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Daily Agenda: The Week Ahead, January 26 – 30, 2015
The limitations of monetary policy and Sunday elections in Greece weigh on economic sentiment going into the weekend.
After a series of major announcements by central banks across the globe, a central question for investors has emerged: Do monetary policymakers have less ability to pull out easing as the instrument of last resort? Clearly in the U.S., the Federal Reserves actions have helped to bolster activity, that while still insufficient to drive wage inflation, leaves the nations economy in the global drivers seat. In Japan, however, the experiment remains unproven despite green shoots, and a round of bond buying by the European Central Bank will provide a fresh litmus test on an even grander scale. While investors muse over the limitations of monetary policy, national elections in Greece are expected to result in a government bent on renegotiating terms with the European Union.
Monday, January 26: December trade data for Japan will be announced, with consensus forecasts among economists predicting a rebound in both imports and exports. November numbers indicated slack activity despite massive Bank of Japan stimulus measures. In Europe, German IFO sentiment data, collected from business leaders, will be released with expectations for sentiment to improve in anticipation of ECB easing.
Tuesday, January 27: On a relatively quiet day for economic data releases elsewhere, a slew of new indicators will be announced in the U.S. Durable goods orders for December are expected to rebound from a stumble in November while Markit service industry purchasing manager index levels are also expected to improve for the first month of 2015. November Case-Shiller data for major markets and monthly new home sales estimates from the Census Bureau will help bring real estate prices into focus. The Conference Board is posting January consumer confidence levels. Consensus forecasts call for a significant uptick, as inexpensive gasoline helps buoy the mood at the cash register. Apples fourth-quarter earnings announcement stands to be a primary narrative for equity markets, with expectations riding high on the back of sales for the iPhone 6. Other large-cap U.S. equities posting quarterly numbers include Amgen, Bristol-Myers Squibb, Procter & Gamble and Caterpillar.
Wednesday, January 28: Consumer inflation levels for the final three months of 2014 will be released in Australia, with expectations for a contraction in the pace of price increases, supporting the argument behind the Reserve Bank of Australias record benchmark lending rates. In the U.S. the primary focus of the day and likely the week will be the Federal Reserves monetary policy announcement at 2 pm U.S. Eastern time. Investors will parse Energy Information Administration data on crude oil stock levels. On a day full of earnings releases, the Wynn Resorts announcement stands out, as a crackdown on high rollers in Macau leaves gaming investors worried about the sectors fastest-growth market.
Thursday, January 29: December retail sales for Japan and external trade prices for Australia will be the primary economic releases in the Asia-Pacific region. Taking center stage in Europe are employment and consumer inflation data in Germany and fresh sentiment data from the European Commission. Private-sector lending data for December as estimated by the ECB stands to provide insight into how much of the liquidity provided to markets by the euro zones central bank is actually passing into the hands of commercial borrowers. In the U.S. initial jobless claims and pending new home sales figures will be announced. Among the many earnings releases on Thursday the NASDAQ OMX Group announcement will be of note as a bellwether of increased volatility and volume during the final quarter of 2014.
Friday, January 30: December consumer price inflation levels will be released in Japan in conjunction with Tokyo-specific January figures, putting Abenomics under the microscope. December employment and consumer spending figures, as well as final industrial production and critical vehicle manufacturing data, will also provide more insight into the health of the Japanese economy in the final month of last year. In Europe, aggregate euro zone consumer price and employment data will dominate headlines, while December consumer credit data in the U.K. provides insight into the impact on households of the Bank of Englands sustained low rate policy. In the U.S. revised fourth-quarter GDP data will be the primary economic release for the day. Also on the schedule are personal consumer expenditures and initial University of Michigan consumer sentiment data. Eli Lilly, MasterCard and Weyerhaeuser are among the many companies reporting fourth-quarter results.