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The Fed and Earnings Reports Galore: Global Week Ahead
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Key Takeaways
Wednesday, the Latest FOMC Meeting Concludes
Q2 Earnings Season Picks Up, Especially in Europe
Oil Shipping Channels Remain Under Duress
What happens across this Global Week Ahead?
It's all about central banks this week: interest rate-setters as distant as Tokyo, Washington and London will only grow more nervous
As war escalation in the Middle East puts oil prices back to $100
As if that's not enough, U.S. tariffs are also back on the worry list for markets fretting about war-driven inflation and growth risks. Next are Reuters’ five world market themes, re-ordered for equity traders--
(1) The U.S. Fed Meets This Week. Plus, There Are Major EPS Reports Out
A U.S. Federal Reserve meeting and a slew of corporate earnings reports headlined by technology giants are setting U.S. markets up for a busy week.
The Fed is widely expected to hold rates steady on Wednesday in its second meeting under new Chair Kevin Warsh.
Warsh has shunned offering guidance but vowed to bring the inflation rate down to target, so uncertainty remains high as interest rate rises might be in order at some point.
Recent consumer and producer price data that were cooler than market participants expected helped calm rate-hike bets, but a resurgence in oil prices means traders are raising their bets again.
Meanwhile, earnings reports from Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) are due as investors count on a strong quarter for U.S. corporate profits and focus on AI spending trends.
Expect more scrutiny after hyperscaler Alphabet's shares tanked as it faced investor questions about its cash flow and higher capital spending plans this week.
(2) A Deluge of Corporate Earnings Come from Europe’s Major Corporations
It's Europe's busiest week of this earnings season with 40% of STOXX 600 market cap reporting, according to Barclays.
Second-quarter profit in Europe is set to increase by 17.3% when combining the results of companies that have already reported with estimates for those pending.
That would mark the fastest growth rate since the fourth quarter of 2022. But that's driven mostly by energy, given surging oil prices. Exclude them and LSEG I/B/E/S expects a more modest 7.2%.
Flash Eurozone inflation and growth readings, meanwhile, could go some way to deciding whether the ECB will raise interest rates again this year, after it left policy unchanged on Thursday following June's hike.
(3) The Strait of Hormuz and the Bab el-Mandeb Strait (Red Sea) Are Closed
How much oil and gas is coming out of the Middle East is the most important near-term question, and investors now have two energy shipping chokepoints to watch.
Houthi attacks could make off-limits the Bab el-Mandeb strait, which links the Indian Ocean to the Red Sea and eventually the already-squeezed Strait of Hormuz.
That prospect sent Brent crude through $100 a barrel on Thursday for the first time since May. European gas prices just touched their highest levels since March.
A U.S.-Iran peace deal looks elusive, but news about the Gulf isn't the only thing investors will be looking for when they refresh Truth Social. The U.S. on Friday imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, adding to market uncertainty.
(4) On Thursday, the Bank of England (BoE) Meets
The Bank of England has, unlike the European Central Bank or Bank of Japan, so far resisted the urge from some policymakers to hike rates in the face of oil-driven price pressure.
It's widely expected to do so again on Thursday.
Markets anticipate at least one interest rate increase this year as the rate of inflation picks up again, but signs of job market weakness indicate the BoE could adopt a more dovish tone.
Rate-setters meet just days after Prime Minister Andy Burnham entered Downing Street promising to reshape Britain.
In the post-policy-meeting briefing, BoE chief Andrew Bailey is likely to be pressed on his thoughts on what Burnham's agenda means for monetary policy.
Economists estimate an early decision to cut tax on electricity would slow inflation by 0.1 percentage points.
New finance minister John Healey, meanwhile, will also be scrutinized as watchful bond markets assess whether he will be friend or foe.
(5) On Friday, the Bank of Japan (BoJ) Meets
The Bank of Japan meets on Friday, with much riding on policymakers to deliver a hawkish message that could haul the yen away from a four-decade low against the U.S. dollar.
A well-telegraphed rate hike last month, $73 billion worth of currency intervention nor hope of money returning home have done much to lift the yen, which recently weakened beyond 163 per dollar for the first time since 1986.
Sources told Reuters that some in the BOJ see scope to raise rates at a faster pace than the dominant market view of twice a year if price pressure from a weak yen and rising energy costs persist.
Ahead of Friday's policy decision, Tokyo's July inflation figures are also due, though market participants don't expect the data to alter the BOJ outcome.
Zacks #1 Rank (STRONG BUY) Stocks
Next are three Zacks #1 (STRONG BUY) large-cap stocks.
These are the three largest market-cap stocks currently on our list.
I have listed them by their F12 P/E ratio. Notably, these are very close to the same.
(1) Taiwan Semi (TSM - Free Report) : This is a $416 a share stock, with a market cap of $2.1T
It is found in the Zacks Semiconductor-Circuit Foundry industry. The stock holds a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of A.
F12M P/E: 25.4.
Image Source: Zacks Investment Research
Taiwan Semiconductor Manufacturer Co. is the world's largest dedicated integrated circuit foundry.
As a foundry, the company manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes.
TSMC's goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the leading IC foundry in the world.
(2) Nvidia (NVDA - Free Report) : This is a $209 a share stock, with a market cap of $5.05T
It is found in the Zacks Semiconductor - General industry. The stock holds a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of B.
F12M P/E: 23.0.
Image Source: Zacks Investment Research
Nvidia Corp. is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU.
Over the years, the company's focus has evolved from PC graphics to artificial intelligence (AI) based solutions that now support high performance computing (HPC), gaming and virtual reality (VR) platforms.
Nvidia's GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep learning algorithms.
The company's GPU platforms are playing a major role in developing multi-billion-dollar end-markets like robotics and self-driving vehicles.
Nvidia is a dominant name in the Data Center, professional visualization and gaming markets where Intel and Advanced Micro Devices are playing a catch-up role.
The company's partnership with almost all major cloud service providers (CSPs) and server vendors is a key catalyst. (3) Alphabet (GOOGL - Free Report) : This is a $318 a share stock, with a market cap of $3.9T
It is found in Zacks Internet Services industry. The stock holds a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of A.
F12M P/E: 22.0.
Image Source: Zacks Investment Research
Alphabet has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.
In the online search arena, Google is a monopoly with more than 94% of the online search volume and market.
Over the years, the company has witnessed increases in search queries, resulting from ongoing growth in user adoption and usage, primarily on mobile devices, continued growth in advertiser activity, and improvements in ad formats.
The company is gaining market share in cloud-computing, driven by continued strength in Google Cloud Platform and Google Workspace.
Alphabet also enjoys a dominant position in the autonomous vehicles market, thanks to Waymo's relentless efforts.
Also, it has bolstered its footprint in the healthcare industry with its life science division, Verily.
Key Global Macro
Thursday’s ECB presser will be a major event this week.
On Sunday, Japan’s leading economic index for May came out. The consensus looked for 116.8. The prior reading was 116.8.
On Monday, the Reserve Bank of Australia head Bullock makes a speech.
U.S. Durable Goods Orders for June rebounded to +0.3% from -4.5% y/y reported a month ago. This, however, was well below expectations for around +2.0% growth.
On Tuesday, Australia’s CPI data for June comes out. The prior broad CPI reading was +4.0% y/y. The use trimmed mean CPI too. The was +3.5% y/y. Also hot.
On Wednesday, the FOMC rate decision comes out. Expect no change. There is a Warsh presser.
On Thursday, the Euro Area GDP for Q2 comes out. I see a +0.3% annualized Q2 preliminary consensus for that.
The Bank of England (BoE) comes out with its monetary policy rate. No change expected from the current 3.75% number.
U.S. core PCE data for June comes out. The prior May core PCE rate was +3.4% y/y. On Friday, the core HICP inflation rate for the Euro Area comes out for June. The consensus looks for +2.9% y/y, a little higher than the prior +2.8% y/y data.
Conclusion
On July 23rd, Zacks Research Director Sheraz Mian shared a Q2-26 earnings update.
Four points:
(1) The picture emerging from Q2 earnings is one of broad-based strength.
Companies are comfortably beating consensus estimates — even as those forecasts were revised upward leading into the reporting cycle — while the overall pace of earnings growth continues to accelerate noticeably.
(2) Through Thursday, July 23rd, we have received Q2 results from 121 S&P 500 members (representing 24.2% of the total index).
Total earnings for these early reporters are up +72.1% year-over-year on +13.0% higher revenues.
86.8% topped EPS estimates and 80.2% beat revenue estimates.
This performance represents a marked improvement for these 121 index members compared to their performance in recent quarters.
(3) The Q2 earnings growth pace has been boosted by the blockbuster quarterly numbers from Alphabet and Micron ((MU - Free Report) ).
Alphabet's Q2 earnings increased +297.9% from the same period last year, with unrealized gains on the company's minority stake in SpaceX (SPCX - Free Report) boosting the numbers.
Micron's Q2 earnings were up +1350.1%, given the red-hot demand for the company's memory products in the emerging AI world.
Excluding the contribution from Alphabet and Micron?
Q2 earnings for the rest of the companies that have reported already would be up +17.6% (vs. +72.1% otherwise) on +9.4% higher revenues (vs. +13% otherwise).
(4) Any way you look at it, this is an impressive earnings picture and represents a market-friendly set up, notwithstanding headwinds from the geopolitical side.
That’s it for me.
Kind Regards,
John Blank, PhD. Zacks Chief Equity Strategist and Economist
View the Zacks #1 Rank List
Image: Shutterstock
The Fed and Earnings Reports Galore: Global Week Ahead
Key Takeaways
What happens across this Global Week Ahead?
As if that's not enough, U.S. tariffs are also back on the worry list for markets fretting about war-driven inflation and growth risks.
Next are Reuters’ five world market themes, re-ordered for equity traders--
(1) The U.S. Fed Meets This Week. Plus, There Are Major EPS Reports Out
A U.S. Federal Reserve meeting and a slew of corporate earnings reports headlined by technology giants are setting U.S. markets up for a busy week.
The Fed is widely expected to hold rates steady on Wednesday in its second meeting under new Chair Kevin Warsh.
Warsh has shunned offering guidance but vowed to bring the inflation rate down to target, so uncertainty remains high as interest rate rises might be in order at some point.
Recent consumer and producer price data that were cooler than market participants expected helped calm rate-hike bets, but a resurgence in oil prices means traders are raising their bets again.
Meanwhile, earnings reports from Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) are due as investors count on a strong quarter for U.S. corporate profits and focus on AI spending trends.
Expect more scrutiny after hyperscaler Alphabet's shares tanked as it faced investor questions about its cash flow and higher capital spending plans this week.
(2) A Deluge of Corporate Earnings Come from Europe’s Major Corporations
It's Europe's busiest week of this earnings season with 40% of STOXX 600 market cap reporting, according to Barclays.
The line-up includes LVMH (LVMUY - Free Report) , AstraZeneca (AZN - Free Report) , Shell SHEL, Airbus (EADSY - Free Report) and UBS (UBS - Free Report) .
Second-quarter profit in Europe is set to increase by 17.3% when combining the results of companies that have already reported with estimates for those pending.
That would mark the fastest growth rate since the fourth quarter of 2022. But that's driven mostly by energy, given surging oil prices. Exclude them and LSEG I/B/E/S expects a more modest 7.2%.
Flash Eurozone inflation and growth readings, meanwhile, could go some way to deciding whether the ECB will raise interest rates again this year, after it left policy unchanged on Thursday following June's hike.
(3) The Strait of Hormuz and the Bab el-Mandeb Strait (Red Sea) Are Closed
How much oil and gas is coming out of the Middle East is the most important near-term question, and investors now have two energy shipping chokepoints to watch.
Houthi attacks could make off-limits the Bab el-Mandeb strait, which links the Indian Ocean to the Red Sea and eventually the already-squeezed Strait of Hormuz.
That prospect sent Brent crude through $100 a barrel on Thursday for the first time since May. European gas prices just touched their highest levels since March.
A U.S.-Iran peace deal looks elusive, but news about the Gulf isn't the only thing investors will be looking for when they refresh Truth Social. The U.S. on Friday imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, adding to market uncertainty.
(4) On Thursday, the Bank of England (BoE) Meets
The Bank of England has, unlike the European Central Bank or Bank of Japan, so far resisted the urge from some policymakers to hike rates in the face of oil-driven price pressure.
It's widely expected to do so again on Thursday.
Markets anticipate at least one interest rate increase this year as the rate of inflation picks up again, but signs of job market weakness indicate the BoE could adopt a more dovish tone.
Rate-setters meet just days after Prime Minister Andy Burnham entered Downing Street promising to reshape Britain.
In the post-policy-meeting briefing, BoE chief Andrew Bailey is likely to be pressed on his thoughts on what Burnham's agenda means for monetary policy.
Economists estimate an early decision to cut tax on electricity would slow inflation by 0.1 percentage points.
New finance minister John Healey, meanwhile, will also be scrutinized as watchful bond markets assess whether he will be friend or foe.
(5) On Friday, the Bank of Japan (BoJ) Meets
The Bank of Japan meets on Friday, with much riding on policymakers to deliver a hawkish message that could haul the yen away from a four-decade low against the U.S. dollar.
A well-telegraphed rate hike last month, $73 billion worth of currency intervention nor hope of money returning home have done much to lift the yen, which recently weakened beyond 163 per dollar for the first time since 1986.
Sources told Reuters that some in the BOJ see scope to raise rates at a faster pace than the dominant market view of twice a year if price pressure from a weak yen and rising energy costs persist.
Ahead of Friday's policy decision, Tokyo's July inflation figures are also due, though market participants don't expect the data to alter the BOJ outcome.
Zacks #1 Rank (STRONG BUY) Stocks
Next are three Zacks #1 (STRONG BUY) large-cap stocks.
These are the three largest market-cap stocks currently on our list.
I have listed them by their F12 P/E ratio. Notably, these are very close to the same.
(1) Taiwan Semi (TSM - Free Report) : This is a $416 a share stock, with a market cap of $2.1T
It is found in the Zacks Semiconductor-Circuit Foundry industry. The stock holds a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of A.
