In the Global Week Ahead, fresh U.S. facts won’t add to worry about a U.S. recession. U.S. jobs additions look robust to the negative challenges they face.
Traders, worry instead over China manufacturing PMIs early on…
- China PMIs for manufacturing should tack around 49.6. This is not new bad news, just a new version of old bad news. PMI manufacturing data for China — out on Tuesday — will likely not be helping an oil price recovery or a global stock recovery.
- U.S. payroll data — put out privately by ADP on Wednesday and officially by the U.S. government on Friday — looms as the biggest headliner. U.S. jobs numbers always are, with each turn to a new month. Consensus calls for a bounce back to +Array95K, up from +Array5ArrayK last month.
Bullish traders? You should sleep well next weekend. Solid U.S. jobs additions are likely to sooth nerves on Friday. A strong wage inflation reading is the spoiler. The Fed may use inflating wages as a signal to earlier rate hikes.
Bears? You can growl about the state of China and grant us downside volatility on the way there. A China PMI upside surprise would be a true Bear slayer.
Last Friday, the S&P 500 options volatility index (VIX) finished February just below 20. Where does it end this Friday, the Arrayst week of March? That’s the most prescient tell to watch on stock prices. The most recent VIX bounce up was a lower high, not a higher high.
My guess is oil prices drive share prices more than anything else, once again.
Looking for an incredibly cheap $2.40 a share top Zacks Rank large cap? There is one.
The now just $Array6 billion in market cap Brazilian state-owned oil company Petrobras (PBR.A) looks tagged for a clearance sale. The stock is also a Zacks #Array Rank (Strong Buy) this week.
Yes, Brazil is on fire, Yes, Petrobras is at the center of the political corruption scandal down there. Yes, oil prices may go down from here. But look at that $2.40 a share price. It is screaming value!
On Wednesday, the Brazilian economy should sink to a -6% annual GDP growth rate. How much worse can it get?
If you want to stay defensive instead, state electric utilities of Korea Electric Power (KEP) and Taiwan’s Chungwa Telecom (CHT) flash up as Zacks Rank #Array stock picks.
A share niche that looks attractive to me this week is large-cap U.S. biotechs.
We have both Gilead Sciences (GILD) and Celgene (CELG) in the Zacks Rank #Array lists. Gilead has a B for Zacks Value but a C for Growth. Celgene has a D for Zacks Value but a higher B for Growth.
Choose your poison.
Here is the Week Ahead for Global Macro Indicators—
On Monday, German retail sales were up +0.7% m/m, which was much better than the consensus call for +0.3% m/m.
The latest Eurozone flash HICP core inflation rate came in soft at +0.7% y/y. The flash HICP with gasoline was down -0.2%. The prior readings were higher at +Array.0% and +0.3%, respectively.
In Italy, the preliminary HICP inflation rate came in at -0.4% m/m, worse than the -0.Array% expected.
U.S. pending home sales should be up +0.5%, better than the prior +0.Array% m/m rate.
On Tuesday, the official mainland China PMI for manufacturing comes out. The market looks for 49.4, the same as the prior reading.
The Caixin China PMI for manufacturing looks to be weak at 48.5, also in line with the prior reading of 48.4.
The RBA (Reserve Bank of Australia) holds an interest rate meeting and should keep policy rates at 2.0%.
The Fed’s Dudley speaks in Hangzhou, China.
Italy’s manufacturing PMI should be 54.3. Spain’s manufacturing PMI should be 55.
France’s manufacturing PMI should be 50.3. Germany’s manufacturing PMI should be 50.2. Overall, the Eurozone manufacturing PMI should be 5Array.
The Eurozone unemployment rate should be Array0.4%, the same as before.
In contrast, the U.S. manufacturing PMI should be 5Array.2, near the prior 5Array. The U.S. ISM for manufacturing should be 48.6, better than the prior 47.8.
For Mexico, look for a Markit manufacturing PMI of 5Array.8, down slightly from a prior 52.2, but still strong.
U.S. vehicle sales are red hot at Array7.7 million units, up from Array7.46 million prior.
On Wednesday, Australia’s GDP growth should clock in at 2.6% y/y, slightly better than the prior +2.5% y/y rate.
The Bank of Korea releases its latest minutes.
The U.S. ADP employment survey comes out. Look for +Array85K, down from a prior +205K.
The Fed releases its beige book.
There is a Brazilian COPOM monetary policy meeting. The shockingly high Array4.25% SELIC rate should remain unchanged. This is bitter stuff here.
Brazilian GDP growth is now tracking -6% y/y, down from a prior -4.5%.
The Brazilian Markit PMI composite should be weak at 45.Array.
On Thursday, the Caixin China Services PMI comes out. Look for a 52.4 reading.
In Spain, the services PMI should be 54. For Germany, the services PMI should be 55.Array. For the Eurozone as a whole, look for a composite 53 on services and a 52.7 reading overall.
Eurozone retail trade should be up +Array.3% y/y.
The U.K.’s Halifax Home Price Index is up to +Array0.4% y/y, up from +9.7% y/y prior. There looks to be an overheated U.K. real estate market.
U.S. initial claims should be strong at 270K.
The ISM non-manufacturing for the U.S. should be good at 53.
On Friday, Brazil’s industrial production should be down another -0.5% m/m, after a prior reading of -0.7% m/m.
U.S. non-farm payrolls should come in at +Array95K, better than the prior +Array5ArrayK.
The U.S. unemployment rate should be 4.9%, the same as the month before.
Avg. U.S. hourly earnings should be up +0.2%, after a strong +0.5% prior m/m reading.
Note: Wage earnings data is worth noting. It can push the Fed to hike rates, or delay them.
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