Key Events In The Coming Week: Peak Earnings, Fed And GDP
Mon, 07/27/2020 – 10:00
Looking to the week ahead, and just after the biggest two week fall in the Nasdaq (-2.39%) since the turmoil in mid March, DB’s Jim Reid writes that one of the most interesting things this week will be earnings releases from Amazon, Apple, Alphabet and Facebook (all on Thursday) together with roughly a third of the S&P reporting Q2 results. This could have a big impact on sentiment, especially if the tech giant follow Intel and disappoint. Intel falling -16.24% on Friday after results the previous night helped tech sentiment dip a little on Friday.
Digging more into earnings, we have many of the world’s biggest companies reporting this week. In total, releases include 190 from the S&P 500 and a further 169 from the STOXX 600. Among the releases include SAP, Ryanair and LVMH today. Then tomorrow we’ll hear from Starbucks, Visa, McDonald’s, Pfizer, Peugeot and Nissan. Wednesday will see Sanofi, Rio Tinto, GlaxoSmithKline, Qualcomm, PayPal, Boeing, Santander, General Electric, General Motors, Barclays and Nomura release earnings. After that, Thursday’s releases include Alphabet, Amazon, Apple, Facebook, Samsung, Nestle, Procter & Gamble, Comcast, L’Oreal, Stanley Black & Decker, AstraZeneca, Linde, Mastercard, American Tower, AB InBev, Total, Volkswagen, Ford, Royal Dutch Shell, Lloyds Banking Group and Credit Suisse. Finally on Friday, there’s Chevron, Charter Communications, Merck, AbbVie, Phillips 66, ExxonMobil, BNP Paribas, Caterpillar, Nokia, NatWest Group and Fiat Chrysler Automobiles.
Elsewhere one of the key macro highlights this week will be the Federal Reserve’s latest monetary policy decision, along with Chair Powell’s subsequent press conference. Recent communications from the Fed have made it clear that the FOMC will soon pivot away from stabilization towards accommodation, and in a piece earlier this week, DB’s economists released the first of a two part series looking at how much accommodation will be needed and how it will be provided. On Friday, Reid published a CoTD to suggest that if balance sheet was the only tool used, to keep policy neutral an extra 12 trillion of QE could be required. We are currently at $7tn.
Data releases will also get a decent amount of attention, particularly given the Q2 GDP releases out in the US (Thursday) and the Euro Area (Thursday/Friday) that are likely to show some of the largest quarterly contractions in history. They will also help calibrate forecasts for economists going forward. The other main data release will be the release of PMIs from China on Friday. All the other data releases will be in the day by day calendar at the end.
A day-by-day calendar of key global events is below courtesy of Deutsche Bank
- Data: Japan May All industry activity index, final May leading index, Euro Area June M3 money supply, Germany July Ifo business climate, US preliminary June durable goods orders, non-defence capital goods orders ex air, July Dallas Fed manufacturing activity
- Central Banks: Bank of Japan release Summary of Opinions from July meeting
- Earnings: SAP, Ryanair, LVMH
- Data: UK July CBI distributive trades survey, US July Conference Board consumer confidence, July Richmond Fed manufacturing index
- Earnings: Starbucks, Visa, McDonald’s, Pfizer, Peugeot, Nissan
- Data: France July consumer confidence, UK June consumer credit, mortgage approvals, M4 money supply, US weekly MBA mortgage applications, June advance goods trade balance, pending home sales, preliminary June wholesale inventories
- Central Banks: Federal Reserve monetary policy decision
- Earnings: Facebook, Sanofi, Rio Tinto, GlaxoSmithKline, Qualcomm, PayPal, Boeing, Santander, General Electric, General Motors, Barclays, Nomura
- Data: Japan June retail sales, Germany preliminary Q2 GDP, July unemployment, preliminary July CPI, Italy preliminary June unemployment rate, Euro Area June unemployment rate, final July consumer confidence, US advance Q2 GDP, personal consumption, core PCE, weekly initial jobless claims
- Central Banks: ECB publishes Economic Bulletin
- Earnings: Alphabet, Amazon, Apple, Samsung, Nestle, Procter & Gamble, Comcast, L’Oreal, Stanley Black & Decker, AstraZeneca, Linde, Mastercard, American Tower, AB InBev, Total, Volkswagen, Ford, Royal Dutch Shell, Lloyds Banking Group, Credit Suisse
- Data: Japan June jobless rate, housing starts, preliminary June industrial production, China July composite PMI, manufacturing PMI, non-manufacturing PMI, France preliminary Q2 GDP, preliminary July CPI, Italy preliminary Q2 GDP, preliminary July CPI, June retail sales, Euro Area advance Q2 GDP, July CPI estimate, US June personal income, personal spending, Q2 employment cost index, July MNI Chicago PMI, final July University of Michigan sentiment, Canada May GDP
- Earnings: Chevron, Charter Communications, Merck, AbbVie, Phillips 66, ExxonMobil, BNP Paribas, Caterpillar, Nokia, NatWest Group, Fiat Chrysler Automobiles
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Finally, looking at just the US, the key event this week is the July FOMC meeting, with the release of the statement at 2:00 PM ET on Wednesday followed by Chair Powell’s press conference at 2:30 PM. The key economic data releases this week are the durable goods report on Monday, the initial Q2 GDP estimate on Thursday, and the personal income and spending and UMich consumer sentiment reports on Friday.
