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This Global Week Ahead holds policy rate meetings by heavyweight central banks:
From the U.S. Federal Reserve
To the Bank of England (BoE)
From Switzerland (SNB), and
Norway (Norges Bank), to
Mexico (Banxico)
But one question is dominating markets: Will the Bank of Japan (BoJ) finally gear up to exit its negative policy rate?
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Wednesday Afternoon at 2 pm ET, an Updated FOMC ‘Dot Plot’ Shows Up
Wednesday's Fed meeting is all about gauging policymakers' views on the timing of rate cuts, the resilience of the U.S. economy, and the possibility of an inflationary rebound.
Robust jobs and inflation data has prompted a rethink of how much policymakers will lower rates this year.
Fed funds futures price in around 80 basis points of cuts from more than 150 priced in in January.
That hasn’t stopped a rally that’s taken the S&P500 to fresh records this year. A hawkish Powell tilt, however, could give investors pause.
Also on the radar is chipmaker Nvidia’s GTC developer conference from March 18th -21st, featuring a keynote speech from Chief Executive Jensen Huang. The AI-fueled frenzy has boosted Nvidia’s stock nearly +80% year-to-date.
(2) Fresh PMIs from Around the World May Show Real GDP Growth Is Picking Up
In contrast to U.S. exceptionalism, economic growth is sluggish in many other major economies.
Some economists say there's too much pessimism around Europe, which was harder hit than some peers by the energy shock — and thus slower to rebound. That means European shares, even if they are near record highs, are too heavily discounted.
The flash PMI or business activity numbers, released by economies across the globe in coming days, could confirm the view that the global economy outside the U.S. is not as bad as it might first seem.
While the February Eurozone composite PMI remained below the 50 mark that separates expansions from contraction, the index came in above market consensus.
Britain's manufacturing PMI, stuck below the 50-threshold for growth since August 2022, is now edging higher.
(3) On Tuesday, Will the Bank of Japan (BoJ) Finally Exit a Negative Policy Rate?
The two-day monetary policy meeting of Japan's central bank beginning Monday could, at long last, very well be 'live' after months of false alarms and eager anticipation.
The stars are finally aligning for a move away from negative interest rates and an overhaul of its massive stimulus program, following Japan Inc.’s hefty pay bumps at this year's annual wage negotiations.
Recent comments from BOJ officials, including Governor Kazuo Ueda, also seem to signal an imminent end to years of ultra-loose monetary policy, even if it doesn't happen in March.
Markets are priced for an exit by June.
Investors have positioned to benefit from selling of short-dated paper since a rise in central bank deposit rates would quickly draw banks' capital out of bonds and into cash.
But it's a guessing game, and only time will tell.
(4) On Thursday, Stock and Bond Traders Hear from the Bank of England (BoE)
The Bank of England will likely play for time in Thursday's rate announcement as it awaits greater clarity on wage growth, which remains stronger than in the U.S. or the Eurozone.
The BoE is expected to start cutting borrowing costs from 5.25% — the highest since 2008 — in August, a Reuters poll showed, potentially bringing up the rear behind both the Fed and the European Central Bank.
Markets will watch for any change in language about putting the BoE's Bank Rate "under review" and any shift in the balance of votes after February's three-way split. And Wednesday's inflation reading could cause a last-minute rethink.
Meanwhile in Switzerland, inflation easing to a nearly 2-1/2 year low has fueled expectations that the Swiss National Bank could cut interest rates on Thursday.
(5) Also Thursday Is Banxico’s Policy Rate Decision in Mexico. And Turkiye’s
Mexico's central bank has been a rare — and sizable — holdout among Latin America's central banks, which have been at the forefront of the emerging market rate-cutting frenzy. But that might well change on Thursday.
Easing inflation and a strong economy thanks to higher-than-expected domestic spending in an election year have given Banxico some room for maneuver to pull away from record high 11.25% rates.
In Türkiye, a fresh inflation spurt has dashed policymakers' hopes that the recent severe tightening cycle aimed at shoring up the ever-sliding lira and combating sticky price pressures had come to an end.
