Key Events This Busy Week: Biden, Central Banks, PMIs And Earnings
With the US closed for MLK day, it will be a quiet start to the week. After the lull today, the week ahead is a busy one with Biden’s inauguration on Wednesday an obvious focal point. Outside of that, DB’s Jim Reid writes that we have an array of central bank decisions to expect, including from the ECB and the Bank of Japan (both Thursday), while data highlight will be the flash PMIs for January. In addition, earnings season will begin to ramp up, with 43 S&P 500 companies reporting this week before the heavy couple of weeks after that.
Looking more into the week ahead now, with regards to Joe Biden, the clock will start on his first 100 days in office post the inauguration. He has already announced that he is aiming for 100 million vaccinations in his first 100 days in office, as well as an economic package that includes topping up the recently passed $600 checks to individuals up to $2,000. In February, he is then expected to outline his “Build Back Better Recovery Plan” before a Joint Session of Congress, where he’ll push for investments in infrastructure, R&D and clean energy.
Staying on the political scene, the German CDU have elected Armin Laschet as the new party leader over the weekend and someone who was the closest politically to Chancellor Merkel. However, it’s far from a given that the new leader will necessarily be the chancellor candidate of the CDU/CSU in September’s federal election, with the CSU’s Markus Söder strongly tipped for that role which is expected to be decided upon in April. So from that respect there’s too much water to flow under the bridge before September for this to be a big market moving event at the moment.
This week sees an array of central bank decisions, with 7 of the G20 central banks deciding on rates. In terms of the highlights, the consensus is not expecting the ECB to make any changes in rates on Thursday following their easing package in December, and President Lagarde warned earlier this week against tightening simply on the back of inflation rising thanks to pent-up demand. Meanwhile, the BoJ will maintain their policy stance, but they’re likely to downgrade their economic outlook in light of the state of emergency declaration. The other monetary policy decisions to watch out will be from Canada and Brazil on Wednesday, and then Turkey, South Africa and Indonesia on Thursday.
As also discussed above, earnings season ramps up as 43 companies in the S&P 500 will be reporting. The highlights will be Bank of America, Netflix, Charles Schwab and Goldman Sachs tomorrow, then on Wednesday, releases will come from Procter & Gamble, UnitedHealth Group, ASML Holding, Morgan Stanley and BNY Mellon. Finally on Thursday, we’ll hear from Intel, Union Pacific and IBM.
In Europe we have 30 reporting in the Stoxx 600 as the season slowly gets into gear. The median beat over the last 15 years is 3.4pp. The last two quarters have been 20pp and 17pp above consensus.
On the data side, the main highlight next week will be the release of the flash PMIs on Friday, which will be one of the first indications of how the global economy has fared into 2021. However, with the pandemic continuing to spread in numerous regions and fresh restrictions having been imposed, the consensus estimates are generally pointing to lower readings in January compared with December. Over the last couple of months of fresh lockdowns, growth had generally held up better than expected as more activity seems to be permissible relative to last spring. However it’s fair to say that these restrictions are likely to last longer than economists expected so calibrating what that means for revisions is tough. Probably less bad but for longer is the message.
Day-by-day calendar of events courtesy of Deutsche Bank
Monday January 18
- Data: China Q4 GDP, December industrial production, retail sales. All now out.
- Central Banks: Bank of England Governor Bailey speaks
- Other: US equity and bond markets closed for Martin Luther King Jr. Day
Tuesday January 19
- Data: Germany January ZEW survey, US November foreign net transactions
- Central Banks: Bank of England Chief Economist Haldane speaks
- Politics: Janet Yellen has confirmation hearing for Treasury Secretary at Senate Banking Committee
- Earnings: Bank of America, Netflix, Charles Schwab, Goldman Sachs
Wednesday January 20
- Data: UK December CPI, Euro Area final December CPI, Canada December CPI, US January NAHB housing market index, Japan December trade balance (23:50 UK time)
- Central Banks: Monetary policy decisions from the Bank of Canada and Central Bank of Brazil, BoE Governor Bailey speaks
- Politics: Inauguration of Joe Biden as US President
- Earnings: Procter & Gamble, UnitedHealth Group, ASML Holding, Morgan Stanley, BNY Mellon
Thursday January 21
- Data: France January business confidence, Italy November industrial orders, industrial sales, US weekly initial jobless claims, December housing starts, building permits, January Philadelphia Fed business outlook, Euro Area advance January consumer confidence, preliminary January manufacturing, services and composite PMIs from Australia (22:00 UK time), Japan December nationwide CPI (23:30 UK time)
- Central Banks: Monetary policy decisions from the ECB, the Bank of Japan, the Central Bank of Turkey, Bank Indonesia and the South African Reserve Bank
- Earnings: Intel, Union Pacific, IBM
Friday January 22
- Data: Preliminary January manufacturing, services and composite PMIs from Japan, France, Germany, Euro Area, UK and US, UK January GfK consumer confidence, December retail sales, public sector net borrowing, Canada November retail sales, US December existing home sales
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Finally, looking at just the US, Goldman writes that the key economic data releases this week are the Philadelphia Fed manufacturing index and jobless claims reports, both on Thursday. There are no major speaking engagements from Fed officials this week, reflecting the FOMC blackout period.
Monday, January 18
- Martin Luther King Jr. Day holiday. There are no major economic data releases scheduled. NYSE will be closed. SIFMA recommends bond markets also closed.
Tuesday, January 19
- There are no major economic data releases scheduled.
Wednesday, January 20
- 10:00 AM NAHB housing market index, January (consensus 86, last 86)
- 12:00 PM Presidential inauguration
Thursday, January 21
- 08:30 AM Philadelphia Fed manufacturing index, January (GS 10.0, consensus 11.3, last 9.1): We estimate that the Philadelphia Fed manufacturing index rebounded marginally in January to 10.0 from a downwardly revised 9.1. Our forecast reflects the decline in the Empire Fed measure but continued resilience in the industrial sector more broadly.
- 08:30 AM Initial jobless claims, week ended January 16 (GS 935k, consensus 923k, last 965k); Continuing jobless claims, week ended January 9 (consensus 5,250k, last 5,271k): We estimate initial jobless claims declined to 935k in the week ended January 16.
- 08:30 AM Housing starts, December (GS +1.2%, consensus +0.8%, last +1.2%): Building permits, December (consensus -2.0%, last +6.2%): We estimate housing starts increased by 1.2% in December. Our forecast incorporates higher permits and stronger construction job growth, but a potential virus drag.
Friday, January 22
- 09:45 AM Markit Flash US manufacturing PMI, January preliminary (consensus 56.5, last 57.1)
- 09:45 AM Markit Flash US services PMI, January preliminary (consensus 53.4, last 54.8)
- 10:00 AM Existing home sales, December (GS -2.0%, consensus -2.1%, last -2.5%): We estimate that existing home sales declined by 2.0% in December after declining by 2.5% in November. Existing home sales are an input into the brokers’ commissions component of residential investment in the GDP report.
Source: DB, Goldman, BofA
Mon, 01/18/2021 – 09:30