The Week Ahead – Dr. Evil

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

Can you believe Austin Powers: International Man of Mystery is now over two decades old? For those who don’t know, the film’s antagonist Dr. Evil was frozen for thirty years and, when he is thawed out, he’s back to his villainous ways. At one point he conspires to hold the world hostage for $1 million, at which all of the world’s leaders begin laughing at the paltry sum. Poor Dr. Evil didn’t understand the power of inflation and the growth of the global economy!  

Meanwhile, here in 2018 another company has finally crossed the $1 trillion dollar market cap threshold. Back in 2007, PetroChina briefly broke that barrier before the Great Financial Crisis and the collapse of oil occurred. This past week Apple broke through that threshold. To put things in perspective, the total market cap for U.S. equity markets today is $31 trillion. Japan just recently took back the #2 spot, coming in at $6.17 trillion. Meanwhile, China checks in at #3 at $6.09 trillion (amazingly, China first broke the $1 trillion level back in 2006!).

After a data heavy week, the week ahead will be much quieter, with two readings for inflation via PPI and CPI. Expectations are a small increase to both readings as current survey data reflects manufacturers dealing with rising input costs as well as supply chain constraints. With Core PCE growing 0.1% in June, one would expect a similar positive move with Core CPI. With last week’s continued strong employment report (the unemployment rate ticking down to 3.9%), it looks the like Fed is on course to hike at next month’s FOMC meeting.

Data deck for August 4-August 10: