In-depth Analysis

Focus on CPI data | Weekly Outlook October 17-21

 

On Monday 17th: NY Empire State Manufacturing due from the US, and New Zealand releases CPI data.

On Tuesday 18th: RBA Monetary Policy Minutes are released, China’s GDP comes out and ZEW Sentiments from Germany and the EU are due.

On Wednesday 19th: CPI data from the UK, EU, and Canada are due, and Building Permits from the US are released.

On Thursday 20th: Australian Employment data are released, the Philadelphia Fed Reserve Manufacturing Index and Existing Home sales from the US are due.

On Friday 21st: CPI data from Japan is released, along with Retail Sales data from the UK and Canada.

Weekly outlook

Earnings season is in full swing now with some big names reporting this week, from Johnson & Johnson, Tesla, IBM, Procter & Gamble, among many others. Mixed results are generally expected, but on the basis of the macroeconomic slowdown, most tech companies are forecast for some disappointing results. The S&P 500 is slated to post growth of its earnings somewhere in the vicinity of 4% year-on-year.

With CPI data and retail sales reports due to be released from a number of countries that are deep into the cycle of monetary policy tightening, such as New Zealand and the UK, it will be very interesting to see just what impact these conditions are having on their economies. This is in contrast to Japan, which is also due to report CPI data while its interest rates are still remaining extremely low.

Monday 17th of October

The NY Empire State Manufacturing Index is published today for the month of October. The Index is released monthly and is one of the leading indicators for the health of the US economy, conducted via a survey of around 200 manufacturers. A reading above 0.0 indicates conditions are improving, and a reading below indicates conditions are less favorable. Forecasts are for an increase from -1.50 to -1.0.

New Zealand released its CPI data today after the RBNZ voted for its 8th straight rate increase earlier this month. Expectations are in favor of tightening monetary policy hitting its mark, sending the CPI for Q3 down from 7.3% to 6.7% year-on-year and 1.7% down to 1.6% quarter quarter-on-quarter.

Major Earnings Reports Due:

  • Bank of America Corp
  • Charles Schwarb Corp
  • Bank of New York Mellon Corp
  • Rio Tinto Ltdd

Tuesday 18th of October

From Australia, the Minutes from the latest Monetary Policy Meeting will be released. The meeting, held on the 4th of October, led to another increase in the OCR of 25 basis points, up to 2.60%.

Chinese GDP figures and Industrial Production are also due, with expectations that the country is starting to show a broad recovery from the lows of the pandemic. Year-on-year an increase from 0.4% to 3.5% and quarter-on-quarter an increase from -2.6% to 3.8% in Q3 GDP is forecast. Industrial Production is expected to have increased from 4.2% to 4.7% for the month of September compared to last year.

ZEW Economic Sentiment data is released from the EU and Germany today. Widely accepted as a barometer for the outlook of the economy for the next six months, a level above 0 indicates positivity and below 0 suggests negativity. The German forecast is expected to show a dismal reading of -65.0 down from -61.9, while the EU may also be expected to be declining further from -60.7 to -62.3 as the economies continue to struggle with the cost of energy and inflation.

Major Earnings Reports due:

  • Johnson & Johnson
  • Lockheed Martin Corporation
  • Goldman Sachs Group Inc
  • Netflix Inc
  • Hasbro
  • BHP Group
  • Roche Holdings

Wednesday 19th of October

CPI data is due from the UK, the Eurozone, and Canada today. The BoE will potentially conclude that more work is to be done to tighten monetary policy conditions as the month-on-month CPI is expected to increase to 0.6% from 0.5% for September, and annualized CPI for September is forecast for a rise from 9.9% to 10.2%.

Eurozone CPI is expected to be holding steady at 10.0% annual and 0.6% month on month CPI for September. Canada is expected to post a monthly CPI from -0.3% to -0.1% for September.

Changes to the number of building permits accepted in the US are expected to be slightly up to 1.575M from 1.542M for the month of September. The measure is helpful in determining the future level of housing starts. Therefore, it provides an indication of the health of the US economy, as the number of constructions usually increases when the economy strengthens and decreases when it slows down. 

 Major Earnings Reports due:

  • Tesla Motors Inc
  • Procter & Gamble Co
  • Abbott Laboratories
  • IBM

Thursday 20th of October

Australia publishes its Employment data today with the Employment Change for September expected to show an increase in the number of people employed from 33.5K to 35K and the Unemployment Rate is expected to show a drop from 3.5% to 3.4%.

The Philadelphia Federal Reserve Manufacturing Index, which is an important metric for the level of business conditions within the Federal reserve district in the US, will be published. A level above 0 indicates positivity, while below 0 suggests worsening conditions. For the month of October, this is expected to show conditions are improving from -9.9 to -4.5.

Also from the US, existing home sales are forecast to have dropped from 4.80M to 4.70M indicating conditions could be cooling in the property market.

Major Earnings Reports due:

  • Philip Morris International Inc
  • Union Pacific Corp
  • AT&T Corp
  • Blackstone Group LP
  • L’Oréal
  • Hermes International
  • Kering
  • Pernod Ricard
  • Danone
  • Publicis Group
  • Vivendi

Friday 21st of October

The annual Japanese National Core CPI data for September is released on Friday showing that conditions remain stable with a drop from 2.8% to 2.7% expected across the country.

Retail Sales are due for both the UK and Canada today, as both countries will observe the impact of tightening monetary policy on its citizens’ spending habits. For September month-on-month, the UK is expected to see an increase from -1.6% to -0.5%. Canada’s Core Retail Sales for the month of August, which excludes transport, is expected to increase from -3.1% to -1.2%.

Major Earnings Reports due:

  • Verizon
  • American Express Co
  • Schlumberg Ltd
  • EssilorLuxottica
  • Renault

 

 

 

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