We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Europe's Elections Stoke the Fire: Global Week Ahead
Read MoreHide Full Article
In the Global Week Ahead, the Federal Open Market Committee (FOMC) surely raises the Fed Funds target range by 25 basis points from 0.75 to 1.0% on Wednesday afternoon.
That foregone conclusion is not where traders will focus. Primary U.S. Treasury dealers and Fed Funds future markets carry nearly a 100% market probability on a hike.
Want a source for trader surprise? It would be if the FOMC doesn’t move its forward ‘dot plot’ enough. Future policy guidance should be more hawkish, but how much more hawkish?
FOMC macro data will be equally interesting. See if the committee’s GDP, inflation and unemployment rate forecast updates move significantly. These are "tells," too. Traders, pay close attention.
Chair Yellen’s recent Executives’ Club of Chicago language guides us. She said rate hikes proceed at a gradual pace, and the Fed’s huge balance sheet reinvests its earnings, until this rate normalization gets “well underway.”
Consensus thinks a Fed Funds target rate of 2.0%+ does not occur until late 2018. That sounds too low and too late to me.
By the way, the latest GDPNow forecast on March 8th by the Atlanta Fed shows a paltry +1.2% for the First Quarter of 2017.
Without strong GDP growth to back it, why did U.S. hiring accelerate early in 2017? Is extra hiring being done in anticipation of better capital goods tax incentives, like accelerated depreciation and lower corporate income taxes?
Or are incremental job additions running too far ahead of U.S. GDP data?
Over in Europe, pay close attention to high-level elections this year.
The first to stoke these smoldering fires are Dutch voters. Their high-level elections are held this Wednesday.
You may not know this. The Turkish president and strongman, Erdogan, just called the Netherlands a “banana republic,” saying it would “pay the price” for its actions.
What actions is he referring to? The Dutch didn’t let his Foreign Minister’s plane land, so he could participate in a Turkish referendum rally held there. Both countries are part of NATO.
The much more important French presidential election holds its first round of voting on April 23rd. The second round occurs on May 7th.
The 39-year-old centrist candidate Emmanuel Macron has jump-started the pushback on the incendiary fringe movements that lit up across advanced countries in 2016. He is a former French Minister of the Economy, Industry and Digital Affairs.
Germany holds Federal elections on September 24th.
Top Zacks Rank stocks—
Texas Instruments (TXN - Free Report) . This marquee large cap semiconductor stock got added – again -- to our #1 STRONG BUY list on March 7th. It’s all about the autonomous vehicle revolution that’s about to pick up its pace.
Telefonica SA (TEF - Free Report) . The biggest of Latin American telco providers is back. Its long-term Zacks VGM score is A. The latest #1 STRONG BUY rating hit on March 8th.
Deere and Company (DE - Free Report) . A sales rebound is underway for big U.S. agriculture machinery. Does the trade rhetoric help or hurt here? The Zacks #1 STRONG BUY rating hit on March 11th.
Key Global Macro—
The Federal Reserve’s two-day meeting is the highlight of the week.
Also, there are a number of follow-on central bank meetings. Watch the Japan (the BoJ), the U.K. (the BoE), the Bank of Indonesia (BI) and the Swiss National Bank (SNB).
Further, the Group of 20 (G20) finance ministers meet in Baden-Baden, Germany. This is the first foreign trip for the new U.S. Treasury Secretary, Steve Mnuchin.
Economic data from the U.S. on home building should be noted. The NAHB index comes out Wednesday. Housing starts and permits come out on Thursday.
On Monday, the ECB’s Draghi speaks in Frankfurt.
On Tuesday, the Federal Open Market Committee (FOMC) meets to start a 2-day meeting.
The final HICP inflation reading for Germany looks to be +2.2% y/y. In Spain, the HICP is already +3.0% y/y.
The German ZEW indices come out. Current conditions should rise to 77 from 76.4. Economic sentiment should get to 14.0 from 10.4.
For the Eurozone, the ZEW economic sentiment index should get to 18.5 from 17.1.
Industrial production in Mexico looks set to decline -0.5% y/y, a slight upturn from the prior -0.6% y/y rate.
On Wednesday, the FOMC meeting wraps up. We are likely to get a 25 basis point rate hike. A press conference follows. The ‘dot plot’ is what moves markets, not the rate hike.
The unemployment rate in Turkey is 12.1%.
The U.K.’s ILO unemployment rate is 4.8%.
U.S. retail sales data comes out.
The National Association for Home Builders (NAHB) issues its builders survey. The prior reading was 65.
On Thursday, the Bank of Japan (BoJ) issues a policy statement and the -0.10 overnight rate is assessed.
The Bank of Indonesia (BI) holds a meeting. The 7-day reverse repo rate (its policy rate) should remain at 4.75%.
The Bank of England (BoE) holds a monetary policy meeting and issues an updated policy rate decision. A base rate of 0.25% is what is in place.
The Central Bank of Turkey (CBT) announces its interest rates. The 1-week repo rate (its policy rate) is 8.0%.
Chile’s overnight target rate should fall to 3.0% from 3.25%.
U.S. housing starts should get to 1.31 million from 1.246 million.
On Friday, the U.S. capacity utilization rate of 75.3 percent gets updated.
U.S. leading indicators should be similar to the 0.6 reading prior.
