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.
In the Global Week Ahead, traders will see major monetary policy meetings galore.
Rate hikes and policy outlooks flow out of monetary policy meetings in Australia, the United States, the United Kingdom and Norway.
Any signs the pace of aggressive policy tightening among big developed economies (led by the U.S.) could slow? That is termed a “pivot” or a “pause.”
Data-driven U.S. Fed policy rates also put the spotlight on Friday’s October U.S. nonfarm jobs report.
For Europe, make sure to catch up on Monday’s Euro-area inflation data.
In Latin America, all eyes are on the aftermath of a 2nd return of Lula in Brazil.
Here are Reuters’ five world market themes, reordered for equity traders.
(1) 2-day Fed Policy Meeting Wraps Wednesday
A fourth straight jumbo 75-basis point (bps) interest rate hike is widely expected when the Fed meets on Nov 1st – 2nd.
Investors are focused, instead, on whether the pace of future hikes will slow, as the Fed weighs the risks to economic growth against its progress in curbing soaring inflation.
Wall Street's latest rally is underpinned by some hopes the Fed will react to softer economic data by easing up on their aggressive rate hikes.
Fed Chair Jerome Powell has come under political pressure of putting U.S. jobs at risk by tightening policy too much.
A consequential week for markets also includes Friday's October U.S. payrolls report, with economists polled by Reuters forecasting the economy created +200K new jobs.
(2) On Thursday, Bank of England (BoE) Policy Choices Follow FOMC
The Bank of England looks set to raise rates by the most since 1989 on Thursday with a 75 basis-point increase baked into market expectations.
That is down from near-100% bets on a full percentage-point leap in the Bank Rate, which were doused last week by new finance minister Jeremy Hunt, when he reversed almost all of former Prime Minister Liz Truss' tax cuts.
But the delay of the first budget plan of Hunt and new Prime Minister Rishi Sunak until Nov. 17th will make it harder for the BoE to spell out its economic forecasts.
After delays caused by Britain's recent market mayhem, the BoE is also due to start selling bonds from its stimulus stockpile on Tuesday.
(3) On Monday, Euro Area Flash CPI: +10.7% for OCT
In the Euro-area, all eyes were on the October flash inflation estimate on Monday, which printed +10.7%, the highest-ever monthly reading.
The European Central Bank (ECB) just delivered its second 75 basis point rate increase to control price pressures.
Like other big central banks, the ECB hopes this is a peak inflation number.
That doesn't mean the danger is over and policymakers and markets will wait to see if underlying price pressures are broadening out.
No wonder some ECB officials are keen to take monetary tightening further by winding down the bonds the ECB holds on its balance sheet.
(4) On Tuesday, the Reserve Bank of Australia (RBA) Decides
The Reserve Bank of Australia is under pressure ahead of Tuesday's policy gathering.
Its decision to slow hikes to a quarter point clip earlier this month reverberated through global markets as investors began to consider peak rates might be near.
But data on Wednesday showing a shock jump in Aussie inflation to a 32-year peak suggests the RBA has thrown itself behind the curve, and beckons Governor Philip Lowe to perform an embarrassing about-face.
The Aussie dollar's reaction has been fairly subdued so far, but a sudden shift back to a hawkish policy outlook should provide some welcome support to a currency that has been battered by global equity market angst and China growth worries.
(5) On Sunday, Brazil’s Presidential Election Runoff Took Place
Brazil's presidential runoff took place on Sunday. Leftist former President Luiz Inacio Lula da Silva won 50.9% of the vote. His opponent, far-right-wing incumbent Jair Bolsonaro, did not concede.
President Bolsonaro may have been hurt by a recent incident in which his ally Roberto Jefferson, a former lawmaker, shot at police as he resisted arrest. This was the wrong kind of harbinger for a Wall Street concerned about a contested result, and Brazil's currency fell over -4% from Monday to Wednesday.
Still, the real remains the best performing free-floating emerging market currency in Latin America versus the U.S. dollar so far this year.
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three worthy names to look into.
(1) Marriott (MAR - Free Report) : This is a $156 a share Hotel and Motel company, with a market cap of $50.7B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of B.
(2) Recruit Holdings (RCRRF - Free Report) : This is a $31 a share Tokyo-based business-Info Services HR company, with a market cap of $50.2B. I see a Zacks Value score of B, a Zacks Growth score of A and a Zacks Momentum score of C.
(3) Bayerische Moteren Werke (BAMXF - Free Report) : This is a $77 a share Foreign Auto company, with a market cap of $46.5B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of A.
Quite a varied list of earnings strength, speaking both geographically, and about industry leadership.