Expectations are high that the central bank needs to deliver another rate hike, maybe as much as 500 basis points.
That would come at a sensitive time, with the country gearing up for local elections on March 31st.
Zacks #1 Rank (STRONG BUY) Stocks
(1) The Bank of New York Mellon (BK - Free Report) : This is a $54 a share Major Regional U.S. Bank stock. The market capitalization is $41B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
Headquartered in New York and formed as a holding company for The Bank of New York Mellon, The Bank of New York Mellon Corp. (popularly known as BNY Mellon) is a financial services company that has been in business since 1784.
The company was incorporated on July 1st, 2007, following the merger of The Bank of New York Company Inc. and Mellon Financial Corp.
BNY Mellon operates in 35 countries and provides various products and services to individuals and institutions. Its global client base consists of financial institutions, corporations, government agencies, endowments and foundations, and high-net-worth individuals.
BNY Mellon presents operations through the following segments:
The Investment and Wealth Management segment provides investment management services to institutional and retail investors; and investment management, wealth and estate planning and private banking solutions to high-net-worth individuals and families, as well as foundations and endowments.
The Market and Wealth Services segment includes the Pershing, Treasury Services, and Clearance and Collateral Management businesses. Within Pershing, BNY Mellon provides clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading services, and prime brokerage. Treasury services include integrated cash management solutions, whereas Clearance includes U.S. government and global clearing services, and Collateral Management includes tri-party services.
The Securities Services segment includes the Asset Servicing and Issuer Services businesses. Within Asset Servicing, it provides custody, trust & depositary, accounting, ETF services, middle-office solutions, transfer agency, and services for private equity and real estate funds. Issuer Services include corporate trust and depositary receipts.
The Other segment consists of credit-related services, the leasing portfolio, corporate treasury activities, business exits, M&I expenses, as well as other corporate revenues and expense items.
As of Dec 31, 2023, BNY Mellon had $47.8 trillion in assets under custody and/or administration (AUC/A) and $1.97 trillion in AUM.
(2) Seven and I Holdings Co. (SVNDY - Free Report) : This is a $14 a share Miscellaneous Retail Industry stock. The market capitalization is $37.5B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Seven & i Holdings Co., Ltd. is a Japan-based holding company which focusses on seven business areas including convenience stores, general merchandise stores, department stores, supermarkets, food-services, financial services, and IT services.
The company's Convenience Store operates under the name 7-Eleven Japan
The Super Store segment operates general supermarkets such as Ito Yokado and Marudai, as well as food supermarkets such as York-Benimaru, York Mart and Sanei
The Department Store segment operates department stores such as Sogo and Seibu
The Food Service segment operates restaurant and dining halls, as well as provides catering services
The Financial-related segment is engaged in the provision of bank services and other financial related businesses
The company focuses on the creation of life infrastructure that keeps up with the changing society and time, through a New, Comprehensive Lifestyle Industry to continually respond to the ordinary needs of the customers.
(3) Veeva Systems (VEEV - Free Report) : This is a $232 a share Internet-Software industry stock. The market capitalization is $37.4B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Headquartered in Pleasanton, CA, Veeva Systems Inc. offers cloud-based software applications and data solutions for the life sciences industry.
The company's product portfolio includes:
Veeva CRM (customer relationship management)
Veeva Vault (content and information management)
Veeva Network (customer master and product data management) and
Veeva data services (Veeva OpenData and Veeva KOL data)
Veeva CRM is the company’s flagship product and runs on Salesforce.com’s SaaS platform. The contract between Veeva and salesforce.com extends until 2025.
Veeva Systems has also released its advanced Veeva Commercial Cloud offering, Veeva CRM Engage Webinar, at the Veeva Commercial Summit Europe.
Veeva Systems also released Veeva Vault PromoMats Brand Portal — a new digital asset management capability that helps brand managers create portals, organize and showcase content within Veeva Vault PromoMats.
Veeva Systems has announced its intent to build Veeva MedTech CRM on the Vault Platform to meet the need for a deep, industry-specific solution.
