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A first week of a month is always the most active for market-moving macro data.
Bond market economists and stock strategists alike consider the huge flow of macro data out in the first week of a month — particularly payrolls in the USA, inflation in Europe, and manufacturing PMIs everywhere — to be catalysts for changes to their quarterly and annual outlooks, on rates and on stock prices, respectively.
In turn, their updates become a big focus for informed traders and investors on their subscriber lists, in the Global Week Ahead.
There were a number of top ranked global themes to choose from; a mixture of Reuter’s in London, Scotia Bank in Canada and the Financial Times everywhere.
The headlines I wrote down, though, will look very familiar to you.
I put my five themes for the week ahead in a rank order. The most important is first.
(1) U.S. Non-Farm Payrolls Out Friday
On Friday, the release of the U.S. March nonfarm payroll report will be on traders' and investors' radar, in the wake of Fed Chair Powell’s first rate hike.
With inflation pressures brewing, wage growth figures will be important for world financial markets. Economists polled by the Financial Times have payrolls rising by +150K jobs in March and the U.S. unemployment rate falling to 4.0%.
Average hourly earnings are expected to increase 0.3% in March. The U.S. economy added a hefty +313K jobs in February. But a slowdown in wage growth pointed to only a gradual increase in inflation this year, which eased investor concerns.
The background to all of this will be the interest rate market. As longer-dated bond yields rise, banks which borrow short-term money and lend it on longer-term benefit.
(2) A Big Week for Global Macro Data
Spring is coming to large parts of the northern hemisphere. It seems fitting that so much global data is coming out.
World stock markets have just seen their first quarterly fall in two years. This will feed the view on how Q2-18 might play out.
On Wednesday, March inflation data from the Eurozone is expected to creep up and bolster bets on the end of ECB “QE” this year.
ISM and unemployment/jobs numbers in so many countries -- from the United States to India -- which most economists need, arrive all week long.
(3) Can Tech Stocks Get It Back Together?
Whether or not the world's biggest tech and social media firms can bounce back from the more than $400 billion wipeout of the last couple of weeks is going to be one of the big things to watch.
Facebook's top brass might reveal when they will appear in front of lawmakers in the United States and Britain to answer questions about the misuse of 50 million users’ private data.
The heat is also likely to stay on online retail giant Amazon. President Trump is not happy. Its growing dominance is sending many small businesses to the wall.
(4) U.S.-China Trade Relations
U.S.-China trade frictions will remain a central focus. There are hopes there will be negotiations that end with everyone looking happy for the cameras. But for the time being everything remains uncertain.
The U.S. administration is expected to announce tariffs on China’s so-called ‘2025 industries’ that are new growth sectors such as robotics and artificial intelligence applications, alongside limits on Chinese investments in U.S. companies and technology transfers.
One background issue over the last couple of weeks has been a sizable appreciation of the Renminbi. In trade-weighted terms, the China currency has now risen more this year — 3% — than it did in the whole of 2017.
The Renminbi has been closely hugging the daily benchmark fixing set by the central bank. Markets are speculating that allowing the Renminbi to rise might be part of China's conciliatory offerings in the trade spat.
(5) NAFTA Percolates
Markets have largely reversed improved odds of a NAFTA deal this week.
Scotiabank in Canada says there is a high bar set for being able to deliver upon U.S. Trade Representative Robert Lighthizer’s earlier quest for at least a handshake agreement on NAFTA next week.
Top Zacks #1 Rank (STRONG BUY) Stocks—
NVIDIA (NVDA - Free Report) : Incredibly, the Artificial Intelligence (AI) semiconductor chip company is now a $230 stock with a $140B market capitalization. With a Zacks Value score of F, this is all about the seemingly unlimited potential for future growth, set by equity strategists that cover the stock.
Micron (MU - Free Report) : I find it easier to like this $60B market-cap stock as a strategist, and own it for any number of portfolio objectives. The Zacks Value score of A, Zacks Growth score of A, and Zacks momentum score of A are much more palatable.
Centene (CNC - Free Report) : If you don’t want to be in the hot chip plays, you may want to consider this HMO-Medical stock. It carries a Zacks VGM of A, with an A for Value and a B for Growth. It has a $19B market cap at the moment.
For major stock like these three, there are lots to look out for, in a busy first week of the month.
Key Global Macro—
Data risk will be concentrated towards the end of the week.
Domestic highlights are: the U.S. ISM manufacturing reading on Monday, the ADP private payroll survey on Wednesday, and the all-important U.S. non-farm payroll on Friday.
On Tuesday, Eurozone and Germany manufacturing PMIs are worth focusing on. On Wednesday, the big Europe news of the week hits. That would be the HICP inflation reading and the latest unemployment rate (it is at 8.6%).
In Asia Pacific, there is a rate-setting central bank meeting in Australia Tuesday, and one in India Thursday.
On Monday, the Caixin China Manufacturing PMI (the one for smaller private companies) came in at 51.0 versus a prior reading of 51.6. Its slight expansion is the same, month-after-month.
The U.S. ISM manufacturing index, an influential number, reached 59.3. The prior reading was 60.8, which itself represented a 14-year high.
In comparison, the Markit Mexico manufacturing PMI comes out. The prior was 51.6 and the forecast is for 51.8.
The Mexico IMEF manufacturing PMI index, that is seasonally adjusted should rise to 53 from 52.6.
On Tuesday, the Reserve Bank of Australia (the RBA) sets its policy overnight rate. No change from the 1.5% rate is expected.
The Germany manufacturing PMI comes out. It was 58.6.
The Eurozone manufacturing PMI comes out. It was 56.6. Note: I would pay more attention to manufacturing PMIs than service PMIs. Generally they are more active and cyclical.
On Wednesday, the unemployment rate in Italy comes out. It has been 11.1%.
The core HICP inflation rate for Europe is out. It has been 1.0% y/y.
The Eurozone unemployment rate comes out. It has been 8.6%.
The ADP private payroll survey for the USA comes out. The prior was a solid 235K.
On Thursday, the Central Bank of India sets its three policy rates. The Cash Reserve Ratio should stick at 4.0%, the repo rate at 6.0%, and the reverse repo rate at 5.75%.
The proxy GDP – IMACEC for Chile comes out. It has been 3.9% y/y and could get to 4.8% y/y. That is strong.
U.S. initial claims for unemployment are looking very low at 215K.
On Friday, the all-important nonfarm payroll comes out. Look for the last 313K data print in February to move down to 150K in March. As for the U.S. unemployment rate, it could go to 4.1% from 4.0%.
Average hourly earnings may go up +0.3% m/m after a quiet +0.1% m/m reading in the prior month. This is more important for setting inflation expectations.
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Time to Learn from the Facts: Global Week Ahead
A first week of a month is always the most active for market-moving macro data.
Bond market economists and stock strategists alike consider the huge flow of macro data out in the first week of a month — particularly payrolls in the USA, inflation in Europe, and manufacturing PMIs everywhere — to be catalysts for changes to their quarterly and annual outlooks, on rates and on stock prices, respectively.
In turn, their updates become a big focus for informed traders and investors on their subscriber lists, in the Global Week Ahead.
There were a number of top ranked global themes to choose from; a mixture of Reuter’s in London, Scotia Bank in Canada and the Financial Times everywhere.
The headlines I wrote down, though, will look very familiar to you.
I put my five themes for the week ahead in a rank order. The most important is first.
(1) U.S. Non-Farm Payrolls Out Friday
On Friday, the release of the U.S. March nonfarm payroll report will be on traders' and investors' radar, in the wake of Fed Chair Powell’s first rate hike.
With inflation pressures brewing, wage growth figures will be important for world financial markets. Economists polled by the Financial Times have payrolls rising by +150K jobs in March and the U.S. unemployment rate falling to 4.0%.
Average hourly earnings are expected to increase 0.3% in March. The U.S. economy added a hefty +313K jobs in February. But a slowdown in wage growth pointed to only a gradual increase in inflation this year, which eased investor concerns.
The background to all of this will be the interest rate market. As longer-dated bond yields rise, banks which borrow short-term money and lend it on longer-term benefit.
(2) A Big Week for Global Macro Data
Spring is coming to large parts of the northern hemisphere. It seems fitting that so much global data is coming out.
World stock markets have just seen their first quarterly fall in two years. This will feed the view on how Q2-18 might play out.
On Wednesday, March inflation data from the Eurozone is expected to creep up and bolster bets on the end of ECB “QE” this year.
ISM and unemployment/jobs numbers in so many countries -- from the United States to India -- which most economists need, arrive all week long.
(3) Can Tech Stocks Get It Back Together?
Whether or not the world's biggest tech and social media firms can bounce back from the more than $400 billion wipeout of the last couple of weeks is going to be one of the big things to watch.
Facebook's top brass might reveal when they will appear in front of lawmakers in the United States and Britain to answer questions about the misuse of 50 million users’ private data.
