World Week Ahead: Yellen speech, US jobs data

Monday 2nd November 2015

Among the key US economic data this week will be October’s jobs report on Friday, especially after Federal Reserve policy makers firmly put the possibility of an interest rate hike at their December meeting on the table.

Friday’s nonfarm payrolls report, an important gauge for the Fed, is expected to show employers in the US added fewer than 200,000 workers for a third month in October.

Ahead of the latest employment numbers, there’s the ISM’s October manufacturing and October construction spending, due today; US September factory orders and October vehicle sales, due Tuesday; September trade and the ISM’s services index for October and ADP private payrolls for October, due Wednesday, as well as weekly jobless claims, due Thursday.

“It felt like a big change in tone and policy from what we saw in September," Peter Tchir, head of macro strategy with Brean Capital, told Bloomberg of the Fed’s latest policy statement. "They have a lower hurdle" for a rate rise, so even moderately good data could "spook the market a little bit.”

The most important central bank policy meetings this week will be in the UK and Australia. The Bank of England is expected to hold its key rate at 0.5 percent on Thursday. The jury is out on whether the Reserve Bank of Australia will cut when it meets on Tuesday.

On Wednesday, Fed chair Janet Yellen will give testimony to a Congressional committee on the central bank’s regulation of the financial system.

The slew of other Fed officials scheduled to hold talks this week include San Francisco.

President John Williams, today. Williams speaks again on Wednesday, as will New York chief William Dudley and Vice Chairman Stanley Fischer. On Thursday, Dudley and Fischer is set to join IMF boss Christine Lagarde at a conference in New York, while Governor Daniel Tarullo will give a speech in Chicago and Atlanta Fed President Dennis Lockhart is in Bern, Switzerland, and former Fed chairman Ben Bernanke will give a lecture at the IMF's annual research conference in Washington.

On Friday, St Louis Fed’s James Bullard will review US monetary policy at a local business meeting, while Fed Governor Lael Brainard takes part in a forum at the IMF’s research gathering in Washington.

October was a strong month for equities, the best in four years. Last week, the Dow Jones Industrial Average added 0.1 percent, while the Standard & Poor’s 500 Index rose 0.2 percent, and the Nasdaq Composite gained 0.4 percent. For the month, the Dow advanced 8.5 percent, the S&P 500 was up 8.3 percent and the Nasdaq leapt 9.4 percent.

Veteran market watcher Laszlo Birinyi remains optimistic when it comes to equities.

“You’re in a bull market, and in a bull market stocks go up,” said Birinyi, president of Birinyi Associates in Westport, Connecticut, Bloomberg reported. “The best thing I can do right now, which I have been saying all along, is stay the course.”

It wasn’t just Wall Street that had a solid month: Europe’s Stoxx 600 Index rallied 8 percent last month.

The latest earnings will also help determine sentiment on both sides of the Atlantic.

Among the companies poised to report results in the days ahead are Visa, Commerzbank and Ryanair today, Tesla Motors, BMW and UBS on Tuesday, Time Warner, Twenty-First Century Fox, and Facebook on Wednesday; Walt Disney, Credit Agricole, Deutsche Telekom and Societe Generale on Thursday; and, Berkshire-Hathaway, ArcelorMittal, Telecom Italia and AP Moeller-Maersk on Friday.

With about two-thirds of companies in the S&P 500 having reporting this season so far, 75 percent have bettered profit expectations, while 44 percent have surpassed estimates for sales, according to Bloomberg.

In Europe, some companies have done better than others, too.

“We’re part way through earnings season and I think it’s been mixed,” Ben Kumar, an investment manager at Seven Investment Management in London, told Bloomberg. “It’s not been a particularly fun ride but if you’re overweight Europe since the start of the year, you’ve had a pretty decent year.”

In the eurozone, economic data slated for release this week include eurozone manufacturing, due today; eurozone services PMI, and PPI, due Wednesday; German factory orders, eurozone retail sales, as well as European Commission economic forecasts, due Thursday; and German industrial product, due Friday.

BusinessDesk.co.nz

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