Key Global Macro
Wednesday’s FOMC outcome (out at 2:00 pm EST) is the major market-moving event.
On Monday, Mainland China’s Foreign Direct Investment (FDI) for February came out in-line with expectations and the prior reading of -11.7% y/y. This is what is spooking external investors. Is an authoritarian Mainland China “un-investible”?
On Tuesday, the Bank of Japan (BoJ) could move to 0% policy rates after multiple years at -0.1%. There will be a presser.
There is also a Reserve Bank of Australia (RBA) rate decision. A 4.35% policy rate is expected to be held. There will be a presser too.
U.S. housing starts (1.42M expected vs. 1.33M prior) and U.S. building permits 1.489M prior) for FEB come out.
On Wednesday, the March FOMC monetary policy statement comes out, along with FOMC economic projections. A 5.5% policy rate should be held. There will be a presser.
On Thursday, Japan’s Jibun Bank manufacturing PMI for FEB lands. The prior reading was 47.2.
The preliminary March HCOB manufacturing PMI comes out. I see a 47 consensus after a 46.5 prior reading.
There will be a Bank of England (BoE) monetary policy report and policy rate decision out. Expect the 5.25% policy rate to be held.
There will be a Swiss (SNB) monetary policy assessment. 1.75% is their policy rate.
On Friday, an EU Leader’s summit ends. It is focused on Ukraine.
Conclusion
Finally, Zacks Research Director Sheraz Mian’s 4 key Q1-2024 earnings points:
(1) Total S&P500 earnings for Q1-2024 are expected to be up +2.2% from the same period last year on +3.5% higher revenues.
This follows the +6.4% earnings growth on +3.4% higher revenues in 2023 Q4.
(2) As was the case in the preceding two quarters, the Tech sector remains a key growth driver in Q1-2024.
Had it not been for the robust Tech sector earnings growth, total earnings for the rest of the index would be modestly in negative territory.
(3) Expect half of the 16 Zacks sectors to enjoy positive earnings growth in Q1, with the
Tech (earnings growth of +18.5%),
Retail (+13.3%),
Aerospace (+8.1%),
Utilities (+7.3%) sectors
enjoying notable year-over-year growth.
(4) Expect Q1-24 earnings for the remaining 8 Zacks sectors to be below the year-earlier level, with the
Energy (decline of -24.8%),
Basic Materials (-26.4%),
Autos (-24.8%) and
Transportation (-14.8%)
as the major decliners.
Have an excellent trading week!
John Blank, PhD. 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
The "Dot Plot" Shall Land: Global Week Ahead
This Global Week Ahead holds policy rate meetings by heavyweight central banks:
But one question is dominating markets: Will the Bank of Japan (BoJ) finally gear up to exit its negative policy rate?
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Wednesday Afternoon at 2 pm ET, an Updated FOMC ‘Dot Plot’ Shows Up
Wednesday's Fed meeting is all about gauging policymakers' views on the timing of rate cuts, the resilience of the U.S. economy, and the possibility of an inflationary rebound.
Robust jobs and inflation data has prompted a rethink of how much policymakers will lower rates this year.
Fed funds futures price in around 80 basis points of cuts from more than 150 priced in in January.
That hasn’t stopped a rally that’s taken the S&P500 to fresh records this year. A hawkish Powell tilt, however, could give investors pause.
Also on the radar is chipmaker Nvidia’s GTC developer conference from March 18th -21st, featuring a keynote speech from Chief Executive Jensen Huang. The AI-fueled frenzy has boosted Nvidia’s stock nearly +80% year-to-date.
(2) Fresh PMIs from Around the World May Show Real GDP Growth Is Picking Up
In contrast to U.S. exceptionalism, economic growth is sluggish in many other major economies.
Some economists say there's too much pessimism around Europe, which was harder hit than some peers by the energy shock — and thus slower to rebound. That means European shares, even if they are near record highs, are too heavily discounted.
The flash PMI or business activity numbers, released by economies across the globe in coming days, could confirm the view that the global economy outside the U.S. is not as bad as it might first seem.
While the February Eurozone composite PMI remained below the 50 mark that separates expansions from contraction, the index came in above market consensus.
