Daily Agenda: The Week Ahead, July 12 – 17, 2015

Leaders convene to discuss Greek and Puerto Rican debt crises; J.P. Morgan and Goldman Sachs report earnings; Yellen to address Congressional committees.

Puerto Rico Loses Bid For Restructuring Law as Crisis Mounts

People walk on a street in Old San Juan, Puerto Rico, on on Tuesday, July 7, 2015. Governor Alejandro Garcia Padilla said in a televised speech June 29 that Puerto Rico will seek to delay payments on the islandís debt for ìa number of years.î Photographer: Christopher Gregory/Bloomberg

Christopher Gregory/Bloomberg

While the tone of the week ahead my well be set by the last-ditch summit between Greece and its creditors on Sunday, a meeting of bondholders in New York on Monday may signal the start of a long negotiation process for Puerto Rico to execute the largest public debt restructure in U.S. history. With the near-panic in Chinese equity markets in recent sessions, second-quarter GDP figures will provide Beijing an opportunity to refocus on long-term growth prospects. Major Wall Street banks will begin announcing quarterly results in an earnings season that is forecast to be downbeat after a spring drought in trading revenues. Federal Reserve Chair Janet Yellen will undoubtedly have the opportunity to address many of these factors and more as she is grilled on Capitol Hill midweek about the Federal Reserve’s rumored plan to lift rates in the coming months.

Sunday, July 12: Sunday will mark the final deadline for Greek leaders to come to terms with creditors at a special emergency summit in Brussels. Representatives from all 28 member nations of the European Union, rather than only the countries that are on the euro, will be in attendance for a meeting that may presage a historic departure of Greece from the common currency.

Monday, July 13: Citigroup is hosting a group of investors that are holders of Puerto Rico-issued bonds. The island territory is facing an uphill battle in its bid to restructure its $72 billion in debt since, as it’s a U.S. territory rather than a state, it does not have access to Chapter 9 bankruptcy protection. Economist International Monetary Fund and World Bank alumna Anne Krueger reportedly will provide a keynote address. The IMF has recommended a restructure involving a swap by bondholders for debt with a longer maturity.

Tuesday, July 14: J.P. Morgan Chase & Co. will be the first major Wall Street bank to report earnings this season at 7 am. Consensus among research analysts are for a slump in bond trading activity to hit the bottom lines of most of the major dealers posting results for the second quarter. Analysts have forecast that J.P. Morgan will realize earnings of $1.44 per share, a modest decline from the same period last year. Rival Goldman Sachs Group, which reports on Wednesday, is expected to have suffered a greater drawdown during the second quarter of this year versus the same period 2014.

Wednesday, July 15: China releases second-quarter GDP figures. With the intense focus on equity-market volatility there, concerns over Beijing’s ability to orchestrate a soft landing for the overall economy have been overshadowed. Separately, China’s National Bureau of Statistics will announce June fixed-investment, industrial production and retail sales data.

Thursday, July 16: Federal Reserve Chair Janet Yellen is testify before the Senate Banking Committee on Thursday after meeting with the House Financial Services Committee on Wednesday. Expect the question and answer session following her remarks to center on what impact the crisis in the euro zone, as well as the Chinese stock markets may have on the Fed’s decision on when to begin rate normalization.


Friday, July 17: The U.S. Department of Labor Statistics will announce consumer price index levels for June. In a speech last week in Frankfurt, Minneapolis Federal Reserve President Narayana Kocherlakota said that it is unlikely that the Fed can reach its goals for inflation and employment on its own, speculating that the U.S. might assist by pursuing policies accordingly.