it looks like the Japanese economy will be at a standstill for the rest of this year. Will traders see further negative rate monetary policy action from the BoJ -- or some other action taken?
GDP in Japan grew at a paltry annualized rate of +0.2% in Q2, according to preliminary data released Monday. This missed economists’ forecasts for +0.7% growth. For Japan, it marked a sharp GDP slowdown compared with a +2.0% rate in Q1.
On top of that, Italy’s unexpected weak GDP growth performance in Q2 contributed to a slowing the GDP growth rate for the Eurozone as a whole.
According to macro data released by Istat -- Italy’s statistical agency -- on Friday, Italy’s GDP growth slowed from +0.3% in Q1 to a flat (0.0%) reading in Q2. This was well below economists’ forecasts for +0.2% Italian GDP growth in Q2.
Germany and Greece are the fresh leaders. Japan and Italy are the fresh laggards. To bust upward into a higher rate of global GDP growth, all of the world’s most significant economies must hit on all cylinders.
A solid column of notable laggards holds down the world’s GDP growth team. You can’t cut the laggards from the roster, bench them, or trade them away. That means the world economy growth rate limps along for a few more quarters.
What are the other big implications -- to a longer path with slow global growth?
First, this tepid condition is going to keep the fire hose of extraordinary QE monetary policy on for longer. Second, this mixed growth condition is going to start up a vigorous search for new solutions to secular growth problems in laggard countries like Japan and Italy. A bank bailout in Italy tops that list.
That is what a trader and an investor should watch for: novel targeted stimulus moves from authorities in laggard countries.
We got a few fresh Zacks Rank upgrades in the last few days.
My old Greek shipping stock pick friend Aegean Marine is back to a Zacks #1 Rank and holds a Zacks VGM score of A. A surprise GDP growth turnup in the Greek economy is playing out here. At $8 a share, with a forward P/E of just 8.5, this stock has plenty of room to run.
In the U.S., take a look at Sanderson Farms . This poultry producer stock is a fresh Zacks #1 Rank and holds a Zacks VGM score of A, too. The Zacks Industry rank for the Agricultural Producers is #20 out of 265. That looks strong. The stock also scored an A for Zacks Momentum.
With housing data out this week, keep a close eye on MDC Holdings (MDC - Free Report) . This is a U.S. residential building with a fresh Zacks #1 Rank and a Zacks VGM score of A.
The Zacks Industry rank for the Homebuilders is #32 out of 265. That means analysts are positive on the growth prospects for this key industry. With a PEG ratio of 0.47, this stock is a value. The Zacks Momentum grade shows an A at the moment.
The Big Global/Macro data prints this week—
The week’s schedule looks fairly tame.
The German ZEW indices on Tuesday and the U.S. housing data on starts and permits also on Tuesday look to be the big data prints.
The FOMC’s latest minutes released on Wednesday may move the rate and currency markets a bit.
On Monday, the unemployment rate in Turkey was 9.4%. After the coup, we shall see.
Tax collections in Brazil, a sign of economic strength, rose to 110.50 billion reals from 98.13 billion. And that is data from before the Olympics.
The U.S. NAHB builders survey should come in at 58 from a 59 prior.
On Tuesday, the Germany ZEW indices come out. Current conditions in Germany could get to 50.5 from 49.8. Economic sentiment in Germany could get to 2 from -6.8. For the Eurozone as a whole, economic sentiment could rise to -1 from -14.7.
U.S. building permits should get to 1.16 million from 1.153 million last time. U.S. housing starts should be 1.18 million from 1.189 million.
U.S. capacity utilization should come out at 76 from 75.40.
On Wednesday, the U.K. ILO unemployment rate should be 4.9%, the same as before.
South Africa’s retail sales growth should be +4.5% y/y.
Russia’s unemployment rate should be 5.4%. That’s near the US rate, by the way.
The latest FOMC minutes get released.
The Fed’s Bullard speaks.
On Thursday, Australia’s unemployment rate should be 5.9%, rising from 5.8% previously.
GDP growth in the Philippines looks strong at 6.8% y/y.
The U.K.’s latest retail sales number (ex-Auto and Fuel) should bounce to +4.1% from +4.9% y/y. That shows resilience after the Brexit vote.
U.S. initial claims should remain near rock bottom at 271K.
On Friday, the core rate of inflation in Canada looks to be near the target at 2.1%.
Canada’s retail sales should be up +0.6% from +0.2% m/m. Ex Auto, it should be up +0.3% from +0.9% before.
The Fed’s Kaplan speaks in Dallas.