One insight: Jobs markets and leisure spending are holding up well.
Key Global Macro
This is a busy week, with several central bank events, ISM PMIs, and nonfarm payrolls.
On Monday, the NBS (National Bureau of Statistics) Mainland China manufacturing PMI for October fell to 49.2 vs 50.1 in September. while services fell to 48.7 from 50.6. These are managed, centrally-planned, data outcomes.
In Q3-22, GDP increased by +0.2% (sa) in both the Euro Area and the EU, compared with Q3, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union. In Q2-22, GDP had grown by +0.8% in the Euro Area and by +0.7% in the EU.
On Tuesday, Mainland China’s Caixin manufacturing PMI (smaller private companies) should be weak. Prior is 48.1.
Australia’s RBA offers its monetary policy decisions.
The U.S. ISM for manufacturing in OCT comes out. I see a 50.4 consensus. Prior was 50.9.
ISM prices paid is a sub-index. That is key, these days. It comes out too. Prior is 51.7.
On Wednesday, U.S. ADP jobs change should be -163K in OCT, after a +208K print in SEPT. Let’s see how the markets treat a negative payroll number.
The FOMC monetary policy statement comes out. Fresh projections come out. Chair Powell holds a presser.
On Thursday, the Bank of England (BoE) monetary policy statement comes out.
On Friday, U.S. nonfarm payrolls should add +200K in OCT, after a +263K print in SEPT. That’s a positive print. We shall see. I would bet on a positive print.
Conclusion
I close with Zacks Research Director Sheraz Mian’s key Q3 earnings insights:
“We see the ongoing Q3 earnings season as a replay of what we witnessed in the June-quarter reporting cycle, when estimates and sentiment weakened so much the actual results ended up looking a lot better in comparison.”
The picture emerging from the Q3-22 earnings season continues to go against pre-season fears of an impending earnings cliff. Overall corporate profitability isn’t great, but it isn’t bad either.
For the 170 S&P500 members that have reported Q3 results already, total earnings are down -3.2% from the same period last year on +9.7% higher revenues, with 76.5% beating EPS estimates and 67.6% beating revenue estimates.
The earnings and revenue growth rate for these 170 companies compares modestly favorably to what we had seen from the same group of companies in the first half of the year.
Looking at the calendar-year picture, total S&P500 earnings are expected to be up +6.3% in 2022 and +5.1% in 2023. On an ex-Energy basis, total 2022 index earnings would be down -0.4% (instead of +6.3%, with Energy).
Image: Bigstock
A Busy Week: Global Week Ahead
In the Global Week Ahead, traders will see major monetary policy meetings galore.
Rate hikes and policy outlooks flow out of monetary policy meetings in Australia, the United States, the United Kingdom and Norway.
Any signs the pace of aggressive policy tightening among big developed economies (led by the U.S.) could slow? That is termed a “pivot” or a “pause.”
Data-driven U.S. Fed policy rates also put the spotlight on Friday’s October U.S. nonfarm jobs report.
For Europe, make sure to catch up on Monday’s Euro-area inflation data.
In Latin America, all eyes are on the aftermath of a 2nd return of Lula in Brazil.
Here are Reuters’ five world market themes, reordered for equity traders.
(1) 2-day Fed Policy Meeting Wraps Wednesday
A fourth straight jumbo 75-basis point (bps) interest rate hike is widely expected when the Fed meets on Nov 1st – 2nd.
Investors are focused, instead, on whether the pace of future hikes will slow, as the Fed weighs the risks to economic growth against its progress in curbing soaring inflation.
Wall Street's latest rally is underpinned by some hopes the Fed will react to softer economic data by easing up on their aggressive rate hikes.
Fed Chair Jerome Powell has come under political pressure of putting U.S. jobs at risk by tightening policy too much.
A consequential week for markets also includes Friday's October U.S. payrolls report, with economists polled by Reuters forecasting the economy created +200K new jobs.
(2) On Thursday, Bank of England (BoE) Policy Choices Follow FOMC
The Bank of England looks set to raise rates by the most since 1989 on Thursday with a 75 basis-point increase baked into market expectations.
That is down from near-100% bets on a full percentage-point leap in the Bank Rate, which were doused last week by new finance minister Jeremy Hunt, when he reversed almost all of former Prime Minister Liz Truss' tax cuts.
But the delay of the first budget plan of Hunt and new Prime Minister Rishi Sunak until Nov. 17th will make it harder for the BoE to spell out its economic forecasts.
After delays caused by Britain's recent market mayhem, the BoE is also due to start selling bonds from its stimulus stockpile on Tuesday.
