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In the global week ahead, the U.S. CPI is out on Tuesday Dec. 13th at 8:30 am ET.
After the U.S. CPI data print comes out, a number of the world's top central banks meet.
On Wednesday, the FOMC likely hands bond traders a 50 basis point Fed Funds rate hike.
On Thursday, the BoE and ECB will follow suit, in one capacity or another.
Reuters says indications abound: Those central banks aggressive pace of policy rate hikes might slow, but not yet fade away, given consumer price inflation (CPI) pressures.
In terms of regional macro data, Mainland China publishes key economic data, just as Beijing loosens some of its strict COVID shackles
On Friday, a number of country composite ‘flash’ PMIs provide a health check on the global economy.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) On Tuesday morn, the latest monthly U.S. CPI data comes out.
Investors will be fed a huge helping of year-end U.S. news when Tuesday's release of November consumer inflation data is followed by the Federal Reserve's latest rate decision of 2022 on Wednesday.
October's CPI report showed prices rose less-than-expected at 0.4% from the month before, with signs of slowing inflation boosting equities and knocking the dollar. November's reading is expected at 0.3%.
But recent strong U.S. jobs data rekindled inflation fears.
Over to the Fed, where Chair Jerome Powell will hold his last news conference of the year after recent comments that it was time to slow the pace of coming rate rises. Traders are pricing in a 50-basis point (bps) hike - a step down from recent three-quarter percentage point increases.
The focus may instead turn to signals for how high the Fed will ultimately raise rates next year.
(2) On Thursday, a number of Europe’s central banks meet and produce policy.
It's Super Thursday in Europe, where central banks in the euro area, Britain, Switzerland and Norway all meet.
Latest inflation numbers have raised hopes that Eurozone pressures are finally abating and markets feel confident that after two straight back-to-back 75 bps hikes, the ECB will deliver a 50 bps rate move on Dec. 15.
Don't expect the ECB to sound dovish — pipeline price pressures remain strong and President Christine Lagarde will be careful not to give the impression policy makers are taking their eye off the ball.
It's the same story elsewhere, with Switzerland and Norway also expected to jack up borrowing costs again.
The pace of aggressive rate hikes from big central banks is slowing but the fight against inflation is not over yet.
(3) Special note needs to made about the Bank of England (BoE) situation.
Britain's grim economic situation is unlikely to stop the Bank of England from raising borrowing costs again on Thursday.
Economists polled by Reuters expect the central bank to raise its key rate by 0.5 percentage points to 3.5% despite a looming recession the BoE expects to last well into 2024.
Surging energy and food costs propelled consumer price inflation to a 41-year high of 11.1% in the year to October. Wednesday's UK inflation data may hint at price rises having peaked, following trends in the Eurozone and the U.S.
Still, the BoE is likely to resist ending monetary tightening just yet with inflation still well above its 2% target. Swaps markets imply UK interest rates will hit 4.6% by next September and will end 2023 at 4.5%.
(4) Will Mainland China loosen COVID protocols permanently?
After three years of suffocating coronavirus curbs, China can finally breath a little easier.
New measures include home quarantine for the COVID-positive instead of isolation centers and no more testing for domestic travel, just in time for a trip to Shanghai's reopened Disneyland.
Wednesday's long-awaited shift has residents, who a week ago were protesting in the streets, now rejoicing on social media. Investors are more sedate. The Hang Seng had its worst day in more than a month that day, selling the fact after a multi-week rally. The yuan is back on the stronger side of the key 7 per dollar mark, but peaked on Monday.
The weakest trade data in 2 1/2 years gave reason for caution, pointing not just to the effects of COVID lockdowns but weaker international demand.
Retail and factory data due Thursday could make for further gloomy reading.
(5) S&P Global flash composite PMIs come out for a number of countries.
A year of the worst inflation in a generation is drawing to a close. With the energy prices now well off the year's highs, businesses and households are getting some respite from eye-watering high inflationary pressures.
But that's unlikely to be enough to avoid a sixth straight month of contraction in business activity in December across some of the world's largest economies. Anything from the manufacturing sector to hospitality has seen demand slump and input prices soar.
S&P Global's flash composite PMI output indices for the United States, Britain, Germany, France and the wider Eurozone are expected to show some mild improvement, but activity in all five regions is expected to have declined again.
Japan is also on the docket — its manufacturing November PMI staged the sharpest contraction in two years.
Zacks #1 Rank (STRONG BUY) Stocks
Major firms — located in Consumer Staples, Foreign Autos, & the Energy sector — made it on to my weekly highlight list.
(1) Coca-Cola HBC (CCHGY - Free Report) : This is a $24 a share Beverages - Soft Drink firm, with a market cap of $8.8B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of B.
This group operates primarily in Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland, Switzerland, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM, Moldova, Montenegro, Nigeria, Romania, the Russian Federation, Serbia and Ukraine.
Coca-Cola HBC AG is headquartered in Zug, Switzerland.
(2) Yamaha Motor (YAMHF - Free Report) : This is a $25 a share Foreign Auto firm, with a market cap of $8.7B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of B.
