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To start this Global Week Ahead, trader doubt grew copiously over the weekend.
In the ensuing 5 trading days, a 2016 love affair with brazen and cheap populist rhetoric is about to wise up with a 2017 hard edge of reality. This gets counted in terms of rough political change.
What’s a trader to worry about on this side of the Atlantic?
President Trump may not be able to implement his full economic agenda. This fresh worry comes after the President and House Republicans failed on health-care insurance reform last Friday.
The much-hyped Team Goldman Sachs tax reforms partially needed spending cuts on health care to look palatable. That’s not going to happen now.
Bottom of Form
On Monday, U.S. equity index futures suggested major U.S. stock indices would retreat for the 7th time in eight days. European shares have slumped.
The U.S. dollar is about to erase the rally spurred by Trump’s victory, too. The dollar is falling against all 10 major currency crosses. Oil slipped. Iron ore futures paced losses in raw materials. Safe havens including the Japanese yen climbed.
How about on the other side of the pond?
Wednesday, March 29th: that is the day U.K. Prime Minister Theresa May sends Article 50 notice to withdraw from the European Union (the EU).
This EU exit -- known to traders as Brexit -- is supposed to be a two-year process.
To stop the exit process -- and have a change of heart -- all EU member governments must agree. So a country triggers exit unilaterally. But “exiting the exit” must achieve unanimous EU consent. That’s not easy.
Here we go!
According to observers, a soft Brexit option seems remote at this point, versus a hard Brexit. This perhaps brings forth greater EU unity.
Acting tough sends a strong message -- at the U.K.’s expense -- on how other exit candidates get treated in future, and it puts the U.K. on the defensive in negotiations.
In Mexico, on Thursday, we may also see collateral damage from the harsh political rhetoric of 2016. The Bank of Mexico may be forced to raise rates another 50 basis points, to reign in peso-driven inflation.
The latest leg in peso depreciation accelerated after the election of the new U.S. President.
Top Zacks #1 Rank (STRONG BUY) stocks—
Unilever : This big $86 billion market cap European consumer staples conglomerate also scores a long-term Zacks VGM score of B.
BHP Billiton (BHP - Free Report) : With all the latest hang wringing about iron ore prices in play; now may be a great time to load up on shares of this Australian mining giant, with $58 billion in market cap. The long-term Zacks VGM score is B.
Telefonica (TEF - Free Report) : I liked this large-cap telco stock — with $55 billion in market cap — a lot last year. This year is when the big share price run from the bottom is going on. These Latin American and Spanish-focused shares get a Zacks VGM score of A.
Key Global Macro—
On Tuesday, Fed Chair Janet Yellen speaks.
On Thursday, the Bank of Mexico (known as Banxico) meets. Banxico isn’t finished hiking rates. Yet, consensus is divided on whether or not the next move up happens right now.
Hawkish analysts expect a 50 bps hike on Thursday, March 30th. In Latin American markets, the Banxico meeting will be the most watched development over the coming Global Week Ahead.
On Monday, the influential German IFO indexes came out. Business Climate was up to 112.3 from 111.1; Current Conditions was up to 119.4 from 118.4. Expectations went up to 105.7 from 104.2. That’s all good news for growth.
Mexico’s proxy GDP growth rate should be 1.9% y/y from 2.08% y/y.
On Tuesday, the Case-Shiller Home Price index should show us where the +5.58% annual growth in home prices is going. Expect a further rise.
Mexico’s unemployment rate should rise to 3.65% from 2.57%. Ominous.
The Fed’s Yellen speaks.
On Wednesday, U.S. pending home sales comes out. The prior was weak at 2.8%. This is a forward-looking indicator, so it will be followed closely.
The unemployment rate in Hungary looks low at 4.3%.
On Thursday, Spain’s most important consumer inflation rate, the HICP, comes out. The flash reading was 3.0% y/y last time around.
Germany’s HICP reading should be 2.0% y/y from 2.2% in a prior reading. The fall must be related to declining oil prices.
The Eurozone’s Business Climate (0.82), Economic Confidence (108) and Industrial sentiment (1.3) indices come out. These are like the German IFO indexes.
U.S. initial claims still look strong at 261K.
Brazil’s retail sales get better, moving from -4.9% y/y to -4.2% y/y. Still pathetic, but this is better.
On Friday, Germany’s unemployment rate should be 5.9% or better.
The core Flash HICP for the Eurozone should be +0.90% y/y. This does not include the volatile energy component. The broad HICP was +1.6% y/y last time.
The U.K.’s final GDP reading should be 2.0% y/y. That would be unchanged from a prior reading.
University of Michigan sentiment should be updating from a 97.6 prior reading.
Brazil’s unemployment rate could get to 13.2% from 12.6%. That’s awful.
In comparison, Columbia’s unemployment rate could go to 10.9% from 13.4%.