F12M P/E: 25.4.
Image Source: Zacks Investment Research
Taiwan Semiconductor Manufacturer Co. is the world's largest dedicated integrated circuit foundry.
As a foundry, the company manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes.
TSMC's goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the leading IC foundry in the world.
(2) Nvidia (NVDA - Free Report) : This is a $209 a share stock, with a market cap of $5.05T
It is found in the Zacks Semiconductor - General industry. The stock holds a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of B.
F12M P/E: 23.0.
Image Source: Zacks Investment Research
Nvidia Corp. is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU.
Over the years, the company's focus has evolved from PC graphics to artificial intelligence (AI) based solutions that now support high performance computing (HPC), gaming and virtual reality (VR) platforms.
Nvidia's GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep learning algorithms.
The company's GPU platforms are playing a major role in developing multi-billion-dollar end-markets like robotics and self-driving vehicles.
Nvidia is a dominant name in the Data Center, professional visualization and gaming markets where Intel and Advanced Micro Devices are playing a catch-up role.
The company's partnership with almost all major cloud service providers (CSPs) and server vendors is a key catalyst.
(3) Alphabet (GOOGL - Free Report) : This is a $318 a share stock, with a market cap of $3.9T
It is found in Zacks Internet Services industry. The stock holds a Zacks Value score of D, a Zacks Growth score of C, and a Zacks Momentum score of A.
F12M P/E: 22.0.
Image Source: Zacks Investment Research
Alphabet has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.
In the online search arena, Google is a monopoly with more than 94% of the online search volume and market.
Over the years, the company has witnessed increases in search queries, resulting from ongoing growth in user adoption and usage, primarily on mobile devices, continued growth in advertiser activity, and improvements in ad formats.
The company is gaining market share in cloud-computing, driven by continued strength in Google Cloud Platform and Google Workspace.
Alphabet also enjoys a dominant position in the autonomous vehicles market, thanks to Waymo's relentless efforts.
Also, it has bolstered its footprint in the healthcare industry with its life science division, Verily.
Key Global Macro
Thursday’s ECB presser will be a major event this week.
On Sunday, Japan’s leading economic index for May came out. The consensus looked for 116.8. The prior reading was 116.8.
On Monday, the Reserve Bank of Australia head Bullock makes a speech.
U.S. Durable Goods Orders for June rebounded to +0.3% from -4.5% y/y reported a month ago. This, however, was well below expectations for around +2.0% growth.
On Tuesday, Australia’s CPI data for June comes out. The prior broad CPI reading was +4.0% y/y. The use trimmed mean CPI too. The was +3.5% y/y. Also hot.
On Wednesday, the FOMC rate decision comes out. Expect no change. There is a Warsh presser.
On Thursday, the Euro Area GDP for Q2 comes out. I see a +0.3% annualized Q2 preliminary consensus for that.
The Bank of England (BoE) comes out with its monetary policy rate. No change expected from the current 3.75% number.
U.S. core PCE data for June comes out. The prior May core PCE rate was +3.4% y/y.
On Friday, the core HICP inflation rate for the Euro Area comes out for June. The consensus looks for +2.9% y/y, a little higher than the prior +2.8% y/y data.
Conclusion
On July 23rd, Zacks Research Director Sheraz Mian shared a Q2-26 earnings update.
Four points:
(1) The picture emerging from Q2 earnings is one of broad-based strength.
Companies are comfortably beating consensus estimates — even as those forecasts were revised upward leading into the reporting cycle — while the overall pace of earnings growth continues to accelerate noticeably.
(2) Through Thursday, July 23rd, we have received Q2 results from 121 S&P 500 members (representing 24.2% of the total index).
Total earnings for these early reporters are up +72.1% year-over-year on +13.0% higher revenues.
86.8% topped EPS estimates and 80.2% beat revenue estimates.
This performance represents a marked improvement for these 121 index members compared to their performance in recent quarters.
(3) The Q2 earnings growth pace has been boosted by the blockbuster quarterly numbers from Alphabet and Micron ((MU - Free Report) ).
Alphabet's Q2 earnings increased +297.9% from the same period last year, with unrealized gains on the company's minority stake in SpaceX (SPCX - Free Report) boosting the numbers.
Micron's Q2 earnings were up +1350.1%, given the red-hot demand for the company's memory products in the emerging AI world.
Excluding the contribution from Alphabet and Micron?
Q2 earnings for the rest of the companies that have reported already would be up +17.6% (vs. +72.1% otherwise) on +9.4% higher revenues (vs. +13% otherwise).
(4) Any way you look at it, this is an impressive earnings picture and represents a market-friendly set up, notwithstanding headwinds from the geopolitical side.
That’s it for me.
Kind Regards,
John Blank, PhD.
Zacks Chief Equity Strategist and Economist