Yamaha Motor Co., Ltd. engages in the manufacture and sale of motorcycles, automotive engine and transportation equipment. Its operating segment consists of Motorcycles, Marine Products, Power Products, Industrial Machinery and Robots and Others.
(3) DCP Midstream Partners : This is a $39 a share Oil & Gas – Production and Pipelines firm, with a market cap of $33B. I see a Zacks Value score of B, a Zacks Growth score of A and a Zacks Momentum score of D.
Headquartered in Denver, DCP Midstream, LP is a leading energy infrastructure firm. This Fortune 500 firm has a strong and sustaining business strategy, with a diversified portfolio of gathering, logistics, marketing and processing assets across nine states.
I really liked the solid VGM scores seen on all three of these stocks.
They would make for good stocking stuffers.
Key Global Macro
The big days are the FOMC on Wednesday, and the BoE and ECB on Thursday.
On Monday, the U.K. GDP m/m reading for OCT gained +0.5%, versus and expected -0.1% and the previous month’s -0.6%. The U.K.’s index of services grew +0.6% as opposed to the expected -0.1% m/m in OCT. Industrial production was flat, compared to a -0.3% estimate m/m in OCT. Macro data in the U.K. improves overall.
On Tuesday, the U.K.’s ILO unemployment rate for OCT comes out. 3.6% is consensus, similar to the prior reading. That is low, as so many ex-COVID shutdown countries show.
The U.S. CPI for NOV should be +7.7% y/y on the broad measure and +6.4% on the core measure.
On Wednesday, the U.K.’s CPI for NOV should be +11.5%, up from the prior month’s +11.1%.
The FOMC hands down its latest rate decision. Powell has telegraphed a 50 bps move.
On Thursday, there is a start to a 2-day E.U. leader’s summit.
Australia’s household unemployment rate should be 3.3% in NOV.
The BoE issues its policy decisions.
The ECB issues its policy decisions.
On Friday, the Euro Area global composite “flash” reading for DEC should be 48, in line with the prior 47.8 reading.
The core HICP in the Euro Area (their core CPI) should be +5.0% in NOV.
Conclusion
The final end-game for policy rate-hiking is on all trader’s minds, worldwide.
Do traders get clarity on the end-game, meaning where the rate-hiking goes across 2023???????I would stay agnostic about that.
It is far too early -- in the game of calling the turn/peak in the CPI data -- worldwide.
Happy Xmas season trading and investing!
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
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The CPI: Global Week Ahead
In the global week ahead, the U.S. CPI is out on Tuesday Dec. 13th at 8:30 am ET.
After the U.S. CPI data print comes out, a number of the world's top central banks meet.
On Wednesday, the FOMC likely hands bond traders a 50 basis point Fed Funds rate hike.
On Thursday, the BoE and ECB will follow suit, in one capacity or another.
Reuters says indications abound: Those central banks aggressive pace of policy rate hikes might slow, but not yet fade away, given consumer price inflation (CPI) pressures.
In terms of regional macro data, Mainland China publishes key economic data, just as Beijing loosens some of its strict COVID shackles
On Friday, a number of country composite ‘flash’ PMIs provide a health check on the global economy.
Next are Reuters’ five world market themes, reordered for equity traders.
(1) On Tuesday morn, the latest monthly U.S. CPI data comes out.
Investors will be fed a huge helping of year-end U.S. news when Tuesday's release of November consumer inflation data is followed by the Federal Reserve's latest rate decision of 2022 on Wednesday.
October's CPI report showed prices rose less-than-expected at 0.4% from the month before, with signs of slowing inflation boosting equities and knocking the dollar. November's reading is expected at 0.3%.
But recent strong U.S. jobs data rekindled inflation fears.
Over to the Fed, where Chair Jerome Powell will hold his last news conference of the year after recent comments that it was time to slow the pace of coming rate rises. Traders are pricing in a 50-basis point (bps) hike - a step down from recent three-quarter percentage point increases.
The focus may instead turn to signals for how high the Fed will ultimately raise rates next year.
(2) On Thursday, a number of Europe’s central banks meet and produce policy.
It's Super Thursday in Europe, where central banks in the euro area, Britain, Switzerland and Norway all meet.
Latest inflation numbers have raised hopes that Eurozone pressures are finally abating and markets feel confident that after two straight back-to-back 75 bps hikes, the ECB will deliver a 50 bps rate move on Dec. 15.
Don't expect the ECB to sound dovish — pipeline price pressures remain strong and President Christine Lagarde will be careful not to give the impression policy makers are taking their eye off the ball.
It's the same story elsewhere, with Switzerland and Norway also expected to jack up borrowing costs again.
The pace of aggressive rate hikes from big central banks is slowing but the fight against inflation is not over yet.
(3) Special note needs to made about the Bank of England (BoE) situation.
Britain's grim economic situation is unlikely to stop the Bank of England from raising borrowing costs again on Thursday.
Economists polled by Reuters expect the central bank to raise its key rate by 0.5 percentage points to 3.5% despite a looming recession the BoE expects to last well into 2024.
