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In a short Global Week Ahead, Mainland China macro data is the premier event.
Could China’s economy be losing momentum in 2017? When you are the world’s dominant manufacturing center, this momentum matters for lots of key global growth-sensitive sectors, including the direction of commodity prices, and industrial materials demand.
The two Mainland China purchasing manager indexes (PMI) to be released this week could be misleading signals. But they are all traders have to make their inferences.
On Wednesday, the May reading on the China state PMI arrives. On Thursday, the private Caixin China manufacturing PMI -- which samples smaller manufacturers across coastal cities -- arrives.
Across recent months, both the state and private China manufacturing PMI data have been signaling weak growth; just above the key Rubicon of expansion at 50.
Yet, China’s officially reported GDP growth rate of +6.9% y/y in Q1 was in line with the +6.7 to +6.8% readings of the prior five quarters.
If China’s economy is found to be slowing, then what major economy is accelerating – bolstering the belief the global economy is performing at an improved growth rate in 2017?
Consider these sobering facts. The USA posted a paltry +1.2% annualized growth rate in Q1. And that came with spare growth in consumer spending. The Eurozone economy is getting stronger. But that means it grew by +2.0% in annualized growth terms.
Also on Wednesday, India’s Q1 GDP growth rate arrives. Consensus expects India to show a +7.0% growth rate. But India’s economy is so much smaller than China’s. Such a strong Indian growth rate does not turn the dial on the global economy.
In sum, it all comes down to relying on Mainland China. They and only they can drive the global economy to a higher level.
Hence, their manufacturing PMI data releases are the highlight in the Global Week Ahead.
Top Zacks #1 Rank (STRONG BUY) Stocks
(1) Tokyo Electron (TOELY - Free Report) : This is a big semiconductor company you may not know about. The long-term Zacks VGM score is B.
(2) Orange (ORAN - Free Report) : This is a big European wireless telco company. The long-term Zacks VGM score is B.
(3) Atlas Copco ATKLY: This company is a world leading provider of industrial productivity solutions. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental. Once again, the long term Zacks VGM score is B.
Key Global Macro—
The Fed goes in to communications blackout on Saturday, June 3rd, in advance of the June 14th FOMC meeting. In the week ahead, three Fed speakers get the last words in.
On Wednesday, the Fed’s Beige Book comes out.
Wednesday also carries a monetary policy decision by Banco Central do Brasil. They are likely to cut rates 75 to 100 basis points, as they did on April 12th.
On Friday, May non-farm U.S. payroll data hits.
On Tuesday, the unemployment rate in Japan is 2.8%. That is LOW!
The flash consumer inflation rate in Spain should be +2/6% y/y and +1.8% y/y in Germany. Those should be signals of a strengthening economy.
The all-important Eurozone unemployment rate should be 9.5%.
The Fed’s Brainerd speaks in NYC.
On Wednesday, Brazil’s monetary policy rate, the SELIC rate, should go to 10.25% from 11.25%. That should help the economy there.
China’s manufacturing PMI should be 50.90 after a 51.2 reading last month. The Fed’s Kaplan speaks in NYC.
India’s GDP growth rate should be +7.0% y/y.
Canada’s GDP growth rate should get to +4.5% this quarter, after +2.6% in the winter quarter.
The U.S. Beige Book is published.
On Thursday, China’s Caixin manufacturing index should get to 50.1 from 50.3 in a prior reading.
The manufacturing PMI in Germany is an astonishing 59.4.
In comparison, the Markit manufacturing PMI for Mexico should be 50.5 after a 50.7 reading in the prior quarter.
The Fed’s Williams speaks in Seoul, South Korea.
On Friday, U.S. non-farm payroll should be +170K in May, after a +211K print in April.
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China Is the Premier Event: Global Week Ahead
In a short Global Week Ahead, Mainland China macro data is the premier event.
Could China’s economy be losing momentum in 2017? When you are the world’s dominant manufacturing center, this momentum matters for lots of key global growth-sensitive sectors, including the direction of commodity prices, and industrial materials demand.
The two Mainland China purchasing manager indexes (PMI) to be released this week could be misleading signals. But they are all traders have to make their inferences.
On Wednesday, the May reading on the China state PMI arrives. On Thursday, the private Caixin China manufacturing PMI -- which samples smaller manufacturers across coastal cities -- arrives.
Across recent months, both the state and private China manufacturing PMI data have been signaling weak growth; just above the key Rubicon of expansion at 50.
Yet, China’s officially reported GDP growth rate of +6.9% y/y in Q1 was in line with the +6.7 to +6.8% readings of the prior five quarters.
If China’s economy is found to be slowing, then what major economy is accelerating – bolstering the belief the global economy is performing at an improved growth rate in 2017?
Consider these sobering facts. The USA posted a paltry +1.2% annualized growth rate in Q1. And that came with spare growth in consumer spending. The Eurozone economy is getting stronger. But that means it grew by +2.0% in annualized growth terms.
Also on Wednesday, India’s Q1 GDP growth rate arrives. Consensus expects India to show a +7.0% growth rate. But India’s economy is so much smaller than China’s. Such a strong Indian growth rate does not turn the dial on the global economy.
In sum, it all comes down to relying on Mainland China. They and only they can drive the global economy to a higher level.
Hence, their manufacturing PMI data releases are the highlight in the Global Week Ahead.
Top Zacks #1 Rank (STRONG BUY) Stocks
(1) Tokyo Electron (TOELY - Free Report) : This is a big semiconductor company you may not know about. The long-term Zacks VGM score is B.
(2) Orange (ORAN - Free Report) : This is a big European wireless telco company. The long-term Zacks VGM score is B.
(3) Atlas Copco ATKLY: This company is a world leading provider of industrial productivity solutions. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental. Once again, the long term Zacks VGM score is B.
Key Global Macro—
The Fed goes in to communications blackout on Saturday, June 3rd, in advance of the June 14th FOMC meeting. In the week ahead, three Fed speakers get the last words in.
On Wednesday, the Fed’s Beige Book comes out.
Wednesday also carries a monetary policy decision by Banco Central do Brasil. They are likely to cut rates 75 to 100 basis points, as they did on April 12th.
On Friday, May non-farm U.S. payroll data hits.
On Tuesday, the unemployment rate in Japan is 2.8%. That is LOW!
The flash consumer inflation rate in Spain should be +2/6% y/y and +1.8% y/y in Germany. Those should be signals of a strengthening economy.
The all-important Eurozone unemployment rate should be 9.5%.
The Fed’s Brainerd speaks in NYC.
On Wednesday, Brazil’s monetary policy rate, the SELIC rate, should go to 10.25% from 11.25%. That should help the economy there.
China’s manufacturing PMI should be 50.90 after a 51.2 reading last month.
The Fed’s Kaplan speaks in NYC.
India’s GDP growth rate should be +7.0% y/y.
Canada’s GDP growth rate should get to +4.5% this quarter, after +2.6% in the winter quarter.
The U.S. Beige Book is published.
On Thursday, China’s Caixin manufacturing index should get to 50.1 from 50.3 in a prior reading.
The manufacturing PMI in Germany is an astonishing 59.4.
In comparison, the Markit manufacturing PMI for Mexico should be 50.5 after a 50.7 reading in the prior quarter.
The Fed’s Williams speaks in Seoul, South Korea.
On Friday, U.S. non-farm payroll should be +170K in May, after a +211K print in April.