Monday 13th November 2017
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A slew of Federal Reserve officials including Chair Janet Yellen are set to speak in the coming days, while corporate earnings including from Home Depot and Wal-Mart will also help set the tone as investors eye the Trump administration’s progress on tax reform.
Other retailers including Target, Best Buy and the Gap are also scheduled to report their latest earnings this week.
On Tuesday, Federal Reserve Chair Janet Yellen is set to speak on a European Central Bank panel with ECB President Mario Draghi, Bank of Japan Governor Haruhiko Kuroda and Bank of England Governor Mark Carney. Investors will eye any clues on the Fed’s rate hike plans for next year.
Other Fed officials scheduled to speak this week include Patrick Harker, today, Charles Evans, James Bullard and Raphael Bostic on Tuesday, Eric Rosengren on Wednesday, Loretta Mester, Robert Kaplan, and Lael Brainard on Thursday, and John Williams on Friday as well as Saturday.
“With a hike in December pretty much a slam dunk, the focus [this] week be on the regional Reserve Bank Presidents who will be voting members in 2018,” Derek Holt, VP and head of Capital Markets Economics at Scotiabank, wrote in a note on Friday.
"To that effect, we’ll hear from San Francisco’s Williams twice next week, Atlanta’s Bostic and Cleveland’s Mester. The rest of the week’s speakers don’t vote next year,” Holt noted, adding, “I’m still not a believer that it’s in any way obvious the FOMC turns more hawkish next year.”
Among the latest US economic data out this week are the NFIB small business optimism index and producer price index, due Tuesday; consumer price index, retail sales, Empire State manufacturing survey, Atlanta Fed business inflation expectations, and business inventories, due Wednesday; weekly jobless claims, Philadelphia Fed business outlook survey, import and export prices, industrial production, and housing market index, due Thursday; housing starts, e-commerce retail sales, and Kansas City Fed manufacturing index, due Friday.
Tuesday’s reports on inflation and retail sales will be closely watched.
"We believe another strong retail sales report is in the cards for October,” according to a TD Economics note. "The August-September hurricanes that propped up spending in September, specifically for autos, grocery stores and restaurants, and building materials, have scope for a sustained tailwind into October. New vehicle sales should be only a modest drag."
Wall Street’s slow but steady ascent to record highs stalled last week as investors worried about US tax reform proposals. For the week, the Dow Jones Industrial Average slid 0.5 percent, the Standard & Poor’s 500 Index declined 0.2 percent, while the Nasdaq Composite Index also fell 0.2 percent.
“The uncertainty over the tax reform weighs on the market, but technically the market was prone for a pause as investor sentiment has been very optimistic for quite some time,” Bruce Bittles, chief investment strategist at Robert W Baird, told Bloomberg. “I wouldn’t expect a major surprise to the downside as long as the interest rates in the long end of the curve behave.”
Today, General Electric Chief Executive John Flannery is expected to announce a cost-cutting plan in a bid to bolster profits. Shares of General Electric closed 2.5 percent stronger on Friday in New York after Reuters reported, citing people familiar with the matter, that the company is laying off sales staff and other employees in its software division.
The 125-year-old conglomerate is considering job reductions across all of its businesses, the sources said, according to Reuters. It is not clear how many more jobs Flannery now plans to cut, or how quickly, Reuters reported.
Meanwhile, investors will also closely watch any further progress towards a consensus between OPEC and other key oil producers ahead of a November 30 meeting, where they are expected to extend an agreement on output cuts to help ease the global glut.
“Market participants expect OPEC to extend the production cuts beyond March 2018 and stocks to decline further,” commodities analysts at Commerzbank wrote in a note to clients Friday, according to Bloomberg. “That said, the reduction of stocks should be sluggish even if the agreement to cut production is extended. What’s more, the higher price level should lead to a further rise in US shale oil production. Oil is already much too expensive even if the latest developments in Saudi Arabia justify a certain risk premium on the oil price.”
On Friday, Brent slipped but held above US$63 a barrel.
In Europe, the Stoxx 600 Index finished Friday with a 0.4 decline from the previous day’s close.
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