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CPI Lands, U.S. Financials Report: Global Week Ahead
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In the Global Week Ahead, key U.S. March Consumer Price Inflation (CPI) data arrives at 8:30 pm ET on Wednesday, April 12th, via the Bureau of Labor Statistics (BLS).
Before the market opens on Friday, U.S. bank earnings kick off Q1 earnings season.
In Europe, Switzerland's parliament debates the UBS-Credit Suisse tie up.
In Asia, Kazuo Ueda takes over the helm at the Bank of Japan (BoJ).
The World Bank and IMF Spring Meetings happen all week long in Washington DC.
A balancing act — between slowing global growth and sticky global price pressures — sits at the top of their agendas.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Do Oil Prices Rise to Feed Inflation, or Stay Static Facing Slow Global Growth?
OPEC+ producers sent oil prices spiraling higher on April 2nd by announcing output cuts of around 1.16 million barrels per day until the end of 2023.
This followed crude price drops in March as banking sector turmoil sparked recession fears.
The big question is whether oil prices will keep rising, feeding higher inflation, or settle to balance the production cuts with a lackluster global economy.
China's reopening has boosted its domestic economy but demand at its factories remains weak.
The latest ISM survey of U.S. manufacturers indicated conditions were dire.
Outside of gains for resources stocks, initial market reaction to OPEC's move was muted, with investors waiting on U.S. inflation data on April 12th to see if price rises have slowed enough to quell central banks' appetite for further aggressive rate rises.
(2) The IMF and World Bank Spring Meetings Get Underway
Policymakers and investors head to Washington for the World Bank and International Monetary Fund Spring meetings starting on Monday.
High inflation and financial stability are top concerns.
The Fund will release its latest projections for global growth on Tuesday and a sovereign round table to address countries in debt distress is a key event on Wednesday.
Cash-strapped economies such as Zambia, Sri Lanka and Ghana are still in talks to restructure their overseas debt with much focus on China, the largest bilateral creditor for emerging markets economies.
It will be the first meeting for Ajay Banga, U.S. nominee to run the World Bank and sole contender for the job.
Banga says he supports his predecessor's proposal to expand the bank's annual lending capacity by about $5 billion to help tackle climate change and other global challenges.
(3) U.S. Financials Kick Off Uneasy Earnings Season
The uneasy calm that has settled over the U.S. banking sector after the collapse of Silicon Valley Bank (SVB) will be tested as U.S. financials kick off their earnings season.
The S&P500 bank index is down -18% since March 8th, when SVB troubles became known, followed shortly after by the collapse of Signature Bank and spreading worries over regional lenders such as First Republic.
S&P500 financials are seen posting first quarter year-on-year earnings growth of +5.2%, putting it among just four sectors whose earnings are expected to climb.
S&P500 earnings are predicted to fall -5.0%, I/B/E/S data from Refinitiv showed.
(4) Serious Questions Rise About Very Swift UBS-Credit Suisse Deal
In Switzerland, the other banking crisis hotspot, parliament holds a special three-day session from Tuesday to debate government support and guarantees provided to secure UBS' (UBS - Free Report) takeover of Credit Suisse Group .
There are no expectations of the deal being scuppered but outlines of conditions attached might take shape. The government had to shell out close to 260 billion Swiss francs ($280 billion) of state funding and guarantees.
The debate is expected to be a heated and emotional one for the Alpine nation which has taken much pride in its financial sector and where banking assets make up more than 500% of annual gross domestic product.
Switzerland has instructed Credit Suisse to cancel or reduce all outstanding bonus payments for the top three levels of management and examine whether those already paid can be recovered.
(5) The Bank of Japan’s (BoJ) Ueda at the Helm Now
After a decade in charge of the Bank of Japan, overseeing unprecedented monetary easing aimed at shocking the country into an inflationary cycle, Haruhiko Kuroda passes the baton to Kazuo Ueda on Monday.
Winding down hefty stimulus may prove more challenging than putting it in place, which is why economists generally expect Ueda will take his time before making major changes.
Still, investors will strain their ears for policy hints at his inauguration speech.
Inflation is running well above the 2% target and salaries have finally shown signs of catching up, so investors are asking the trillion-dollar question of how long crisis-sized stimulus can remain.
That's the record amount it cost the BOJ to buy up bonds last year to keep yields in check as emboldened speculators attacked the market.
Top Zacks #1 Rank (STRONG BUY) Stocks
I found two major French companies on our #1 list this week, along with GE.
(1) General Electric (GE - Free Report) : This is a $94 a share stock. The company’s businesses are found in a variety of Diversified Operations. It is based out of Boston. It has a market cap of $102.8B.
I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
Founded in 1892, General Electric Company is popular for its LEAP aircraft engines, heavy-duty gas turbines, Haliade-X and Cypress wind turbines and healthcare solutions.
(2) Schneider Electric SA (SBGSY - Free Report) : This is a $31 a share stock. The company supplies a diverse mix of Manufacturing Electronics. It has a market cap of $88.9B too.
I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of A.
Schneider Electric SA offers integrated solutions across multiple market segments energy and infrastructure, industrial processes, building automation, and data centers or networks, as well as in residential applications.
The company is focused on making energy safe, reliable, and efficient:
Its power management systems offers high density metering, energy tariff optimization, power quality mitigation, local LV/MV protection & control, intelligent power & motor control, renewable energy conversion and electric vehicle recharging
Its process and machine management system offers general machines control, packaging control and material handling control and hoisting control
Its IT / server room management systems offer rack systems, uninterruptible power supply, cooling control and surveillance
It also has building management systems and security management systems
Schneider Electric SA is headquartered in Rueil Malmaison, in the western suburbs of Paris, France.
(3) BNP Paribas (BNPQY - Free Report) : This is a $31 a share stock. This company is a major Foreign Bank. It is headquartered in Paris, France. It has a market cap of $75.0B.
I see a Zacks Value score of B, a Zacks Growth score of F and a Zacks Momentum score of C.
BNP Paribas is a European leader in global banking and financial services and is one of the four strongest banks in the world according to Standard & Poor's.
Key Global Macro
Wednesday’s U.S. CPI print for March is the big macro data focus.
On Monday, the IMF and World Bank spring meetings kick off. They run all week long.
On Tuesday, the Eurozone’s retail sales for MAR should be +1.6% y/y, after printing a -2.3% y/y prior mark.
Mainland China’s CPI for MAR should be -1.7% y/y, after printing a -1.4% y/y in FEB.
On Wednesday, the U.S CPI for MAR should be +6.1% y/y, after printing +6.0% y/y in FEB. Ex food & energy should be +5.5% y/y, in line with the FEB +5.5% y/y reading.
The Bank of Canada offers a policy rate decision.
On Thursday, U.S. initial jobless claims come out. Last week saw a rise to +238K.
The U.S. PPI for MAR should be +3.7% y/y, after +4.6% y/y in FEB.
On Friday, U.S. retail sales for MAR should be +0.1% y/y, after a -0.4% print in FEB.
The U of Michigan consumer sentiment index for APR (preliminary) comes out. 62 was the prior reading.
Conclusion
Yes, Q1-23 earnings season kicks off.
JPM, C, and WFC report before the market opens (BMO) on Friday, April 14th.
Here are Zacks Research Director Sheraz Mian’s key Q1 earnings season points.
Here are the key points:
(1) Total S&P 500 earnings for 2023 Q1 are expected to be down -10.1% from the same period last year on +1.8% higher revenues.
This would follow the -5.4% decline in the preceding period’s earnings (2022 Q4) on +5.9% higher revenues.
(2) The direction of 2023 Q1 earnings estimates is in-line with the trend we have been seeing over the few quarters.
Yet, the magnitude of negative revisions is smaller, relative to what we had seen in comparable periods for the preceding two quarters.
(3) S&P500 sectors enjoying positive earnings growth in Q1-2023 include:
Transportation (+55.6%)
Aerospace (+14.9%)
Energy (+4.7%)
Finance (+0.8%)
Industrial Products (+1.2%), and
Consumer Discretionary (+17.8%)
(4) Looking at the calendar-year picture:
Zacks expects total S&P500 earnings to decline -3.2%, on flat revenues in 2023.
Exclude the Finance sector? Full-year 2023 earnings would be down -6.4%.
For Q1-2023?
Expect S&P500 earnings to decline -10.1% from the same period last year
On +1.8% higher revenues
Let’s get Q2 off on the right foot!
Warm Regards,
John Blank Zacks Chief Equity Strategist and Economist
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CPI Lands, U.S. Financials Report: Global Week Ahead
In the Global Week Ahead, key U.S. March Consumer Price Inflation (CPI) data arrives at 8:30 pm ET on Wednesday, April 12th, via the Bureau of Labor Statistics (BLS).
Before the market opens on Friday, U.S. bank earnings kick off Q1 earnings season.
In Europe, Switzerland's parliament debates the UBS-Credit Suisse tie up.
In Asia, Kazuo Ueda takes over the helm at the Bank of Japan (BoJ).
The World Bank and IMF Spring Meetings happen all week long in Washington DC.
A balancing act — between slowing global growth and sticky global price pressures — sits at the top of their agendas.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Do Oil Prices Rise to Feed Inflation, or Stay Static Facing Slow Global Growth?
OPEC+ producers sent oil prices spiraling higher on April 2nd by announcing output cuts of around 1.16 million barrels per day until the end of 2023.
This followed crude price drops in March as banking sector turmoil sparked recession fears.
The big question is whether oil prices will keep rising, feeding higher inflation, or settle to balance the production cuts with a lackluster global economy.
China's reopening has boosted its domestic economy but demand at its factories remains weak.
The latest ISM survey of U.S. manufacturers indicated conditions were dire.
Outside of gains for resources stocks, initial market reaction to OPEC's move was muted, with investors waiting on U.S. inflation data on April 12th to see if price rises have slowed enough to quell central banks' appetite for further aggressive rate rises.
(2) The IMF and World Bank Spring Meetings Get Underway
Policymakers and investors head to Washington for the World Bank and International Monetary Fund Spring meetings starting on Monday.
High inflation and financial stability are top concerns.
The Fund will release its latest projections for global growth on Tuesday and a sovereign round table to address countries in debt distress is a key event on Wednesday.
Cash-strapped economies such as Zambia, Sri Lanka and Ghana are still in talks to restructure their overseas debt with much focus on China, the largest bilateral creditor for emerging markets economies.
It will be the first meeting for Ajay Banga, U.S. nominee to run the World Bank and sole contender for the job.
Banga says he supports his predecessor's proposal to expand the bank's annual lending capacity by about $5 billion to help tackle climate change and other global challenges.
(3) U.S. Financials Kick Off Uneasy Earnings Season
The uneasy calm that has settled over the U.S. banking sector after the collapse of Silicon Valley Bank (SVB) will be tested as U.S. financials kick off their earnings season.
The S&P500 bank index is down -18% since March 8th, when SVB troubles became known, followed shortly after by the collapse of Signature Bank and spreading worries over regional lenders such as First Republic.
S&P500 financials are seen posting first quarter year-on-year earnings growth of +5.2%, putting it among just four sectors whose earnings are expected to climb.
S&P500 earnings are predicted to fall -5.0%, I/B/E/S data from Refinitiv showed.
JPMorgan Chase (JPM - Free Report) , Citigroup Inc (C - Free Report) and Wells Fargo (WFC - Free Report) report earnings BMO on Friday, April 14th.
Goldman Sachs (GS - Free Report) , Morgan Stanley (MS - Free Report) and Bank of America (BAC - Free Report) are due the week after.
(4) Serious Questions Rise About Very Swift UBS-Credit Suisse Deal
In Switzerland, the other banking crisis hotspot, parliament holds a special three-day session from Tuesday to debate government support and guarantees provided to secure UBS' (UBS - Free Report) takeover of Credit Suisse Group .
There are no expectations of the deal being scuppered but outlines of conditions attached might take shape. The government had to shell out close to 260 billion Swiss francs ($280 billion) of state funding and guarantees.
The debate is expected to be a heated and emotional one for the Alpine nation which has taken much pride in its financial sector and where banking assets make up more than 500% of annual gross domestic product.
Switzerland has instructed Credit Suisse to cancel or reduce all outstanding bonus payments for the top three levels of management and examine whether those already paid can be recovered.
(5) The Bank of Japan’s (BoJ) Ueda at the Helm Now
After a decade in charge of the Bank of Japan, overseeing unprecedented monetary easing aimed at shocking the country into an inflationary cycle, Haruhiko Kuroda passes the baton to Kazuo Ueda on Monday.
Winding down hefty stimulus may prove more challenging than putting it in place, which is why economists generally expect Ueda will take his time before making major changes.
Still, investors will strain their ears for policy hints at his inauguration speech.
Inflation is running well above the 2% target and salaries have finally shown signs of catching up, so investors are asking the trillion-dollar question of how long crisis-sized stimulus can remain.
That's the record amount it cost the BOJ to buy up bonds last year to keep yields in check as emboldened speculators attacked the market.
Top Zacks #1 Rank (STRONG BUY) Stocks
I found two major French companies on our #1 list this week, along with GE.
(1) General Electric (GE - Free Report) : This is a $94 a share stock. The company’s businesses are found in a variety of Diversified Operations. It is based out of Boston. It has a market cap of $102.8B.
I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
Founded in 1892, General Electric Company is popular for its LEAP aircraft engines, heavy-duty gas turbines, Haliade-X and Cypress wind turbines and healthcare solutions.
(2) Schneider Electric SA (SBGSY - Free Report) : This is a $31 a share stock. The company supplies a diverse mix of Manufacturing Electronics. It has a market cap of $88.9B too.
I see a Zacks Value score of D, a Zacks Growth score of D and a Zacks Momentum score of A.
Schneider Electric SA offers integrated solutions across multiple market segments energy and infrastructure, industrial processes, building automation, and data centers or networks, as well as in residential applications.
The company is focused on making energy safe, reliable, and efficient:
Schneider Electric SA is headquartered in Rueil Malmaison, in the western suburbs of Paris, France.
(3) BNP Paribas (BNPQY - Free Report) : This is a $31 a share stock. This company is a major Foreign Bank. It is headquartered in Paris, France. It has a market cap of $75.0B.
I see a Zacks Value score of B, a Zacks Growth score of F and a Zacks Momentum score of C.
BNP Paribas is a European leader in global banking and financial services and is one of the four strongest banks in the world according to Standard & Poor's.
Key Global Macro
Wednesday’s U.S. CPI print for March is the big macro data focus.
On Monday, the IMF and World Bank spring meetings kick off. They run all week long.
On Tuesday, the Eurozone’s retail sales for MAR should be +1.6% y/y, after printing a -2.3% y/y prior mark.
Mainland China’s CPI for MAR should be -1.7% y/y, after printing a -1.4% y/y in FEB.
On Wednesday, the U.S CPI for MAR should be +6.1% y/y, after printing +6.0% y/y in FEB. Ex food & energy should be +5.5% y/y, in line with the FEB +5.5% y/y reading.
The Bank of Canada offers a policy rate decision.
On Thursday, U.S. initial jobless claims come out. Last week saw a rise to +238K.
The U.S. PPI for MAR should be +3.7% y/y, after +4.6% y/y in FEB.
On Friday, U.S. retail sales for MAR should be +0.1% y/y, after a -0.4% print in FEB.
The U of Michigan consumer sentiment index for APR (preliminary) comes out. 62 was the prior reading.
Conclusion
Yes, Q1-23 earnings season kicks off.
JPM, C, and WFC report before the market opens (BMO) on Friday, April 14th.
Here are Zacks Research Director Sheraz Mian’s key Q1 earnings season points.
Here are the key points:
(1) Total S&P 500 earnings for 2023 Q1 are expected to be down -10.1% from the same period last year on +1.8% higher revenues.
This would follow the -5.4% decline in the preceding period’s earnings (2022 Q4) on +5.9% higher revenues.
(2) The direction of 2023 Q1 earnings estimates is in-line with the trend we have been seeing over the few quarters.
Yet, the magnitude of negative revisions is smaller, relative to what we had seen in comparable periods for the preceding two quarters.
(3) S&P500 sectors enjoying positive earnings growth in Q1-2023 include:
(4) Looking at the calendar-year picture:
For Q1-2023?
Let’s get Q2 off on the right foot!
Warm Regards,
John Blank
Zacks Chief Equity Strategist and Economist