The University of Michigan sentiment index should be better than the prior 96.3, given the rising stock market that it usually tracks.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Europe's Elections Stoke the Fire: Global Week Ahead
In the Global Week Ahead, the Federal Open Market Committee (FOMC) surely raises the Fed Funds target range by 25 basis points from 0.75 to 1.0% on Wednesday afternoon.
That foregone conclusion is not where traders will focus. Primary U.S. Treasury dealers and Fed Funds future markets carry nearly a 100% market probability on a hike.
Want a source for trader surprise? It would be if the FOMC doesn’t move its forward ‘dot plot’ enough. Future policy guidance should be more hawkish, but how much more hawkish?
FOMC macro data will be equally interesting. See if the committee’s GDP, inflation and unemployment rate forecast updates move significantly. These are "tells," too. Traders, pay close attention.
Chair Yellen’s recent Executives’ Club of Chicago language guides us. She said rate hikes proceed at a gradual pace, and the Fed’s huge balance sheet reinvests its earnings, until this rate normalization gets “well underway.”
Consensus thinks a Fed Funds target rate of 2.0%+ does not occur until late 2018. That sounds too low and too late to me.
By the way, the latest GDPNow forecast on March 8th by the Atlanta Fed shows a paltry +1.2% for the First Quarter of 2017.
Without strong GDP growth to back it, why did U.S. hiring accelerate early in 2017? Is extra hiring being done in anticipation of better capital goods tax incentives, like accelerated depreciation and lower corporate income taxes?
Or are incremental job additions running too far ahead of U.S. GDP data?
Over in Europe, pay close attention to high-level elections this year.
The first to stoke these smoldering fires are Dutch voters. Their high-level elections are held this Wednesday.
You may not know this. The Turkish president and strongman, Erdogan, just called the Netherlands a “banana republic,” saying it would “pay the price” for its actions.
What actions is he referring to? The Dutch didn’t let his Foreign Minister’s plane land, so he could participate in a Turkish referendum rally held there. Both countries are part of NATO.
The much more important French presidential election holds its first round of voting on April 23rd. The second round occurs on May 7th.
The 39-year-old centrist candidate Emmanuel Macron has jump-started the pushback on the incendiary fringe movements that lit up across advanced countries in 2016. He is a former French Minister of the Economy, Industry and Digital Affairs.
Germany holds Federal elections on September 24th.
Top Zacks Rank stocks—
Texas Instruments (TXN - Free Report) . This marquee large cap semiconductor stock got added – again -- to our #1 STRONG BUY list on March 7th. It’s all about the autonomous vehicle revolution that’s about to pick up its pace.
Telefonica SA (TEF - Free Report) . The biggest of Latin American telco providers is back. Its long-term Zacks VGM score is A. The latest #1 STRONG BUY rating hit on March 8th.
Deere and Company (DE - Free Report) . A sales rebound is underway for big U.S. agriculture machinery. Does the trade rhetoric help or hurt here? The Zacks #1 STRONG BUY rating hit on March 11th.
Key Global Macro—
The Federal Reserve’s two-day meeting is the highlight of the week.
Also, there are a number of follow-on central bank meetings. Watch the Japan (the BoJ), the U.K. (the BoE), the Bank of Indonesia (BI) and the Swiss National Bank (SNB).
Further, the Group of 20 (G20) finance ministers meet in Baden-Baden, Germany. This is the first foreign trip for the new U.S. Treasury Secretary, Steve Mnuchin.
Economic data from the U.S. on home building should be noted. The NAHB index comes out Wednesday. Housing starts and permits come out on Thursday.
On Monday, the ECB’s Draghi speaks in Frankfurt.
On Tuesday, the Federal Open Market Committee (FOMC) meets to start a 2-day meeting.
The final HICP inflation reading for Germany looks to be +2.2% y/y. In Spain, the HICP is already +3.0% y/y.
The German ZEW indices come out. Current conditions should rise to 77 from 76.4. Economic sentiment should get to 14.0 from 10.4.
For the Eurozone, the ZEW economic sentiment index should get to 18.5 from 17.1.
Industrial production in Mexico looks set to decline -0.5% y/y, a slight upturn from the prior -0.6% y/y rate.
On Wednesday, the FOMC meeting wraps up. We are likely to get a 25 basis point rate hike. A press conference follows. The ‘dot plot’ is what moves markets, not the rate hike.
The unemployment rate in Turkey is 12.1%.
The U.K.’s ILO unemployment rate is 4.8%.
U.S. retail sales data comes out.
The National Association for Home Builders (NAHB) issues its builders survey. The prior reading was 65.
On Thursday, the Bank of Japan (BoJ) issues a policy statement and the -0.10 overnight rate is assessed.
The Bank of Indonesia (BI) holds a meeting. The 7-day reverse repo rate (its policy rate) should remain at 4.75%.
The Bank of England (BoE) holds a monetary policy meeting and issues an updated policy rate decision. A base rate of 0.25% is what is in place.
The Central Bank of Turkey (CBT) announces its interest rates. The 1-week repo rate (its policy rate) is 8.0%.
Chile’s overnight target rate should fall to 3.0% from 3.25%.
U.S. housing starts should get to 1.31 million from 1.246 million.
On Friday, the U.S. capacity utilization rate of 75.3 percent gets updated.
U.S. leading indicators should be similar to the 0.6 reading prior.
The University of Michigan sentiment index should be better than the prior 96.3, given the rising stock market that it usually tracks.