With the Thanksgiving holiday in the US on Thursday, markets may be slow towards the end of the week. Friday is also a half-day in for markets in the US. However, that also means that if there is a surprise in the markets, things could get volatile. For the most part, events of the upcoming week will be focused on Wednesday, with the RBNZ Interest Rate decision meeting, European PMIs, and the FOMC Minutes. And don’t forget that Friday is “Black Friday”, which is the unofficial kickoff to the holiday shopping season. In addition, there are still some names that need to be watched this week regarding earnings, such as Zoom and Dell. 

RBNZ

The Reserve Bank of New Zealand will meet on Wednesday this week to decide on interest rate policy. At the previous meeting on October 5^th, the RBNZ hiked rates by 50bps to bring the OCR to 3.5%. One of the most important items from the Minutes of the meeting showed that a 75bps rate hike was discussed. Ultimately though, the Committee decided only to hike rates by 50bps. A week after the last RBNZ meeting, New Zealand released it’s Q3 CPI data. The headline print was 7.2% vs an expectation of 6.6% and a Q2 reading of 7.3%.  Although expectations for the Q3 print were much lower, the actual print was roughly unchanged from the previous quarter. Food inflation for October also increased from 8.3% YoY to 10.1% YoY. This will most likely give the Committee reason to hike by 75bps at the upcoming meeting, which would bring the official cash rate to 4.25%.

Black Friday

The day after Thanksgiving in the US is the unofficial kickoff to the holiday shopping season, with companies offering large discounts on many items. The sales data is used to gauge holiday spending over the next month. With an increase in interest rates over the last year, one should consider how willing people will be to take on additional debt (credit card spending) at higher rates. The most recent Retail Sales data in the US for October was up 1.3% vs a September reading of 0%. Will the strong spending continue into the holiday season? Walmart beat earnings estimates last week and gave an upbeat holiday shopping season outlook. Meanwhile, rival target missed earnings and said that it plans for rapidly softening demand as borrowing options for consumers run out. Amazon also gave a less favorable outlook and is bracing for a tough holiday season. Amazon recently announced it was laying off 10,000 workers as well. However, one thing most retailers are noting is that they still have a backlog of inventory.  Therefore, investors will be watching how many “sales” are offered and how much items are discounted.

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Earnings

Third-quarter earnings may be ending, however, there are still some big names to watch out for this week. A few of these names are Zoom, Dell, and Baidu. Other important earnings this week are as follows:

ZM, DELL, SNEX, BBY, BIDU, DLTR, HPQ, DE

Economic Data

As we head towards the end of the month, the economic calendar is light.   The calendar will pick up again as we hit the end of November and the first week in December.  But for this week, the PMIs and the FOMC Minutes will highlight the week.  The European PMIs will tell the markets whether the EU is headed in the direction of a recession.  The FOMC Minutes will give more clarity to the meeting on November 2^nd.  Other important economic data due out this week is as follows:

Sunday

• ECB President Lagarde Speech

Monday

• China: Loan Prime Rate 1Y
• China: Loan Prime Rate 5Y (NOV)
• Germany: PPI (OCT)
• US: Chicago Fed national Activity Index (OCT)

Tuesday

• New Zealand: Trade Balance (OCT)
• Australia: RBA Gov Lowe Speech
• Canada: Retail Sales (SEP)
• Canada: New Housing Price Index (OCT)
• EU: Consumer Confidence Flash (NOV)
• US: Richmond Fed Manufacturing Index (NOV)

Wednesday

• Global Manufacturing and Services PMIs Flash (NOV)
• New Zealand: RBNZ Interest Rate Decision
• US: Building Permits Final (OCT)
• US: Durable Goods Orders (OCT)
• US: New Home Sales (OCT)
• US: Michigan Consumer Sentiment Final (NOV)
• US: FOMC Minutes
• Crude Inventories

Thursday

• US: Thanksgiving Holiday
• Japan: Manufacturing and Services PMI Flash (NOV)
• Sweden: Riksbank Interest Rate Decision
• Germany: Ifo Business Climate (NOV)
• UK: CBI Industrial Trends Orders (NOV)
• Mexico: Mid-month Inflation Rate (NOV)
• South Africa: Interest Rate Decision

Friday

• New Zealand: ANZ Roy Morgan Consumer Confidence (NOV)
• New Zealand: Retail Sales (Q3)
• Germany: GfK Consumer Confidence (DEC)
• Germany: GDP Growth Rate Final (Q3)

Chart of the Week: Weekly WTI Crude Oil (USOIL)

Source: Tradingview, Stone X

WTI Crude Oil was down nearly 10.5% last week, near $79.50, in its biggest weekly decline since the week of March 28^th.  With fears of a wider spread of Covid in China and a possible recession in other parts of the world, OPEC lowered its projection for global demand by 500bpd. The demand fears helped push prices lower.  USOIL was able to hold support from the week of September 26^th at 76.28, but if concerns continue, price could break the support and fall to the 50% retracement level from the April 2020 lows to the highs of the week of March 7^th, near 64.71.  Horizontal support sits just below there at 62.46.  However, OPEC+ meets again in early December.  If they update their forecast to see demand increasing, price should move higher. First resistance is at last week’s high of 89.82.  Above there, price can move to the highs from the week of November 7^th at 93.73.  Additional resistance crosses at the lows of the week of June 20^th at 100.73.

The upcoming week is not setting up to be the most exciting week of the year, however, there are still some bits that can move the markets and need to be watched.  The RBNZ meets on Wednesday and is expected to hike rates by 75bps.  Could they raise more?  In addition, the PMIs will tell us which, if any, countries may be heading towards a recession.  And don’t forget about Black Friday!  Will consumers be out spending on Friday or will the hold back and conserve funds?

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