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Apple, Amazon, Alphabet: Global Week Ahead

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Each earnings season moves fast. We get over 100 major company reports this week.

Within this Global Week Ahead report surge, three major U.S. tech firms supply results.

Forward guidance is always key.

This Q4 earnings season is particularly sensitive to broad company data laying out any recession scares, and seeks insight into upstream and downstream price movements.

The Fed meets at mid-week too.

The latest FOMC policy decisions arrive on Wednesday, Feb. 1st.

On Thursday, follow-on central bank decisions arrive from the European Central Bank (ECB) and the Bank of England (BoE).

China’s workers come back from their Lunar New Year holiday.

(1) On Thursday, Apple, Amazon, and Alphabet Report Q4 Earnings

The three “A's" — Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) , three of the top four U.S. companies by market value — all report earnings on Thursday.

Over 100 companies in the S&P 500 deliver results as the earnings season gets into full swing.

Microsoft, the fourth of the U.S. mega-caps, has already reported results. Its cloud business hit Wall Street targets, but it delivered a lackluster forecast that offered little cheer to the broader tech sector.

Tech companies generally are under pressure to grow while cutting costs ahead of a potential recession.

S&P 500 earnings are set to have fallen -2.9% from the year-ago period, according to Refinitiv IBES data as of Tuesday.

(2) The Fed Meeting Dominates Markets, Of Course

Will the Federal Reserve tone down its hawkish rhetoric in the face of cooling inflation or stick to its guns?

Investors widely expect a 25-basis point rate increase at the Feb. 1st meeting and for rates to stop short of hitting 5.0%.

Fed officials, however, have indicated they expect the key policy rate to top out at 5.00-5.25% this year.

Whatever signals the Fed sends could play an importing role in determining the longevity of the rally so far this year.

Dollar bears, meanwhile, will watch for dovish leanings that could further accelerate a decline in the greenback.

The currency has tumbled nearly 11% since hitting multi-decade highs last September.

(3) On Thursday, European Central Bank (ECB) Meets

The ECB meets Thursday and is widely tipped to raise rates by 50 bps to 2.5%. Markets care most about what happens next and that's not clear.

Policy hawks are already pushing for more of the same in March. After all, inflation is well above the 2% target as preliminary January data out on Wednesday is likely to show.

Futures price in a further 100 bps worth of tightening between now and July. Amundi reckons ECB rates could reach 4.0%.

But the doves are getting louder. Yes, inflation is high but it's off record peaks, they say. So, caution is needed before pre-committing to rate hikes beyond February.

Markets, whipped around by the differing opinions, will be looking for the ECB to speak with one voice. That, at least, is the hope.

(4) Bank of England (BoE) to Raise 50 Basis Points

The Bank of England, the first of the major central banks to turn hawkish, is expected to deliver its tenth rate hike since December 2021.

Money markets predict the BoE will raise rates by 0.5 percentage points to 4.0%.

Headline inflation moderated in December to +10.5%, but it's still over five times the Bank's official target.

Deutsche Bank analysts say this will be the BoE's final "forceful" hike. Recent data has shown a sharp contraction in UK business activity and lackluster Christmas retail sales.

Economists polled by Reuters now expect the BoE to stop at 4.25%. But many cited sticky core inflation, which excludes food and energy costs, as the main reason they could be wrong.

(5) The End of China’s Lunar New Year

Chinese markets are back from the week-long Lunar New Year holidays, and will look to pick up where they left off — at a five-month peak for mainland blue chips.

The mood should stay bullish after officials said COVID deaths have dropped about 80% from the peak earlier this month, running counter to worries that the New Year travel rush would trigger a fresh wave of infections.

Some experts even suggest that the surge in cases after the government abruptly reversed its zero-COVID policies last month has resulted in hyper-speedy herd immunity.

The impact of China's Great Reopening may show up in PMIs next Tuesday, with the services sector bouncing back to expansion.

Manufacturing is likely still contracting, but that has a lot to do with the timing of the New Year holiday, and next month should see a strong rebound.

Top Zacks #1 Rank (STRONG BUY) Stocks

A major Mainland Chinese insurance firm, a major Australian bank and a major Mexican beverage franchise made it onto our #1 list this week.

(1) Ping An Insurance Co (PNGAY - Free Report) : This is a $17 a share Chinese multi-line insurance company, with a market cap of $149.3B. I see a Zacks Value score of A, a Zacks Growth score of F and a Zacks Momentum score of F.

(2) Commonwealth Bank of Australia (CMWAY - Free Report) : This is $78 a share bank, with a market cap of $130.8B. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of B.

(3) Coca Cola Femsa (KOF - Free Report) : This is $76 a share Mexican (and Argentinian) beverage stock, with a market cap of $126B. I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of B.

Note: None of these stocks offer strong long-term Zacks Growth scores.

Key Global Macro

Does the U.S. JAN nonfarm payroll report really add just +16K jobs on Friday? We shall see…

On Monday, the Japanese unemployment rate comes out for DEC. 2.6% is the consensus. The prior reading was 2.5%.

Eurozone Economic Sentiment in JAN should be 94.6, after a 958 print in DEC.

On Tuesday, China’s NBS manufacturing PMI should be 48.9 in DEC, after printing 47 in NOV.

Eurozone Q4 real GDP growth should be +2.2%.

On Wednesday, the FOMC provides its latest monetary policy rate. 4.5% is the current Fed Funds rate. 25 basis points is what to expect.

U.S. ADP private payrolls should be up +86K in JAN, after adding +235K in DEC.

The U.S. ISM manufacturing PMI for JAN should be 48.7, after a 48.4 print in DEC.

On Thursday, the Bank of England monetary policy report comes out. 3.5% is the current policy rate. Expect 50 basis points more.

The ECB monetary policy statement also comes out. 2.5% is their main refi ops rates now. Expect 50 basis points more.

On Friday, U.S. nonfarm payrolls should be up +16K in JAN, after a +223K add seen in DEC.


Zacks Research Director Sheraz Mian provided his latest update on Jan. 25th.

(1) For the 96 S&P 500 companies that have reported Q4-22 results.

Total earnings are down -6.0% from the same period last year on +5.5% higher revenues, with 71.9% beating EPS estimates and 67.7% beating revenue estimates.

(2) Looking at Q4-22 as a whole, aggregate S&P 500 earnings are currently expected to be down -7.2% on +3.9% higher revenues.

Excluding the Energy sector’s strong contribution, Q4 earnings for the rest of the index are expected to be down -11.1% on +3.2% higher revenues.

(3) For Q1-23, S&P 500 earnings are currently expected to be down -4.6% on +2.8% higher revenues.

This is down from -4% on January 6th and -2.9% in mid-December 2022.

(4) 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 -10.6% for the index as a whole and -12.8% excluding the Energy sector’s contribution.

(5) Looking at the calendar-year picture, total S&P 500 earnings are on track to be up +4.2% in 2022 and expected to increase +1.1% in 2023.

On an ex-Energy basis, total 2022 index earnings would be down -2.5% (instead of +4.2%, with Energy).

“We are starting to see clear signs of growth moderation at the consumer and the business end.”

“It isn’t a precipitous fall.”

“But it is nevertheless a pronounced deceleration in the growth trend.”

Have a great week, trading and investing.

John Blank
Zacks Chief Equity Strategist and Economist

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