This Global Week Ahead trades mostly on Friday’s U.S. nonfarm payroll report.
A strong November jobs print can be the catalyst for a fresh bull market leg to early 2017. Leading to that key jobs data, other headline prints will be ADP private payrolls and the Chicago PMI on Wednesday.
Equity traders will also keep a close eye on how U.S. holiday sales performed across Thanksgiving week, Black Friday and Cyber Monday. During the week, Black Friday sales data add unique color. A raft of shopping data captures post-election U.S. consumer confidence.
For example, the National Retailers Federation provides a poll. This offers dollar amounts spent and breakdowns on both ‘cyber spending’ and bricks and mortar spending.
The International Council of Shopping Centers (ICRC) publishes regular weekly data on shopping. This will be released on Wednesday.
As for headwinds, the S&P Case-Shiller house price index comes out Tuesday. This peculiar index is constructed with a 2-month lag. It won’t capture the effect of higher 30-year fixed mortgage rates that have unfolded.
U.S. housing data may well deteriorate in the winter months, in response to the jack-up in rates.
The other renewed risk to the U.S. bull market? It comes from the sweep-up in the U.S. dollar.
This is the big elephant in the room!
The broad U.S. trade-weighted dollar index has elevated to a level last seen in early 2002. That’s 14 years ago! The U.S. dollar’s run should widen the U.S. trade deficit down the road, and not far down that road.
Heedless of 2 building headwinds – U.S. housing or the U.S. dollar strength -- a December interest rate hike by the Fed is a done deal. Fed fund futures have 100% odds on a DEC rate hike.
Barring a massive jobs face-plant this Friday, unseen financial chaos, or U.S. political upheaval from the vote recount, the Fed hikes 25 bps on Dec. 14th.
Top Zacks #1 Rank (STRONG BUY) stock picks—
I list them in order of market capitalization.
(#1) Applied Materials (AMAT - Free Report) :This is a big $35 billion market-cap stock in the hot semiconductor equipment-wafer fabrication space. The Zacks VGM score is A, with a B in Value and an A in Growth.
Applied Materials develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.
Customers for these products include semiconductor wafer manufacturers and semiconductor integrated circuit manufacturers, who either use the ICs they manufacture in their own products, or sell them to other companies.
These ICs are the key components in most advanced electronic products such as computers, telecommunications devices, automotive engine management systems and electronic games.
(#2) Burlington Stores (BURL - Free Report) : This is a discount retail store chain with about $6.3 billion in market cap. The Zacks VGM score is A, too. The stock price has run up fast recently. It might be worth waiting for a nice pullback on this one.
Burlington Stores, Inc. operates as an off-price apparel and home product retailer. It provides its customers with a selection of fashionable branded product in women's ready-to-wear apparel, menswear, youth apparel, baby products, footwear, accessories, home goods and coats.
The Company operates within the United States and Puerto Rico. Burlington Stores, Inc. is headquartered in Burlington, NJ.
(#3) SYNNEX Corp. (SNX - Free Report) ): This is a business software services company and the stock is a $4.7 market cap. It also has a Zacks long-term VGM score of A, earned by A’s in both growth and value.
SYNNEX Corp is a global IT supply chain services company offering a comprehensive range of services to original equipment manufacturers and software publishers, or (OEMs), and reseller customers worldwide. The company offers product distribution, related logistics services and contract assembly.
SYNNEX distributes IT systems, peripherals, system components, software and networking equipment for OEM suppliers such as HP, IBM, Intel, Microsoft Corporation and Seagate.
Key Global macro data—
The first day of the month (Dec. 1st lands on Thursday) means purchasing manager indexes (PMIs) around the world get released for the latest month — aka November. Manufacturing PMI reports have the hard data on how global manufacturers fared following the U.S. election.
As a possible headwind lurking outside the U.S., China’s official manufacturing PMI could decline to around 50.8 from October’s 51.2. That was the highest level in more than two years.
The U.S. NOV jobs report will be the last major piece of macro data before the Fed’s DEC meeting. Economists expect +230K job additions, up from +161K in October. The U.S. unemployment rate should go to 4.8% from 4.9%.
If this jobs report is what it is supposed to be – good -- a Fed DEC rate will surely happen.
On Monday, the ECB’s Draghi speaks in Brussels.
Mexico’s unemployment rate looks to be 4.15%. That’s frictional.
Japan’s retail sales had posted a -1.7% y/y decline in 2016. Fresh monthly data will check up on that.
On Tuesday, Hungary’s unemployment rate should be 4.9%. That’s frictional.
Brazil’s FGV inflation rate comes out. The consensus has +7.27% y/y.
Brazil’s national unemployment rate should go to 11.6% from 11.8%. That would be progress.
Brazil holds a COPOM monetary policy meeting.
Chile’s copper productions figures come out. 460,986 tons is what was last reported.
The US Case-Shiller Home Price Index comes out. Look for +5.22% y/y from +5.13% y/y previously. That’s healthy.
The Fed’s Dudley speaks in Puerto Rico and the Fed’s Powell speaks.
On Wednesday, Germany’s unemployment rate should be 6.0%. It’s higher than you think!
The Eurozone flash HICP inflation rate comes out. The core rate should get to +0.9% y/y from +0.8% y/y. It’s still too low.
Brazil’s GDP over 4 quarters is looking at -4.7% y/y growth.
The U.S. ADP employment survey comes out. A nice +180K should beat the prior +147K last month.
U.S. personal incomes should be up +0.4% y/y and spending up +0.5% y/y.
The U.S. Chicago PMI should get to 54 from a prior 50.6.
Columbia’s unemployment rate is 8.5%. The new peace deal can really help here.
On Thursday, China’s manufacturing PMIs come out. Look for the official number to be 50.8 from 51.2 last month. Bare stabilization is what we are seeing.
India’s manufacturing PMI should be 54.4.
Irelands manufacturing PMI should be able to stand up to a previous 52.1, and in Russia the number to beat is 52.4.
The Eurozone manufacturing PMI should be stable at 52.7 again. That’s the modest improvement story we have come to expect here.
On Friday, the critical U.S. non-farm payroll number comes out. We are looking for a strong +230K (with Xmas season temps) from +161K last month.
The U.S. unemployment rate should be 4.8% from 4.9%. As I have written multiple times in this write up, that is frictional.
That means the Fed rate hike in DEC is fully priced in.