In the Global Week Ahead, be aware of a dignified monetary policy conference held in Manhattan. It’s the dark horse winner in gaining institutional traders’ attention.
The conference title is “Globalization Dynamics—E.U. & U.S. perspectives.”
Low and stable long-term bond rates (those are major ingredients) steady the stock market marches to higher valuations — the world over — right now.
Global fixed income market accommodation hinges, in turn, on the Eurozone’s European Central Bank-led monthly bond buying for the rest of 2017 and 2018.
Known by the French language acronym SUERF, the European Money and Finance Forum (when translated to English) is the sponsor. The European Central Bank (the ECB) and the Swiss-based Bank for International Settlements (called the BIS) are key multi-lateral members in SUERF, as are 21 or so European central banks.
According to their website, SUERF is an independent, non-profit network association of central banks, supervisors, financial institutions, academic institutions and financial sector practitioners.
Their meeting provides a unique NYC-based financial market forum for a timely global debate. While the conference is fairly wide-ranging in topics it addresses, a significant theme will be the way out of “QE” balance sheets across major global central banks.
Notably, on Wednesday, ECB Executive Board Member Peter Praet speaks on “European Exit Strategies.” The NY Fed’s Simon Potter will deliver another session on “American Exit Strategies.”
Do exits — from huge multi-trillion dollar central bank balance sheets — merit attention?
Yes. That should be on your front burner, as a lowly retail stock investor. If these coordinated bond market exits go awry, you will lose big.
On Tuesday, eyes in Spain and abroad will be cast towards Catalonia’s regional legislature, and Catalan President Charles Puidgemont.
Economic pressure on the pro-independence camp there is rising. On Monday, three more major companies expect to discuss moving offices out of Catalonia, sources have told Reuters. Major lenders Caixabank and Sabadell have already announced they would be moving offices out of the region.
The scope for tensions to flare is high in the face of a united front against the Catalan separatists, including the central Spanish government and the King of Spain himself. Demonstrations for and against independence happened all weekend.
The EU also made it clear it is unwilling to acknowledge the Oct. 1st referendum. On Monday, European Affairs Minister Nathalie Loiseau said the Catalan crisis had to be resolved through dialogue with Spain.
Also out this week: latest import and export trade figures for India and China.
Traders and investor alike will read these international trade reports closely. They seek fresh global clues on where the manufacturing and commodities markets might go next.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Tencent (TCEHY - Free Report) : This is a $230 billion market cap Tech monster in Mainland China. There is a momentum run for Chinese Internet stocks going on.
Royal Bank of Canada (RY - Free Report) : Foreign banks are worth paying attention to, given the role of global bond market accommodation keeping interest rates low.
But more importantly, realize the bank stock game shows the collateral damage that can be done if central bank balance sheet exits go awry. This stock is a long-term Zacks Rank of F, based on a D in the stock’s valuation score.
Rio Tinto PLC (RIO - Free Report) : This big Australian iron ore mining giant is both a Zacks Rank #1 (Strong Buy) and a long-term Zacks VGM score of A. The stock looks about right for an entry point.
Key Global Macro Data—
Wednesday’s minutes to the FOMC meeting on September 20th come out. This is likely a non-event. Pending October and November data matter more.
Also on Wednesday, a 4th round of NAFTA talk gets underway.
Top Fed officials also speak over the course of the week, including Governor Powell — a candidate for the top job — who speaks on two occasions. Governor Brainard and four regional presidents also speak, including Dallas’s Kaplan (twice), Chicago’s Evans (twice), Minneapolis’s Kashkari and Boston’s Rosengren.
On Friday, a U.S. retail sales report hits. This will include auto sales.
On Monday, the bi-weekly consumer price index (CPI) is forecast at 6.46% y/y, down from 6.53%. That lower step in inflation is good news for monetary policy there.
On Tuesday, India’s exports and imports look to come in at 8% y/y for exports and +23% y/y in imports. Think hard about that. The higher import data is remarkable.
Switzerland’s unemployment rate is 3.0%.
The NFIB small business optimism index comes out in the USA. The prior reading was 105.3.
The Fed’s Kashkari speaks in Minnesota.
On Wednesday, the fourth round of NAFTA talks proceed.
The OPEC monthly oil market report comes out. This is a worthy publication to consult.
Brazil’s broad retail sales should climb to +5% from +3.1% y/y. That would be good news for the macro turnaround effort there.
The Fed’s Potter speaks in NYC and the Fed’s Williams gives a community lenders speech.
The FOMC minutes get released.
On Thursday, U.S. initial claims come out. The recent low of 260K may rise, due mostly to hurricanes, though.
The City of Buenos Aires CPI is at 23.1% y/y. A new reading comes out.
Peru sets its monetary policy rate. The current level is 3.5%.
The ECB’s Draghi and the Fed’s Brainerd speak on monetary policy.
On Friday, the annual meetings of the World Bank and IMF begin.
China’s export and import trade data come out. The import data is set to grow +8.9% y/y, after a prior reading of +13.5% y/y. The export data is set to grow a lower +6.7% y/y. Again, like India, imports are growing much faster than exports.
The final HICP inflation rate in Germany should be +1.8% y/y.
Iceland’s unemployment rate is 1.9%.
The University of Michigan sentiment index comes out. Look for 95.1.
The Fed’s Kaplan and Powell speak in Boston.