Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
The Week Ahead – Summary preview:
(The US opening the gates to a trade war over the weekend, via way of its imposition of 25% tariffs on Canada and Mexico, and an additional 10% tariff on China will effectively render the week’s run of data rather moot, little more than statistical roadkill, given that these measures will impact ca. $1.3 Trln or 43% of US imports, and around 5.0% of US GDP. According to estimates based on the model the Fed used during Trump 1.0, it could add around 0.7 ppt to the core PCE deflator (likely putting an end to the recent fall in longer dated bonds yields, and knock US GDP by over 1.0%. Canada has already countered with 25% tariff on US goods, while China and Mexico have yet to detail their counter measures. The auto sector looks likely to be hardest hit, as will electronics, and there will be a hard to specify, but substantial impact on intermediate goods across many industries, and inevitably an impact on an array of agricultural goods. The immediate reaction of FX market has been to buy the dollar against most currencies, with the EUR among the worst hit, presumably on the assumption that while the EU was not affected by this first round, it will likely be soon. The fact is that the tariffs imposed during Trump’s first term did little to re-shore manufacturing, and the IRA and CHIPS act did a lot more – as per the attached chart of US Manufacturing Construction since 2010.
Be that as it may the new week has a very familiar feel in statistical terms, with the array of Manufacturing and Services PMIs dominating the start of the week, while US labour market statistics (JOLTS, Payrolls including annual revisions, ADP, Non-farm Productivity) feature in the latter half of the week, along with German Orders, Production and Trade, Japan Wages and Household Spending. The BoE is expected to cut rates by 25 bps to 4.50%, while India will digest Saturday’s FY 2025/26 Budget and next Friday’s much anticipated RBI rate cut (expected -25 bps to 6.25%), with plenty of Fed and ECB speakers also scheduled. The US Q4 corporate earnings season reaches its peak with 128 S&P 500 companies reporting, including the likes of Alphabet, Amazon, AMD, Ford, Pespico, Qualcomm, Uber and Walt Disney and a very busy schedule of earnings in Asia and Europe, with ARM, Infineon, NT&T, and Tokyo Electron, a host of European and Japanese banks; Equinor, Sumitomo Corp, TotalEnergies, Toyota Motor among the likely highlights.
G7 PMIs are seen largely unrevised from the mostly better than expected readings for Manufacturing (though Eurozone & UK remained weak) and slower Services (above all in the US), with US ISM surveys seen little changed vs December. But it will be the China Caixin PMI that perhaps attract most interest, after the poor official NSB PMIs. Eurozone CPI is expected to be unchanged at 2.4% y/y, with core edging down to 2.6%. US Auto Sales are forecast to slow sharply to 16.0 Mln SAAR (-800K m/m). German Orders are seen posting a dead cat bounce of 1.8% m/m, but Production and Exports are expected to fall. In Japan, Labour Cash Earnings are forecast to rise to 3.5% y/y from 3.0%, while Household Spending is seen eking out a positive reading in y/y terms (0.3%) for the first time since July. The ECB’s Wage Tracker indices will also attract some attention, though wages do now appear to be well down the list of ECB policy related concerns.
– There are 128 S&P 500 companies reporting this
week, with worldwide corporate earnings highlights as compiled by Bloomberg
News likely to include: Advanced Info Service, Aflac, Air Products &
Chemicals, Allstate, Alphabet, Amazon, AMD, Ametek, Amgen, Apollo Global
Management, Ares Management, ARM Holdings, Asian Paints, Assa Abloy,
AstraZeneca, AvalonBay Communities, Banco Santander, Bank Mandiri Persero, Bank
Rakyat Indonesia Persero, Becton Dickinson, Bharti Airtel, Blue Owl Capital,
BNP Paribas, Boston Scientific, Bristol-Myers Squibb, CDW, Cencora, Centene,
Chipotle Mexican Grill, Cloudflare, Cognizant Technology Solutions, Coloplast,
ConocoPhillips, Corpay, Corteva, Credit Agricole, Cummins, Daikin Industries,
Danske Bank, Dassault Systemes, Diageo, DNB Bank, DSV, Electronic Arts, Eli
Lilly, Emerson Electric, Enterprise Products Partners, Equifax, Equinor, Equity
Residential, Estee Lauder, Fair Isaac, Ferrari, Fiserv, Ford Motor, Fortinet,
Fortive, Fujifilm, Gartner, GSK, Hershey, Hilton Worldwide, honeywell
International, Hoya, Idexx Laboratories, Illinois Tool Works, Infineon
Technologies, ING, ICE Intercontinental Exchange, Intesa Sanpaolo, Iqvia
Holdings, Itau Unibanco, ITC, Itochu, Johnson Controls International, KDDI,
Kellanova, Kenvue, KKR, L’Oreal, Life Insurance Corp. of India, Linde, Marathon
Petroleum, McKesson, MediaTek, Merck, MetLife, Mettler-Toledo International,
Microchip Technology, MicroStrategy, Mitsubishi, Mitsubishi Electric,
Mitsubishi Heavy, Mitsubishi UFJ Financial, Mitsui, Mizuho Financial, Mondelez
International, Monolithic Power Systems, MPLX, Murata Manufacturing, Nintendo,
Nippon Telegraph & Telephone, Novo Nordisk, NTT Data Group, NXP
Semiconductors, O’Reilly Automotive, Old Dominion Freight Line, Palantir
Technologies, PayPal, PepsiCo, Pfizer, Philip Morris International, Prudential
Financial, Publicis, Qualcomm, Regeneron Pharmaceuticals, Renesas Electronics,
Roblox, Siemens Healthineers, Simon Property Group, Societe Generale, Spotify
Technology, State Bank of India, Sumitomo Corp, Suncor Energy, T. Rowe Price
Group, Take-Two Interactive Software, Thomson Reuters, Titan, Tokyo Electron,
TotalEnergies, Toyota Motor, Tradeweb Markets, Uber Technologies, UBS, Veralto,
Vinci, Walt Disney, WEC Energy Group, Willis Towers Watson, Xcel Energy, Xylem,
Yum! Brands.
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