Britain's manufacturing PMI, stuck below the 50-threshold for growth since August 2022, is now edging higher.
(3) On Tuesday, Will the Bank of Japan (BoJ) Finally Exit a Negative Policy Rate?
The two-day monetary policy meeting of Japan's central bank beginning Monday could, at long last, very well be 'live' after months of false alarms and eager anticipation.
The stars are finally aligning for a move away from negative interest rates and an overhaul of its massive stimulus program, following Japan Inc.’s hefty pay bumps at this year's annual wage negotiations.
Recent comments from BOJ officials, including Governor Kazuo Ueda, also seem to signal an imminent end to years of ultra-loose monetary policy, even if it doesn't happen in March.
Markets are priced for an exit by June.
Investors have positioned to benefit from selling of short-dated paper since a rise in central bank deposit rates would quickly draw banks' capital out of bonds and into cash.
But it's a guessing game, and only time will tell.
(4) On Thursday, Stock and Bond Traders Hear from the Bank of England (BoE)
The Bank of England will likely play for time in Thursday's rate announcement as it awaits greater clarity on wage growth, which remains stronger than in the U.S. or the Eurozone.
The BoE is expected to start cutting borrowing costs from 5.25% — the highest since 2008 — in August, a Reuters poll showed, potentially bringing up the rear behind both the Fed and the European Central Bank.
Markets will watch for any change in language about putting the BoE's Bank Rate "under review" and any shift in the balance of votes after February's three-way split. And Wednesday's inflation reading could cause a last-minute rethink.
Meanwhile in Switzerland, inflation easing to a nearly 2-1/2 year low has fueled expectations that the Swiss National Bank could cut interest rates on Thursday.
(5) Also Thursday Is Banxico’s Policy Rate Decision in Mexico. And Turkiye’s
Mexico's central bank has been a rare — and sizable — holdout among Latin America's central banks, which have been at the forefront of the emerging market rate-cutting frenzy. But that might well change on Thursday.
Easing inflation and a strong economy thanks to higher-than-expected domestic spending in an election year have given Banxico some room for maneuver to pull away from record high 11.25% rates.
In Türkiye, a fresh inflation spurt has dashed policymakers' hopes that the recent severe tightening cycle aimed at shoring up the ever-sliding lira and combating sticky price pressures had come to an end.
Expectations are high that the central bank needs to deliver another rate hike, maybe as much as 500 basis points.
That would come at a sensitive time, with the country gearing up for local elections on March 31st.
Zacks #1 Rank (STRONG BUY) Stocks
(1) The Bank of New York Mellon (BK - Free Report) : This is a $54 a share Major Regional U.S. Bank stock. The market capitalization is $41B. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
Headquartered in New York and formed as a holding company for The Bank of New York Mellon, The Bank of New York Mellon Corp. (popularly known as BNY Mellon) is a financial services company that has been in business since 1784.
The company was incorporated on July 1st, 2007, following the merger of The Bank of New York Company Inc. and Mellon Financial Corp.
BNY Mellon operates in 35 countries and provides various products and services to individuals and institutions. Its global client base consists of financial institutions, corporations, government agencies, endowments and foundations, and high-net-worth individuals.
BNY Mellon presents operations through the following segments:
The Investment and Wealth Management segment provides investment management services to institutional and retail investors; and investment management, wealth and estate planning and private banking solutions to high-net-worth individuals and families, as well as foundations and endowments.
The Market and Wealth Services segment includes the Pershing, Treasury Services, and Clearance and Collateral Management businesses. Within Pershing, BNY Mellon provides clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading services, and prime brokerage. Treasury services include integrated cash management solutions, whereas Clearance includes U.S. government and global clearing services, and Collateral Management includes tri-party services.
The Securities Services segment includes the Asset Servicing and Issuer Services businesses. Within Asset Servicing, it provides custody, trust & depositary, accounting, ETF services, middle-office solutions, transfer agency, and services for private equity and real estate funds. Issuer Services include corporate trust and depositary receipts.
