Key Events This Week: Retail Sales, Fed Speakers And Senate Takes On Stimulus

It's been a slow start to the week with much of Asia still closed for the Lunar New Year, and the US Presidents’ Day holiday today, although as DB's Jim Reid writes "it has been a pretty eventful year so far with riots on Capitol Hill, the Georgia election results and huge associated potential stimulus numbers, the taper debate (becalmed for now), various bubble debates, Bitcoin up nearly five-fold since October, the EC vaccine saga, virus mutations, and who can forget the remarkable Reddit story."

Still, as Reid adds, "over the last week or two markets have calmed down and returned to the liquidity/ risk on trade" with the DB strategist predicting that it "will be a very strong year for the global economy as I think life will look very different in the summer (even with some restrictions still), with an abundance of pent up demand. However, that will likely bring its own issues with bond yields vulnerable if we see summer inflation (even if only transitory) and if the US technology bubble bursts as the “old” economy becomes relatively more attractive again and as day traders/retail have less time to invest in these chosen stocks. Before we get there the upcoming stimulus checks may find their way into equity markets so if there is a bubble it may inflate more first before any correction. So I reiterate that I don’t think this will be a low vol year so enjoy the quiet period ahead while you can."

But first, we have to get through this week, where the main event on the data front, is not until Friday with the next batch of flash PMIs published then. As a reminder, January did see a divergence between the major economies as while a number of composite PMIs were below 50, including the Euro Area, the UK, and Japan, the US economy continued to show promising signs, with the composite PMIs rising to the highest level (58.7) since March 2015.

The coming week will also see an increasing amount of hard data releases for January, including retail sales, industrial production, PPI (all Wednesday), housing starts and building permits (both Thursday).

From central banks, the next big round of monetary policy decisions won’t come until mid-March now, but we will get a number of meeting minutes released over the coming week, including from the Federal Reserve (Wednesday), the ECB (Thursday), and the Reserve Bank of Australia. We also get a bunch of Fed speakers. Otherwise, the policy decisions will come from emerging market economies, with Bank Indonesia expected by DB’s economists to cut their policy rate by 25bps on Thursday, and the Central Bank of Turkey also deciding policy that same day.

A full breakdown of economic key events this week is below, courtesy of BofA:

(Click on image to enlarge)

Elsewhere, earnings season is starting to wind down now, with around three-quarters of the S&P 500 having reported. However, the coming week will still see a further 54 in the index report, as well as 67 from the STOXX 600. In terms of the highlights, on Wednesday we’ll hear from Rio Tinto and British American Tobacco, followed by reports on Thursday from Walmart, Nestle, Applied Materials, Airbus, Daimler, Barclays, and Credit Suisse. Finally, on Friday, releases include Hermes International, Deere & Company, Allianz, and NatWest Group.

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