Surging energy and food costs propelled consumer price inflation to a 41-year high of 11.1% in the year to October. Wednesday's UK inflation data may hint at price rises having peaked, following trends in the Eurozone and the U.S.
Still, the BoE is likely to resist ending monetary tightening just yet with inflation still well above its 2% target. Swaps markets imply UK interest rates will hit 4.6% by next September and will end 2023 at 4.5%.
(4) Will Mainland China loosen COVID protocols permanently?
After three years of suffocating coronavirus curbs, China can finally breath a little easier.
New measures include home quarantine for the COVID-positive instead of isolation centers and no more testing for domestic travel, just in time for a trip to Shanghai's reopened Disneyland.
Wednesday's long-awaited shift has residents, who a week ago were protesting in the streets, now rejoicing on social media. Investors are more sedate. The Hang Seng had its worst day in more than a month that day, selling the fact after a multi-week rally. The yuan is back on the stronger side of the key 7 per dollar mark, but peaked on Monday.
The weakest trade data in 2 1/2 years gave reason for caution, pointing not just to the effects of COVID lockdowns but weaker international demand.
Retail and factory data due Thursday could make for further gloomy reading.
(5) S&P Global flash composite PMIs come out for a number of countries.
A year of the worst inflation in a generation is drawing to a close. With the energy prices now well off the year's highs, businesses and households are getting some respite from eye-watering high inflationary pressures.
But that's unlikely to be enough to avoid a sixth straight month of contraction in business activity in December across some of the world's largest economies. Anything from the manufacturing sector to hospitality has seen demand slump and input prices soar.
S&P Global's flash composite PMI output indices for the United States, Britain, Germany, France and the wider Eurozone are expected to show some mild improvement, but activity in all five regions is expected to have declined again.
Japan is also on the docket — its manufacturing November PMI staged the sharpest contraction in two years.
Zacks #1 Rank (STRONG BUY) Stocks
Major firms — located in Consumer Staples, Foreign Autos, & the Energy sector — made it on to my weekly highlight list.
(1) Coca-Cola HBC (CCHGY - Free Report) : This is a $24 a share Beverages - Soft Drink firm, with a market cap of $8.8B. I see a Zacks Value score of B, a Zacks Growth score of B and a Zacks Momentum score of B.
This group operates primarily in Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland, Switzerland, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM, Moldova, Montenegro, Nigeria, Romania, the Russian Federation, Serbia and Ukraine.
Coca-Cola HBC AG is headquartered in Zug, Switzerland.
(2) Yamaha Motor (YAMHF - Free Report) : This is a $25 a share Foreign Auto firm, with a market cap of $8.7B. I see a Zacks Value score of A, a Zacks Growth score of B and a Zacks Momentum score of B.
Yamaha Motor Co., Ltd. engages in the manufacture and sale of motorcycles, automotive engine and transportation equipment. Its operating segment consists of Motorcycles, Marine Products, Power Products, Industrial Machinery and Robots and Others.
(3) DCP Midstream Partners : This is a $39 a share Oil & Gas – Production and Pipelines firm, with a market cap of $33B. I see a Zacks Value score of B, a Zacks Growth score of A and a Zacks Momentum score of D.
Headquartered in Denver, DCP Midstream, LP is a leading energy infrastructure firm. This Fortune 500 firm has a strong and sustaining business strategy, with a diversified portfolio of gathering, logistics, marketing and processing assets across nine states.
I really liked the solid VGM scores seen on all three of these stocks.
They would make for good stocking stuffers.
Key Global Macro
The big days are the FOMC on Wednesday, and the BoE and ECB on Thursday.
On Monday, the U.K. GDP m/m reading for OCT gained +0.5%, versus and expected -0.1% and the previous month’s -0.6%. The U.K.’s index of services grew +0.6% as opposed to the expected -0.1% m/m in OCT. Industrial production was flat, compared to a -0.3% estimate m/m in OCT. Macro data in the U.K. improves overall.
On Tuesday, the U.K.’s ILO unemployment rate for OCT comes out. 3.6% is consensus, similar to the prior reading. That is low, as so many ex-COVID shutdown countries show.
The U.S. CPI for NOV should be +7.7% y/y on the broad measure and +6.4% on the core measure.
On Wednesday, the U.K.’s CPI for NOV should be +11.5%, up from the prior month’s +11.1%.
The FOMC hands down its latest rate decision. Powell has telegraphed a 50 bps move.
On Thursday, there is a start to a 2-day E.U. leader’s summit.
Australia’s household unemployment rate should be 3.3% in NOV.
The BoE issues its policy decisions.
The ECB issues its policy decisions.
On Friday, the Euro Area global composite “flash” reading for DEC should be 48, in line with the prior 47.8 reading.
The core HICP in the Euro Area (their core CPI) should be +5.0% in NOV.
Conclusion
The final end-game for policy rate-hiking is on all trader’s minds, worldwide.
Do traders get clarity on the end-game, meaning where the rate-hiking goes across 2023???????I would stay agnostic about that.
It is far too early -- in the game of calling the turn/peak in the CPI data -- worldwide.
Happy Xmas season trading and investing!
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist