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 this Global Week Ahead, we get a deluge of major U.S. S&P500 earnings reports, along with the latest U.S. retail sales numbers.
In the Asian region, we get a slew of Mainland China data.
Japan's central bankers look set to raise its consumer inflation forecasts and debate further monetary policy tweaks.
In Western Europe, we get Euro area consumer inflation readings.
Business leaders and policymakers descend (in person this time) on the Swiss resort of Davos, to put the world to rights.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) This week, U.S. retail sales data and more earnings reports show up
U.S. retail sales data and more earnings reports are on tap.
And investors, who have pushed up the S&P500 almost +4% so far this month after the index's worst annual decline since 2008 last year, are paying attention.
Retail sales saw their biggest decrease in 11 months for November, and a second such drop would provide further evidence that aggressive Federal Reserve interest-rate hikes are now cooling the economy.
Economists expect a -0.5% decline in December's number, due out on Jan. 18th, after a -0.6% decrease in November.
Investors are also watching corporate results to see if U.S. companies can beat estimates, which have been heftily reduced since October.
Goldman Sachs and Morgan Stanley report earnings on Tuesday, Procter & Gamble and Netflix on Thursday.
(2) After last week’s U.S. CPI report, we get global consumer inflation readings
With every new inflation print, investors are more convinced the worst of the global price squeeze is over.
That's not least because, come spring and a year on from Russia's invasion of Ukraine, the numbers will show a much smaller rise and, in some cases, even a decline.
Headline numbers might be flattered by quite how bad things were last year, but under the surface, core inflation is still climbing. And this number is what keeps central bankers awake at night.
A final read of Eurozone inflation for December, as well as readings from Britain, Canada and Japan, are due. Core inflation in all four regions is mostly rising and above target. The worst may have passed, but it's likely to mark the end of the beginning, rather than the beginning of the end.
(3) On Tuesday, fresh Mainland Chinese macro growth data hits the tape
The new lunar year of the rabbit is almost here, with COVID-19 spreading unchecked through China.
Before then comes December's data deluge, with industrial output, retail sales and Q4 economic growth data lining up to be ugly. Economists expect retail sales to have dropped 7.8% for a fourth straight monthly decline and for annual growth to finish up at a meager 1.8%.
Markets, hoping that China's rapid reopening will take the sting out of global recession risks, may have to be patient.
Just as much focus will be on the two billion journeys expected to carry passengers to their hometowns to celebrate. Mainland markets close for the following week, but holiday anecdotes on willingness to travel, spend and mingle might guide their expectations about how the reopening will unfold.
(4) On Wednesday, the Bank of Japan (BoJ) wraps its two-day meeting
The Bank of Japan concludes a two-day meeting on Wednesday and investors bet it will blink, just four weeks after stunning markets by doubling the size of the band it allows 10-year bond yields (JGB) to move around zero.
The benchmark yield soared as high as 0.54% on Friday, punching through the 0.5% ceiling for the first time after butting against it in previous sessions. A media report that officials will examine bond market distortions from the massive BOJ stimulus appears to have been the final straw. The yen hit a fresh seven-month peak.
And the case for ultra-easy policy certainly seems to be weakening. Recent data showed Tokyo inflation at double the central bank's target. And Japanese workers will hope a decision by Uniqlo's parent company to hike wages as high as 40% will set a trend.
(5) All week long, from Monday, Jan. 16th to Friday, Jan. 20th, the World Economic Forum is underway.
A record number of world leaders, policy makers and top corporate chiefs head to the World Economic Forum (WEF) in the Swiss ski resort of Davos Jan 16-20.
The mood is somber as attendees grapple with the cost-of-living crisis, the threat of natural disasters and extreme weather events, geo-economic confrontation and failure to mitigate climate change — the top risks over the next two years, according to a survey of WEF members.
Also looming is the first anniversary of Russia's war in Ukraine, which has rocked a global economy still reeling from the fallout of COVID-19.
ECB President Christine Lagarde, German Chancellor Olaf Scholz, NATO General Secretary Jens Stoltenberg, Chinese Vice-Premier Liu He and South Africa's President Cyril Ramaphosa are all expected to attend.
Zacks #1 Rank (STRONG BUY) Stocks
Here are three diverse international large-cap stocks to look into.
(1) Baidu (BIDU - Free Report) : This is a $137 a share Mainland China internet services stock, with a market cap of $47.1B. I see a Zacks Value score of B, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Intesa Sanpaolo (ISNPY - Free Report) : This is $15 a share Italian Bank stock, with a market cap of $47.2B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of A.
(3) Swatch Group (SWGAY - Free Report) : This is $16 a share Swiss Apparel and Accesories stock, with a market cap of $47.2B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
These European share prices are low, aren’t they?
Key Global Macro
The PBoC set of policy decisions, due at the end of the week, could be interesting.
On Monday, it is Martin Luther King’s birthday. Stock markets are closed in the USA.
The World Economic Forum (WEF) gets underway in Davos, Switzerland.
On Tuesday, Mainland China’s Q4 GDP growth rate comes out. The prior reading is +3.0% y/y.
Mainland China’s retail sales data for December also come out. The y/y prior is 5.9% on that.
On Wednesday, the Bank of Japan’s (BoJ) policy rate decision comes out. There is a press conference too.
Europe core harmonized index of consumer prices comes out. The prior reading was +5.2% y/y. The Euro area broad consumer inflation reading was at +9.2% y/y.
U.S. retail sales come out for December. I see a -0.6% m/m prior reading. Ex-autos, it is -0.2% m/m.
The Fed’s Beige Book comes out, showing regional economic conditions in the USA.
On Thursday, U.S. house building permits and starts for December come out. The prior U.S. permits reading was 1.351M. U.S. starts were at 1.427M.
The Fed’s Lael Brainard speaks.
On Friday, Mainland People’s Bank of China (PBoC) policy rate decisions come out.
This day is Chinese New Year.
Conclusion
Written Jan. 11th, 2023, these are Zacks Research Director Sheraz Mian’s Q4-2022 key earnings season points:
“Many in the market consider current S&P500 earnings expectations to be too high, and fear that the Q4 earnings season will cause estimates to be significantly lowered.
(1) For Q4-2022, aggregate S&P500 earnings are currently expected to be down -7.6% on +4.0% higher revenues.
“The -7.6% earnings decline today is down from +1.7% on October 5th.
(2) In the aggregate, Q4-2022 earnings estimates for the S&P500 index have declined -8.9% since the quarter got underway.
“Roughly a third of the cuts are coming from the Zacks Tech sector.
(3) Earnings estimates for full-year 2023 have been coming down as well.
“From their peak in mid-April 2022, the aggregate total for the year has been cut by -9.8% for the index as a whole and -12% excluding the Energy sector’s contribution.
(4) The big question surrounding the 2022 Q4 earnings season is not so much about earnings growth for the quarter or what proportion of the S&P 500 members will end up beating consensus estimates, but rather what these results and the associated management commentary and guidance will tell us about the evolving earnings outlook for 2023.
“The fear in the market is that we may be on the cusp of an earnings cliff, with the combined effects of
Softening demand resulting from the extraordinary Fed tightening and
Persistent cost pressures prompting management teams across many industries to provide downbeat guidance.
“Keep in mind that it isn’t a new fear…”
Happy trading and investing!
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
An Earnings Report Deluge: Global Week Ahead
In this Global Week Ahead, we get a deluge of major U.S. S&P500 earnings reports, along with the latest U.S. retail sales numbers.
In the Asian region, we get a slew of Mainland China data.
Japan's central bankers look set to raise its consumer inflation forecasts and debate further monetary policy tweaks.
In Western Europe, we get Euro area consumer inflation readings.
Business leaders and policymakers descend (in person this time) on the Swiss resort of Davos, to put the world to rights.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) This week, U.S. retail sales data and more earnings reports show up
U.S. retail sales data and more earnings reports are on tap.
And investors, who have pushed up the S&P500 almost +4% so far this month after the index's worst annual decline since 2008 last year, are paying attention.
Retail sales saw their biggest decrease in 11 months for November, and a second such drop would provide further evidence that aggressive Federal Reserve interest-rate hikes are now cooling the economy.
Economists expect a -0.5% decline in December's number, due out on Jan. 18th, after a -0.6% decrease in November.
Investors are also watching corporate results to see if U.S. companies can beat estimates, which have been heftily reduced since October.
Goldman Sachs and Morgan Stanley report earnings on Tuesday, Procter & Gamble and Netflix on Thursday.
(2) After last week’s U.S. CPI report, we get global consumer inflation readings
With every new inflation print, investors are more convinced the worst of the global price squeeze is over.
That's not least because, come spring and a year on from Russia's invasion of Ukraine, the numbers will show a much smaller rise and, in some cases, even a decline.
Headline numbers might be flattered by quite how bad things were last year, but under the surface, core inflation is still climbing. And this number is what keeps central bankers awake at night.
A final read of Eurozone inflation for December, as well as readings from Britain, Canada and Japan, are due. Core inflation in all four regions is mostly rising and above target. The worst may have passed, but it's likely to mark the end of the beginning, rather than the beginning of the end.
(3) On Tuesday, fresh Mainland Chinese macro growth data hits the tape
The new lunar year of the rabbit is almost here, with COVID-19 spreading unchecked through China.
Before then comes December's data deluge, with industrial output, retail sales and Q4 economic growth data lining up to be ugly. Economists expect retail sales to have dropped 7.8% for a fourth straight monthly decline and for annual growth to finish up at a meager 1.8%.
Markets, hoping that China's rapid reopening will take the sting out of global recession risks, may have to be patient.
Just as much focus will be on the two billion journeys expected to carry passengers to their hometowns to celebrate. Mainland markets close for the following week, but holiday anecdotes on willingness to travel, spend and mingle might guide their expectations about how the reopening will unfold.
(4) On Wednesday, the Bank of Japan (BoJ) wraps its two-day meeting
The Bank of Japan concludes a two-day meeting on Wednesday and investors bet it will blink, just four weeks after stunning markets by doubling the size of the band it allows 10-year bond yields (JGB) to move around zero.
The benchmark yield soared as high as 0.54% on Friday, punching through the 0.5% ceiling for the first time after butting against it in previous sessions. A media report that officials will examine bond market distortions from the massive BOJ stimulus appears to have been the final straw. The yen hit a fresh seven-month peak.
And the case for ultra-easy policy certainly seems to be weakening. Recent data showed Tokyo inflation at double the central bank's target. And Japanese workers will hope a decision by Uniqlo's parent company to hike wages as high as 40% will set a trend.
(5) All week long, from Monday, Jan. 16th to Friday, Jan. 20th, the World Economic Forum is underway.
A record number of world leaders, policy makers and top corporate chiefs head to the World Economic Forum (WEF) in the Swiss ski resort of Davos Jan 16-20.
The mood is somber as attendees grapple with the cost-of-living crisis, the threat of natural disasters and extreme weather events, geo-economic confrontation and failure to mitigate climate change — the top risks over the next two years, according to a survey of WEF members.
Also looming is the first anniversary of Russia's war in Ukraine, which has rocked a global economy still reeling from the fallout of COVID-19.
ECB President Christine Lagarde, German Chancellor Olaf Scholz, NATO General Secretary Jens Stoltenberg, Chinese Vice-Premier Liu He and South Africa's President Cyril Ramaphosa are all expected to attend.
Zacks #1 Rank (STRONG BUY) Stocks
Here are three diverse international large-cap stocks to look into.
(1) Baidu (BIDU - Free Report) : This is a $137 a share Mainland China internet services stock, with a market cap of $47.1B. I see a Zacks Value score of B, a Zacks Growth score of D and a Zacks Momentum score of A.
(2) Intesa Sanpaolo (ISNPY - Free Report) : This is $15 a share Italian Bank stock, with a market cap of $47.2B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of A.
(3) Swatch Group (SWGAY - Free Report) : This is $16 a share Swiss Apparel and Accesories stock, with a market cap of $47.2B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
These European share prices are low, aren’t they?
Key Global Macro
The PBoC set of policy decisions, due at the end of the week, could be interesting.
On Monday, it is Martin Luther King’s birthday. Stock markets are closed in the USA.
The World Economic Forum (WEF) gets underway in Davos, Switzerland.
On Tuesday, Mainland China’s Q4 GDP growth rate comes out. The prior reading is +3.0% y/y.
Mainland China’s retail sales data for December also come out. The y/y prior is 5.9% on that.
On Wednesday, the Bank of Japan’s (BoJ) policy rate decision comes out. There is a press conference too.
Europe core harmonized index of consumer prices comes out. The prior reading was +5.2% y/y. The Euro area broad consumer inflation reading was at +9.2% y/y.
U.S. retail sales come out for December. I see a -0.6% m/m prior reading. Ex-autos, it is -0.2% m/m.
The Fed’s Beige Book comes out, showing regional economic conditions in the USA.
On Thursday, U.S. house building permits and starts for December come out. The prior U.S. permits reading was 1.351M. U.S. starts were at 1.427M.
The Fed’s Lael Brainard speaks.
On Friday, Mainland People’s Bank of China (PBoC) policy rate decisions come out.
This day is Chinese New Year.
Conclusion
Written Jan. 11th, 2023, these are Zacks Research Director Sheraz Mian’s Q4-2022 key earnings season points:
“Many in the market consider current S&P500 earnings expectations to be too high, and fear that the Q4 earnings season will cause estimates to be significantly lowered.
(1) For Q4-2022, aggregate S&P500 earnings are currently expected to be down -7.6% on +4.0% higher revenues.
“The -7.6% earnings decline today is down from +1.7% on October 5th.
(2) In the aggregate, Q4-2022 earnings estimates for the S&P500 index have declined -8.9% since the quarter got underway.
“Roughly a third of the cuts are coming from the Zacks Tech sector.
(3) Earnings estimates for full-year 2023 have been coming down as well.
“From their peak in mid-April 2022, the aggregate total for the year has been cut by -9.8% for the index as a whole and -12% excluding the Energy sector’s contribution.
(4) The big question surrounding the 2022 Q4 earnings season is not so much about earnings growth for the quarter or what proportion of the S&P 500 members will end up beating consensus estimates, but rather what these results and the associated management commentary and guidance will tell us about the evolving earnings outlook for 2023.
“The fear in the market is that we may be on the cusp of an earnings cliff, with the combined effects of
“Keep in mind that it isn’t a new fear…”
Happy trading and investing!
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist