So, I thought we could have a thread in here for all the upcoming market moving news & events. This could be anything market related. From economic news releases such as the monthly employment reports, retail sales, FOMC announcements, FED speakers, to anything that you guys might deem as potential market moving news events. I always have an economic calendar for the week posted to the very first post of every weekly discussion thread in here. But, often that can get lost during the trading week. So, I thought maybe we could add this thread in here and keep it updated with all of the upcoming important news events. This does not have to be limited to just U.S. news. These could also be important global events such as the ECB announcements, etc. I will try to keep this updated so everyone is on top of all of the important economic news releases that could potentially affect the markets. This way they are not lost in the weekly discussion thread. Here is the overall view of this week's economic events calendar:
Welcome fourth quarter earnings season. This season is important - not only because investors are keen to know if the positive stock market sentiment post Trump elections will be reflected in delivery of corporate earnings / profits, but also because it will set the tone for corporate America's expectations of future earnings under Trump regime and provide guidance on the sanity of market valuations Financials and Energy will definitely be the stars this season as Trump policy expectations of lower regulation, higher rates under his regime, OPEC deal put these sectors in a sweet spot. However, other sectors like technology, healthcare, consumer staples, industrials, telecoms and materials are also expected to deliver earnings growth this year. But these factors could spoil the party: 1) Investors will be keenly watching for CEO guidance for future outlook. There remains a possibility of CEOs not reflecting investor enthusiasm about future in their projections, given lack of policy specifics. Not so upbeat earnings projections may have implications for the stock market as investors worry about over-stretched valuations in absence of strong earnings. 2) With more than 2/5 of sales of S&P 500 companies coming in from outside the US, a strong dollar also might spoil the earnings expectations for multinationals, as it could potentially hit their revenues. It remains to be seen if the drag from a strong dollar will be offset by Trump's tax reform and healthier domestic outlook. Investors should carefully evaluate currency neutral earnings estimates.
Empire Manufacturing Index Backs Off Recent Highs Jan 17, 2017 After a big jump post-election, the Empire Manufacturing report for January backed off of its recent highs, missing consensus forecasts in the process. While economists were forecasting the headline reading to come in at a level of 8.5, the actual reading came in at 6.5. While the current conditions index backed off slightly, expectations for the future remained right at their multi-year high from last month. Plans for capital expenditures and tech spending continued to rise this month, though. Plans for Cap Ex spending rose to the highest level since February 2015, while plans to spend on technology also increased. Finally, the table below breaks down this month’s report by each of the report’s sub-indices. As far as current conditions are concerned, New Orders and Shipments both declined, while every other category increased. One notable increase was Prices Paid, which is now at its highest level in three years, while Prices Received is at its highest level in nearly five years.
The economic calendar picks up a bit for tomorrow (Wednesday 1.18.17)- (CPI, Industrial Production, Homebuilder Sentiment, Beige Book, and a few Fed speakers (including Janet Yellen))
Homebuilder Confidence Ebbs Jan 18, 2017 After a post-election surge in December, homebuilder confidence pulled back more than expected to kick off the year. While economists were forecasting the NAHB homebuilder sentiment survey to come in at a level of 69 this month, the actual reading came in two points lower at 67, and down three points from December’s originally reported reading of 70. We would note that last month’s initial reading was also revised down one point, so the m/m decline was just two points. Looking at the chart below, even after this month’s decline, sentiment remains above every other reading of this expansion prior to December. The table at the bottom shows the breakdown of this month’s report by traffic as well as present and future sales along with sentiment broken down by region. Every component of the overall index declined in January, with the biggest decline coming in Present Sales while Traffic saw the smallest decline. In terms of regions, sentiment on the coasts saw the largest decline, while homebuilder sentiment in the Midwest, which includes the rust belt states that went in favor of Trump, was unchanged at its highs for the cycle. Even for the other three regions, though, it is important to remember that January’s decline in sentiment comes from what were the highest levels of the cycle.
Beige Book Notes Minimum Wage Increases, Warns Of Building Margin Pressures The Fed's latest beige book, perhaps the most boring report released by the Federal Reserve, found 10 of the 12 Fed districts growing at the now ubiquitous "modest or moderate pace" with Cleveland growing only slightly and New York reporting little change for the fourth period in a row. However, despite stagnant growth, margin pressures are building as input prices are rising faster than final goods prices. The good news for US workers is that according to the Fed, labor market conditions remained tight in the majority of the districts. Employment growth ranged from slight to moderate and most Districts indicated that wages increased modestly. A couple of Districts mentioned layoffs, but even in those Districts, as in other regions, most responding firms were said to have added employment, on net. District reports cited widespread difficulties in finding workers for skilled positions; several also noted problems recruiting for less-killed jobs. Wages in some Districts were pushed up a bit by increases in the states’ minimum wages and most Districts said wage pressures had increased. The Boston, Philadelphia, Cleveland and Atlanta Fed districts reported further tightening in their labor markets over the period, with wage pressures likely to rise and the pace of hiring to hold steady or increase. Manufacturing activity appeared to be robust at the end of 2016 into the new year. "Manufacturers in most Districts reported increased sales with several citing turnaround versus earlier in 2016," the Beige Book said. However, manufacturing activity in Cleveland remained steady due to a seasonal decline in new orders. On the other hand, manufacturers in Cleveland reported a break in layoffs." Software and IT services firms in Boston reported watching the resurging dollar to see if it affects their clients' interests in the manufacturing sector. Dallas, St. Louis and San Francisco manufacturing sectors echoed these concerns, though the Boston Fed reported foreign investment in commercial real estate in the district unaffected by an appreciating dollar. The bad news is that any increase in wages is being offset by rising prices as pricing pressures intensified somewhat since the last report. Eight out of twelve Districts saw modest price increases and the remainder experienced slight increases, or flat prices in the case of the Atlanta District. Increases in input costs were more widespread than increases in final goods prices. Cost increases were reported for coal, natural gas, and selected building and manufacturing materials. Retailers’ selling prices were mixed, but on balance were flat or down amidst competitive discounting. Prices of most agricultural commodities stayed flat at very low levels. Home prices were stable or up modestly. Businesses in several districts reportedly expect further modest increases in input costs and selling prices in 2017. And while the number of mentions of "uncertain" declined from 15 in November, to only 6 in Januar, concerns remains over policy changes in the incoming administration. The Fed also said most districts said non-auto retail sales expanded, but that several districts noted holiday sales were disappointing. New York, Cleveland, Minneapolis, and Dallas reported disappointing or slugglish consumer spending or retail spending through November and December. But the most troubling news revolves around the threat to corporate margins because despite the "modest, moderate" growth, margin pressures were said to be building as input prices rose faster than final goods prices. Cost increases were reported for coal, natural gas, and selected building and manufacturing materials. At the same time, retailers’ selling prices were mixed, but on balance were flat or down amidst competitive discounting. We wonder how long before the Trumpflation rally has some variant of "stag" before it?
Busy day on the econ. calendar for tomorrow. Oil inventories are being pushed ahead a day later due to MLK Day on Monday.
US housing starts total 1.226M in Dec vs. 1.20M starts expected U.S. homebuilding rebounded more than expected in December, suggesting that the housing market contributed to economic growth in the fourth quarter. Housing starts jumped 11.3 percent to a seasonally adjusted annual rate of 1.23 million units last month, the Commerce Department said on Thursday. November's starts were revised up to a 1.10 million-unit rate from the previously reported 1.09 million-unit pace. Economists polled by Reuters had forecast housing starts increasing to a 1.20 million-unit rate in December.