Monday, July 27
- 08:30 AM Durable goods orders, June preliminary (GS +2.0%, consensus +7.0%, last +15.7%); Durable goods orders ex-transportation, June preliminary (GS +2.0%, consensus +3.5%, last +3.7%); Core capital goods orders, June preliminary (GS +1.0%, consensus +2.4%, last +1.6%); Core capital goods shipments, June preliminary (GS +1.0%, consensus +2.8%, last +1.5%): We expect durable goods orders to increase 2.0% in the preliminary June report, reflecting cancellations in aircraft orders. We expect a 1.0% increase in core capital goods orders, given the elevated level in May relative to other industrial data series.
- 10:30 AM Dallas Fed Manufacturing Activity, July (consensus -4.9%, last -6.1%)
Tuesday, July 28
- 09:00 AM S&P/Case-Shiller 20-city home price index, May (GS +0.4%, consensus +0.30%, last +0.33%); We estimate the S&P/Case-Shiller 20-city home price index increased by 0.4% in May, following a 0.33% increase in April.
- 10:00 AM Conference Board consumer confidence, July (GS 94.0, consensus 94.4, last 98.1); We estimate that the Conference Board consumer confidence index declined by 4.1pt to 94.0 in July, as the deteriorating virus situation could weigh on confidence.
- 10:00 AM Richmond Fed Manufacturing, July (consensus 5, last 0)
Wednesday, July 29
- 08:30 AM Advance goods trade balance, June (GS -$76.0bn, consensus -$75.1bn, last -$74.3bn); We estimate that the goods trade deficit increased to $76.0bn in June due to a larger rebound in goods imports than in goods exports.
- 08:30 AM Wholesale Inventories, June preliminary (consensus -0.3%, last -1.2%)
- 10:00 AM Pending home sales, June (GS +22.0%, consensus +14.5%, last +44.3%); We estimate that pending home sales increased by 22.0% in June based on regional home sales data, following a 44.3% surge in May. We have found pending home sales to be a useful leading indicator of existing home sales with a one-to-two-month lag.
- 02:00 PM FOMC statement, July 28-29 meeting; As discussed in our FOMC preview, major policy changes are unlikely at the July meeting. We now expect the FOMC to complete its framework review in September and to then change its forward guidance and asset purchase policies in November, a one meeting delay compared to our previous expectations.
Thursday, July 30
- 08:30 AM GDP, Q2 advance (GS -29.0%, consensus -35.0%, last -5.0%); Personal consumption, Q2 advance (GS -34.5%, consensus -34.5%, last -6.8%): We estimate a 29% drop in the initial release of Q2 GDP (qoq ar). Our forecast reflects a 34.5% annualized drop in personal consumption related to the coronavirus lockdowns. We also expect very large declines in structures investment (-25%) and equipment investment (-44%). Despite the large expected GDP decline, we believe economic reality during the quarter was even worse, with a first-print bias from incomplete source data and survey non-response worth roughly +4pp (implying a true GDP growth rate of around -33%). We will finalize our GDP forecast after Wednesday morning’s trade balance and inventory data.
- 08:30 AM Initial jobless claims, week ended July 25 (GS 1,400k, consensus 1,450k, last 1,416k); Continuing jobless claims, week ended July 18 (consensus 16,200k, last 16,197k); We estimate initial jobless claims declined but remain elevated at 1,400k in the week ended July 25.
Friday, July 31
- 08:30 AM Personal income, June (GS +0.5%, consensus –0.6%, last -4.2%); Personal spending, June (GS +5.6% consensus +5.4%, last +8.2%); PCE price index, June (GS +0.39%, consensus +0.5%, +0.10%); Core PCE price index, June (GS +0.22%, consensus +0.2%, last .10%); PCE price index (yoy), June (GS +0.81%, consensus +0.9%, last +0.55%); Core PCE price index (yoy), June (GS +0.98%, consensus +1.0%, last +1.02%): Based on details in the PPI, CPI, and import price reports, we forecast that the core PCE price index rose by 0.22% month-over-month in June, corresponding to a 0.98% increase from a year earlier. Additionally, we expect that the headline PCE price index increased by 0.39% in June, corresponding to a 0.81% increase from a year earlier. We expect a 0.5% increase in personal income in June and a 5.6% increase in personal spending.
- 08:30 AM Employment cost index, Q2 (GS +0.5%, consensus +0.6%, prior +0.8%): We estimate that the employment cost index rose 0.5% in Q2 (qoq sa), reflecting the sharp rise in unemployment and our finding that composition effects drove most or all of the acceleration in other wage measures.
- 09:45 AM Chicago PMI, July (GS 43.0, consensus 44.0, last 36.6): We estimate that the Chicago PMI increased by 6.4pt to 43.0 in July—following a 4.3pt increase in June—partly reflecting the index’s low level relative to other manufacturing surveys.
- 10:00 AM University of Michigan consumer sentiment, July final (GS 72.7, consensus 72.8, last 73.2): We expect University of Michigan consumer sentiment to edge 0.5pt lower from the preliminary estimate for July, in which the index declined 4.9pt. The report’s measure of 5- to 10-year inflation expectations increased by two-tenths to 2.7% in the preliminary report.
Source: DB, BofA, Goldman