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Political Change Is Hard: Global Week Ahead
To start this Global Week Ahead, trader doubt grew copiously over the weekend.
In the ensuing 5 trading days, a 2016 love affair with brazen and cheap populist rhetoric is about to wise up with a 2017 hard edge of reality. This gets counted in terms of rough political change.
What’s a trader to worry about on this side of the Atlantic?
President Trump may not be able to implement his full economic agenda. This fresh worry comes after the President and House Republicans failed on health-care insurance reform last Friday.
The much-hyped Team Goldman Sachs tax reforms partially needed spending cuts on health care to look palatable. That’s not going to happen now.
Bottom of Form
On Monday, U.S. equity index futures suggested major U.S. stock indices would retreat for the 7th time in eight days. European shares have slumped.
The U.S. dollar is about to erase the rally spurred by Trump’s victory, too. The dollar is falling against all 10 major currency crosses. Oil slipped. Iron ore futures paced losses in raw materials. Safe havens including the Japanese yen climbed.
How about on the other side of the pond?
Wednesday, March 29th: that is the day U.K. Prime Minister Theresa May sends Article 50 notice to withdraw from the European Union (the EU).
This EU exit -- known to traders as Brexit -- is supposed to be a two-year process.
To stop the exit process -- and have a change of heart -- all EU member governments must agree. So a country triggers exit unilaterally. But “exiting the exit” must achieve unanimous EU consent. That’s not easy.
Here we go!
According to observers, a soft Brexit option seems remote at this point, versus a hard Brexit. This perhaps brings forth greater EU unity.
Acting tough sends a strong message -- at the U.K.’s expense -- on how other exit candidates get treated in future, and it puts the U.K. on the defensive in negotiations.
In Mexico, on Thursday, we may also see collateral damage from the harsh political rhetoric of 2016. The Bank of Mexico may be forced to raise rates another 50 basis points, to reign in peso-driven inflation.
The latest leg in peso depreciation accelerated after the election of the new U.S. President.
Top Zacks #1 Rank (STRONG BUY) stocks—
Unilever : This big $86 billion market cap European consumer staples conglomerate also scores a long-term Zacks VGM score of B.
BHP Billiton (BHP - Free Report) : With all the latest hang wringing about iron ore prices in play; now may be a great time to load up on shares of this Australian mining giant, with $58 billion in market cap. The long-term Zacks VGM score is B.
Telefonica (TEF - Free Report) : I liked this large-cap telco stock — with $55 billion in market cap — a lot last year. This year is when the big share price run from the bottom is going on. These Latin American and Spanish-focused shares get a Zacks VGM score of A.
Key Global Macro—
On Tuesday, Fed Chair Janet Yellen speaks.
On Thursday, the Bank of Mexico (known as Banxico) meets. Banxico isn’t finished hiking rates. Yet, consensus is divided on whether or not the next move up happens right now.
Hawkish analysts expect a 50 bps hike on Thursday, March 30th. In Latin American markets, the Banxico meeting will be the most watched development over the coming Global Week Ahead.
On Monday, the influential German IFO indexes came out. Business Climate was up to 112.3 from 111.1; Current Conditions was up to 119.4 from 118.4. Expectations went up to 105.7 from 104.2. That’s all good news for growth.
Mexico’s proxy GDP growth rate should be 1.9% y/y from 2.08% y/y.
On Tuesday, the Case-Shiller Home Price index should show us where the +5.58% annual growth in home prices is going. Expect a further rise.
Mexico’s unemployment rate should rise to 3.65% from 2.57%. Ominous.
The Fed’s Yellen speaks.
On Wednesday, U.S. pending home sales comes out. The prior was weak at 2.8%. This is a forward-looking indicator, so it will be followed closely.
The unemployment rate in Hungary looks low at 4.3%.
On Thursday, Spain’s most important consumer inflation rate, the HICP, comes out. The flash reading was 3.0% y/y last time around.
Germany’s HICP reading should be 2.0% y/y from 2.2% in a prior reading. The fall must be related to declining oil prices.
The Eurozone’s Business Climate (0.82), Economic Confidence (108) and Industrial sentiment (1.3) indices come out. These are like the German IFO indexes.
U.S. initial claims still look strong at 261K.
Brazil’s retail sales get better, moving from -4.9% y/y to -4.2% y/y. Still pathetic, but this is better.
On Friday, Germany’s unemployment rate should be 5.9% or better.
The core Flash HICP for the Eurozone should be +0.90% y/y. This does not include the volatile energy component. The broad HICP was +1.6% y/y last time.
The U.K.’s final GDP reading should be 2.0% y/y. That would be unchanged from a prior reading.
University of Michigan sentiment should be updating from a 97.6 prior reading.
Brazil’s unemployment rate could get to 13.2% from 12.6%. That’s awful.
In comparison, Columbia’s unemployment rate could go to 10.9% from 13.4%.