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Daily Agenda: The Week Ahead, February 16 – 20, 2015

China rings in the Year of the Sheep; U.S. markets closed Monday; fourth-quarter 2014 reporting season winds down.

Geopolitical brinkmanship in Europe and the Middle East takes center stage this coming week. Greece’s newly installed government is preparing for a push on Monday to secure concessions at the Eurogroup meeting. Russia, threatened by the prospect of fresh sanctions from the West, has helped broker a cease-fire due to begin Sunday in eastern Ukraine. Meanwhile the battle against ISIS militants has come to Washington. U.S. President Barack Obama has asked Congress for the authority to start military intervention in regions controlled or otherwise destabilized by ISIS. While a miscalculation in political negotiations could lead to tremendous risk for financial markets, for now, investors appear to have few concerns. On Friday, both the DAX and the S&P 500 achieved all-time high levels in a signal that — for now, anyway — political crisis has not bled over into market sentiment.

Monday, February 16: Japan released fourth-quarter GDP figures. Consensus forecasts call for a rebound of nearly 1 percent from a contraction during the third-quarter, as aggressive easing by the Bank of Japan is giving the nation’s economy a boost to get past the hike consumption taxes last year. In China, fresh credit facilities are forecast to nearly double from the prior month’s reading, in part because of seasonal inflections. With the stakes riding high for Greece, Monday’s Eurogroup meeting will dominate European market narratives. Markets in the U.S. are closed in observance of the President’s Day holiday.

Tuesday, February 17: U.K. posts January consumer and producer inflation index readings. Analysts expect numbers to be dampened by the impact of low fuel cost inputs. In Germany, the ZEW economic sentiment index is on the schedule, with forecasts for all components to continue to improve after last week’s surprisingly strong GDP report. In the U.S., monthly Treasury International Capital (TIC) flows for December, scheduled for release at 4 p.m., will reveal the impact of a strong U.S. dollar on demand for Treasury securities.

Wednesday, February 18th: Chinese New Year holiday celebrations get underway Wednesday, effectively interrupting all commerce for the remainder for the week in the nation. In Japan, the Bank of Japan monthly policy statement and press conference is likely to hold few surprises, as the bank continues its massive easing program in search of inflation. In the U.K., Bank of England Monetary Policy Committee meeting minutes and the January claimant count are scheduled for release. With Bank of England governor Mark Carney’s recent warnings that inflation measures may briefly hit negative levels this year, no surprises are expected from the published comments, regardless of any improvement in the job market. An array of fresh economic data points are on deck in the U.S., including housing starts, industrial production and producer price index levels for January. The fourth-quarter earnings reporting season brings the hospitality industry into focus, with Hyatt Hotels Corp. and Marriott International posting numbers for the last three months of 2014.

Thursday, February 19th: following last month’s positive surprise in export numbers, January trade data in Japan will get greater attention. In the U.S., continuing jobless claims will be announced at 8:30 a.m. Separately, Energy Information Administration natural gas and crude oil investor data will be released. Tax preparation software giant Intuit will announce fourth-quarter 2014 results. The company has been hit by bad press in recent weeks after an increase in prices for its flagship TurboTax product suite alienated some clients, and a rash of fake filings caused the company to suspend temporarily state tax preparation services.

Friday, February 20th: Markit releases manufacturing and services purchasing managers’ index data for the primary euro zone economies, with consensus forecasts for a modest improvement in aggregate levels in the region, driven largely by gains in Germany. Separately, German producer prices for January will be announced. December costs at the factory gate registered negative on both a monthly and year-over-year basis. The extreme tails of the pricing distribution curve for U.S. retailers will be brought into focus on Friday, with Nordstrom and Wal-Mart Stores posting fourth-quarter results.

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