EUR Plunges After Draghi Highlights "Downside Risks", Downplays Inflation Mario Draghi first remarks were dovish, highlighting the potential downside risks in the EU economy and suggest that inflation trends were not convincing.... in other words, the un-taper is on the cards. And EURUSD reacted instantly... *DRAGHI SEES NO CONVINCING UPWARD TREND IN UNDERLYING INFLATION *DRAGHI SAYS UNDERLYING INFLATION PRESSURES REMAIN SUBDUED *DRAGHI SAYS INFLATION PICKED UP DUE TO ENERGY *DRAGHI SAYS RISKS TO ECONOMIC OUTLOOK REMAIN ON DOWNSIDE *DRAGHI SAYS ECB HASN'T DISCUSSED REDUCING STIMULUS And the result... This has obviously sent the dollar index soaring to the highs of the day - how long until President Trump tweets? And then there is this... *DRAGHI SAYS G-20 PLEDGED TO REFRAIN FROM COMPETITIVE FX MOVES
Jobless Claims Defy Expectations Jan 19, 2017 Of all the economic indicators on the calendar, none as been more surprising in its consistent strength than jobless claims, and this week’s report was just another example. While economists were forecasting first-time claims to come in at a level of 252K, the actual reading came in at 234K, marking the third straight week that claims came in better than expected. Also, the current level of 234K is just 1K above the cycle low of 233K from early November and marks the 98th straight week where claims have been below 300K. With this week’s low reading in claims, the four-week moving average plummetted by 9.75K to 246.75K taking out the prior cycle low of 249.5K from October. A drop of 9.75K may not sound like much, but it was the largest one-week decline in the four-week average since March 2015. The last time the four-week moving average was this low was in 1973, when the US population was less than two-thirds the size it is now. On a non-seasonally adjusted basis, claims also plummetted by 66K down to 346.3K. Amazingly, that’s nearly 200K below the average of 542K for the current week of the year going back to 2000 and you have to go all the way back to 1969 to find a year where the NSA weekly reading was lower at this time of year. Back then, Donald Trump was just getting out of college and getting his feet wet in the real estate business. Philly Fed Breaks Out Jan 19, 2017 While manufacturing activity in the New York region was slightly weaker than expected earlier in the week, the Philly Fed manufacturing report handily exceeded forecasts. While economists were forecasting the headline reading to come in at a level of 15.3, the actual reading came in at 23.6, which was the highest level since November 2014. The internals of this month’s report were solid with just two of nine components declining, and the declines (Shipments and Average Workweek) were modest at that. On the upside, there were big gains in Prices Received (even as Prices Paid saw just a modest increase), New Orders, and Inventories. Below we have included the charts of New Orders, Unfilled Orders, and Prices Received. The index for New Orders is back up near its highs from November 2014, while Unfilled Orders was even stronger hitting its highest level since March 2011. The most standout chart, though, is Prices Received. As shown in the bottom chart, that component is now at its highest level since July 2008.
It's Donald Trump's swearing-in ceremony today. The markets have shown the best performance so far for any presidential transition period. The S&P rose 6.2%, DJIA 8.07% and NASDAQ composite 7.24% since election. But while this rally so far has been fuelled by market expectations of Trump's pro-growth promises, his inauguration will serve as a reality check and will provide direction to the future growth trend. The markets have receded recently to reflect market caution. And many more downside risks to stock market growth remain: 1) Trump's pro-growth policy expectations seem to have already been priced in as evidenced by the rally since elections. There is an underlying assumption that these expectations will be fulfilled. Any risks to fulfilment of these expectations might lead to a strong market reaction 2) While the markets have priced in expectations relating to fiscal spend, lower taxes and deregulation, it appears that an important potential negative - his protectionist leanings, which could impact international trade agreements and foreign trade policy have not yet been factored into the pricing. There remains significant downside risk to growth if Trump does not tone down his anti-trade rhetoric 3) A Republican majority definitely is a plus for quicker policy implementation - but it remains to be seen how much co-operation Trump can garner for his controversial agenda. Given his high unpopularity ratings, Trump will face significant obstacles in implementing and achieving policy goals 4) Even if all goes well and policies are implemented, there could be a significant time lag before the benefits and the economic impact of the policies show up. Further, the growing national debt, strong dollar, rising interest rates could overshadow these benefits Read more about Wall Street's reaction to Trump inauguration here: http://hubs.ly/H05Z0-x0
Just posted this up over on the weekly thread in case anyone missed it but here is the market performance (using the DJIA) during all presidential terms since 1900.
Jobless Claims Rise Jan 26, 2017 It was a mixed jobless claims report this week as first-time claims rose from extremely low levels and came in higher than expected. While economists were expecting first time claims to come in at a level of 247K, the actual reading came in at 259K. That 22K increase in weekly claims was enough to rank as the largest one-week increase since April 2014. That said, even at 259K, current levels are extremely low by historical standards with the most recent print representing the 99th straight week where claims were below 300K. While this week saw a large increase in claims, because the number from four weeks ago was even higher, the four-week moving average actually declined to 245.5K from last week’s level of 247.5K. That puts the four-week moving average at its lowest level since November 1973. On a non-seasonally adjusted (NSA) basis, the report was also positive as claims declined another 69.8K down to 280.5K. For the current week of the year, that’s the lowest reading since 1969, and is more than 137K below the average of 418K for the current week of the year dating back to 2000.