The Other segment consists of credit-related services, the leasing portfolio, corporate treasury activities, business exits, M&I expenses, as well as other corporate revenues and expense items.
As of Dec 31, 2023, BNY Mellon had $47.8 trillion in assets under custody and/or administration (AUC/A) and $1.97 trillion in AUM.
(2) Seven and I Holdings Co. (SVNDY - Free Report) : This is a $14 a share Miscellaneous Retail Industry stock. The market capitalization is $37.5B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of B.
Image Source: Zacks Investment Research
Seven & i Holdings Co., Ltd. is a Japan-based holding company which focusses on seven business areas including convenience stores, general merchandise stores, department stores, supermarkets, food-services, financial services, and IT services.
The company focuses on the creation of life infrastructure that keeps up with the changing society and time, through a New, Comprehensive Lifestyle Industry to continually respond to the ordinary needs of the customers.
(3) Veeva Systems (VEEV - Free Report) : This is a $232 a share Internet-Software industry stock. The market capitalization is $37.4B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of A.
Image Source: Zacks Investment Research
Headquartered in Pleasanton, CA, Veeva Systems Inc. offers cloud-based software applications and data solutions for the life sciences industry.
The company's product portfolio includes:
Veeva CRM is the company’s flagship product and runs on Salesforce.com’s SaaS platform. The contract between Veeva and salesforce.com extends until 2025.
Veeva Systems has also released its advanced Veeva Commercial Cloud offering, Veeva CRM Engage Webinar, at the Veeva Commercial Summit Europe.
Veeva Systems also released Veeva Vault PromoMats Brand Portal — a new digital asset management capability that helps brand managers create portals, organize and showcase content within Veeva Vault PromoMats.
Veeva Systems has announced its intent to build Veeva MedTech CRM on the Vault Platform to meet the need for a deep, industry-specific solution.
Key Global Macro
Wednesday’s FOMC outcome (out at 2:00 pm EST) is the major market-moving event.
On Monday, Mainland China’s Foreign Direct Investment (FDI) for February came out in-line with expectations and the prior reading of -11.7% y/y. This is what is spooking external investors. Is an authoritarian Mainland China “un-investible”?
On Tuesday, the Bank of Japan (BoJ) could move to 0% policy rates after multiple years at -0.1%. There will be a presser.
There is also a Reserve Bank of Australia (RBA) rate decision. A 4.35% policy rate is expected to be held. There will be a presser too.
U.S. housing starts (1.42M expected vs. 1.33M prior) and U.S. building permits 1.489M prior) for FEB come out.
On Wednesday, the March FOMC monetary policy statement comes out, along with FOMC economic projections. A 5.5% policy rate should be held. There will be a presser.
On Thursday, Japan’s Jibun Bank manufacturing PMI for FEB lands. The prior reading was 47.2.
The preliminary March HCOB manufacturing PMI comes out. I see a 47 consensus after a 46.5 prior reading.
There will be a Bank of England (BoE) monetary policy report and policy rate decision out. Expect the 5.25% policy rate to be held.
There will be a Swiss (SNB) monetary policy assessment. 1.75% is their policy rate.
On Friday, an EU Leader’s summit ends. It is focused on Ukraine.
Conclusion
Finally, Zacks Research Director Sheraz Mian’s 4 key Q1-2024 earnings points:
(1) Total S&P500 earnings for Q1-2024 are expected to be up +2.2% from the same period last year on +3.5% higher revenues.
This follows the +6.4% earnings growth on +3.4% higher revenues in 2023 Q4.
(2) As was the case in the preceding two quarters, the Tech sector remains a key growth driver in Q1-2024.
Had it not been for the robust Tech sector earnings growth, total earnings for the rest of the index would be modestly in negative territory.
(3) Expect half of the 16 Zacks sectors to enjoy positive earnings growth in Q1, with the
enjoying notable year-over-year growth.
(4) Expect Q1-24 earnings for the remaining 8 Zacks sectors to be below the year-earlier level, with the
as the major decliners.
Have an excellent trading week!
John Blank, PhD.
Zacks Chief Equity Strategist and Economist