The heat is also likely to stay on online retail giant Amazon. President Trump is not happy. Its growing dominance is sending many small businesses to the wall.
(4) U.S.-China Trade Relations
U.S.-China trade frictions will remain a central focus. There are hopes there will be negotiations that end with everyone looking happy for the cameras. But for the time being everything remains uncertain.
The U.S. administration is expected to announce tariffs on China’s so-called ‘2025 industries’ that are new growth sectors such as robotics and artificial intelligence applications, alongside limits on Chinese investments in U.S. companies and technology transfers.
One background issue over the last couple of weeks has been a sizable appreciation of the Renminbi. In trade-weighted terms, the China currency has now risen more this year — 3% — than it did in the whole of 2017.
The Renminbi has been closely hugging the daily benchmark fixing set by the central bank. Markets are speculating that allowing the Renminbi to rise might be part of China's conciliatory offerings in the trade spat.
(5) NAFTA Percolates
Markets have largely reversed improved odds of a NAFTA deal this week.
Scotiabank in Canada says there is a high bar set for being able to deliver upon U.S. Trade Representative Robert Lighthizer’s earlier quest for at least a handshake agreement on NAFTA next week.
Top Zacks #1 Rank (STRONG BUY) Stocks—
NVIDIA (NVDA - Free Report) : Incredibly, the Artificial Intelligence (AI) semiconductor chip company is now a $230 stock with a $140B market capitalization. With a Zacks Value score of F, this is all about the seemingly unlimited potential for future growth, set by equity strategists that cover the stock.
Micron (MU - Free Report) : I find it easier to like this $60B market-cap stock as a strategist, and own it for any number of portfolio objectives. The Zacks Value score of A, Zacks Growth score of A, and Zacks momentum score of A are much more palatable.
Centene (CNC - Free Report) : If you don’t want to be in the hot chip plays, you may want to consider this HMO-Medical stock. It carries a Zacks VGM of A, with an A for Value and a B for Growth. It has a $19B market cap at the moment.
For major stock like these three, there are lots to look out for, in a busy first week of the month.
Key Global Macro—
Data risk will be concentrated towards the end of the week.
Domestic highlights are: the U.S. ISM manufacturing reading on Monday, the ADP private payroll survey on Wednesday, and the all-important U.S. non-farm payroll on Friday.
On Tuesday, Eurozone and Germany manufacturing PMIs are worth focusing on. On Wednesday, the big Europe news of the week hits. That would be the HICP inflation reading and the latest unemployment rate (it is at 8.6%).
In Asia Pacific, there is a rate-setting central bank meeting in Australia Tuesday, and one in India Thursday.
On Monday, the Caixin China Manufacturing PMI (the one for smaller private companies) came in at 51.0 versus a prior reading of 51.6. Its slight expansion is the same, month-after-month.
The U.S. ISM manufacturing index, an influential number, reached 59.3. The prior reading was 60.8, which itself represented a 14-year high.
In comparison, the Markit Mexico manufacturing PMI comes out. The prior was 51.6 and the forecast is for 51.8.
The Mexico IMEF manufacturing PMI index, that is seasonally adjusted should rise to 53 from 52.6.
On Tuesday, the Reserve Bank of Australia (the RBA) sets its policy overnight rate. No change from the 1.5% rate is expected.
The Germany manufacturing PMI comes out. It was 58.6.
The Eurozone manufacturing PMI comes out. It was 56.6. Note: I would pay more attention to manufacturing PMIs than service PMIs. Generally they are more active and cyclical.
On Wednesday, the unemployment rate in Italy comes out. It has been 11.1%.
The core HICP inflation rate for Europe is out. It has been 1.0% y/y.
The Eurozone unemployment rate comes out. It has been 8.6%.
The ADP private payroll survey for the USA comes out. The prior was a solid 235K.
On Thursday, the Central Bank of India sets its three policy rates. The Cash Reserve Ratio should stick at 4.0%, the repo rate at 6.0%, and the reverse repo rate at 5.75%.
The proxy GDP – IMACEC for Chile comes out. It has been 3.9% y/y and could get to 4.8% y/y. That is strong.
U.S. initial claims for unemployment are looking very low at 215K.
On Friday, the all-important nonfarm payroll comes out. Look for the last 313K data print in February to move down to 150K in March. As for the U.S. unemployment rate, it could go to 4.1% from 4.0%.
Average hourly earnings may go up +0.3% m/m after a quiet +0.1% m/m reading in the prior month. This is more important for setting inflation expectations.