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Themes That Strike a Chord: Global Week Ahead

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For the Global Week Ahead, I found three broad themes that heavily impact U.S. and global stocks.

Reuters identified these — and all are worth sharing again.

August Angst: With the Dow Jones Industrial Average touching 22,000 in the past week, some investors and traders are bracing for a rocky second half of 2017.

The August through October time frame is the only three-month period to have a negative average return going back to 1928, according to Bank of America/Merrill Lynch.

Some U.S. stock market internal measures are showing signs of rally fatigue, as the number of new stocks striking 52-week lows on the New York Stock Exchange and Nasdaq has risen for seven straight days while the number marking fresh highs has declined in five of the past seven sessions.

Weak U.S. Dollar, Strong Global Stocks: An 8-percent fall since May in the greenback against a basket of other currencies has coincided with ever more record highs in MSCI's All-Country World stocks index.

While the fall in the dollar index happened alongside a reduction in expectations of more Fed rate hikes, many analysts say the dollar weakness does not reflect concerns over the U.S. economy or over the uncertainty emanating from President Donald Trump's White House.

Instead, it reflects the relatively loose monetary conditions and confidence to invest in higher-yielding assets that could see the "risk-on" stocks rally maintained for a while yet.

Tech Sector Drive: The Tech sector is seen to be a beneficiary of low rates, global growth and disruption underway across industries from retail to banking.

This has ensured that tech stocks are the best performers by some distance across each of the world's major market regions and the gap with sectors such as energy is particularly wide.

Inflows this year into tech stocks globally are running second only to the rush into EM debt, according to data from EPFR and Bank of America Merrill Lynch.

Slowing inflows into the sector over the past week, as BofA-ML points out, could be the first signs that investors are keen on banking some profits.

It is August. This means high summer and vacations to traders. Take a step back too, and look into the biggest underlying motives behind recent stock trading.  

Top Zacks #1 Rank  (STRONG BUY) Stocks—

Lam Research (LRCX - Free Report) :
This is a widely followed semiconductor equipment-wafer fabrication outfit. Can the tech sector turn around? It will depend on stocks like this. The long-term Zacks VGM score is A.

Sony Corp. (SNE - Free Report) : This is the big Japanese consumer electronics giant. The stock gets a long-term VGM score of A.

Heineken NV (HEINY - Free Report) : This is the big alcoholic beverage distributor, based in Europe. The stock gets a long-term VGM score of B.

Key Global/Macro—

On Tuesday, the latest trade data from China is worth watching, as well as Thursday’s trade data from India.

On Thursday, Mexico’s central bank is due to deliver its latest interest rate decision.

On Thursday, Macy’s kicks off the U.S. department store sector’s earnings season.

On Friday, U.S. and European consumer inflation rates get revisited. Investors continue to scan for clues on the direction of U.S. and European monetary policy.

On Monday, the nation of Chile reports a number of statistics. Among them, copper production. But it also prints a proxy of GDP growth (ex-mining). The prior reading here was 1.9% y/y. With mining, it goes to 0.5%.

The Fed’s Bullard speaks in Tennessee and Kashkari speaks in Minneapolis.

On Tuesday, the latest Mainland China exports and imports data come out. Look for +10.6% y/y growth from exports and +9.5% y/y from imports.

On Wednesday, the City of Buenos Aires inflation rate comes out. It is still too high, at +21.9% y/y.

On Thursday, building permits in Canada come out. The recent data showed +8.9% m/m growth. Let’s see what happens here in the summer.

Unit labor costs for the USA come out. This proxy for wage growth was +2.2% y/y last time.

India coughs up exports and imports data. The prior readings were 4.4% y/y for exports and +19% y/y for imports. That imports data is strikingly high!

Nominal wages in Mexico may go up +5.2% y/y.

The Greek unemployment rate is still too high at 21.7%.

U.S. initial claims should be low again, as the last reading was 240K.

The Fed’s Dudley speaks in NYC.

Mexico’s central bank may move its policy overnight rate. It is currently at 7.0%

On Friday, the important HICP (the H is for harmonized) inflation rates for a variety of European countries come out.

France was at 0.8% y/y, Spain at +1.5% y/y, Italy at +1.2% y/y, and Germany at +1.5% y/y.

The U.S. CPI ex-food and energy should add +0.2% m/m.

Russian GDP comes out. The prior reading was +0.5% y/y.

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