(3) On Monday, Euro Area Flash CPI: +10.7% for OCT
In the Euro-area, all eyes were on the October flash inflation estimate on Monday, which printed +10.7%, the highest-ever monthly reading.
The European Central Bank (ECB) just delivered its second 75 basis point rate increase to control price pressures.
Like other big central banks, the ECB hopes this is a peak inflation number.
That doesn't mean the danger is over and policymakers and markets will wait to see if underlying price pressures are broadening out.
No wonder some ECB officials are keen to take monetary tightening further by winding down the bonds the ECB holds on its balance sheet.
(4) On Tuesday, the Reserve Bank of Australia (RBA) Decides
The Reserve Bank of Australia is under pressure ahead of Tuesday's policy gathering.
Its decision to slow hikes to a quarter point clip earlier this month reverberated through global markets as investors began to consider peak rates might be near.
But data on Wednesday showing a shock jump in Aussie inflation to a 32-year peak suggests the RBA has thrown itself behind the curve, and beckons Governor Philip Lowe to perform an embarrassing about-face.
The Aussie dollar's reaction has been fairly subdued so far, but a sudden shift back to a hawkish policy outlook should provide some welcome support to a currency that has been battered by global equity market angst and China growth worries.
(5) On Sunday, Brazil’s Presidential Election Runoff Took Place
Brazil's presidential runoff took place on Sunday. Leftist former President Luiz Inacio Lula da Silva won 50.9% of the vote. His opponent, far-right-wing incumbent Jair Bolsonaro, did not concede.
President Bolsonaro may have been hurt by a recent incident in which his ally Roberto Jefferson, a former lawmaker, shot at police as he resisted arrest. This was the wrong kind of harbinger for a Wall Street concerned about a contested result, and Brazil's currency fell over -4% from Monday to Wednesday.
Still, the real remains the best performing free-floating emerging market currency in Latin America versus the U.S. dollar so far this year.
Top Zacks #1 Rank (STRONG BUY) Stocks
Here are three worthy names to look into.
(1) Marriott (MAR - Free Report) : This is a $156 a share Hotel and Motel company, with a market cap of $50.7B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of B.
(2) Recruit Holdings (RCRRF - Free Report) : This is a $31 a share Tokyo-based business-Info Services HR company, with a market cap of $50.2B. I see a Zacks Value score of B, a Zacks Growth score of A and a Zacks Momentum score of C.
(3) Bayerische Moteren Werke (BAMXF - Free Report) : This is a $77 a share Foreign Auto company, with a market cap of $46.5B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of A.
Quite a varied list of earnings strength, speaking both geographically, and about industry leadership.
One insight: Jobs markets and leisure spending are holding up well.
Key Global Macro
This is a busy week, with several central bank events, ISM PMIs, and nonfarm payrolls.
On Monday, the NBS (National Bureau of Statistics) Mainland China manufacturing PMI for October fell to 49.2 vs 50.1 in September. while services fell to 48.7 from 50.6. These are managed, centrally-planned, data outcomes.
In Q3-22, GDP increased by +0.2% (sa) in both the Euro Area and the EU, compared with Q3, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union. In Q2-22, GDP had grown by +0.8% in the Euro Area and by +0.7% in the EU.
On Tuesday, Mainland China’s Caixin manufacturing PMI (smaller private companies) should be weak. Prior is 48.1.
Australia’s RBA offers its monetary policy decisions.
The U.S. ISM for manufacturing in OCT comes out. I see a 50.4 consensus. Prior was 50.9.
ISM prices paid is a sub-index. That is key, these days. It comes out too. Prior is 51.7.
On Wednesday, U.S. ADP jobs change should be -163K in OCT, after a +208K print in SEPT. Let’s see how the markets treat a negative payroll number.
The FOMC monetary policy statement comes out. Fresh projections come out. Chair Powell holds a presser.
On Thursday, the Bank of England (BoE) monetary policy statement comes out.
On Friday, U.S. nonfarm payrolls should add +200K in OCT, after a +263K print in SEPT. That’s a positive print. We shall see. I would bet on a positive print.
Conclusion
I close with Zacks Research Director Sheraz Mian’s key Q3 earnings insights:
“We see the ongoing Q3 earnings season as a replay of what we witnessed in the June-quarter reporting cycle, when estimates and sentiment weakened so much the actual results ended up looking a lot better in comparison.”
Adding to these broad insights, Sheraz wrote up a well-informed Oct. 28th piece on “Making Sense of Big Tech Earnings After Amazon and Meta Tumble”.
Click that hotlink to view it on Zacks.com. Then, enjoy a great trading week.
John Blank