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.
Data. Lots of it. This week will be a busy one, with heavy doses of economic data combined with company earnings data. On the econ side of things, the latest data continues to show a robust recovery. The Atlanta Fed’s latest forecast for first quarter GDP is running at +8.2% versus Bloomberg’s Consensus of +5.4%. The Conference Board’s report on the latest LEIs (Leading Economic Indicators) last week showed an increase of 1.3% in March and that all ten components of the index were positive. We’ll get the official first look from the Bureau of Economic Analysis on Thursday. As with all things, market participants are now looking forward to the second quarter, as much of the stimulus checks received from President Biden’s $1.9 trillion American Rescue Plan were not received nor spent during the first quarter of this year. Expectations are for peak economic growth to occur in the second quarter now.
S&P 500 earnings season will have its busiest week, as 40% of index earnings are scheduled to be reported this week. The majority of the top ten companies by market cap will reporting this week. So far 123 companies representing 37% of index earnings have reported, with 79% beating on EPS, 78% beating on Sales, and 66% beating expectations on both. Once again, the acceleration of the economic recovery has surprised everyone. Mentions of “inflation” on earnings calls have more than tripled so far and from a wide range of sectors.
Once again the Fed could serve as a curveball for investors as await the FOMC’s rate decision mid-week. The market is currently pricing just a 2.8% chance of a rate hike, up from March’s 0%. We expect no rate hike and for no major policy changes. Last month we saw some volatility in fixed income markets as some investors were hoping for some form of Operation Twist to be announced to help contain the long-end of the yield curve. As my colleague Cal Jones mentioned in his most recent thoughts, “Time will tell, but for now, the Fed is sticking to its patient stance. It will await widespread improvement of several labor market indications to prove that we are well on our way to a broad-based and inclusive recovery before we get a shift in policy. It remains to be seen how far the market is willing to believe it.”
Data deck for April 24–April 30
|
Date |
Indicator |
Period |
|
April 26 |
Durable Goods Orders (Preliminary) |
March |
|
April 27 |
Case-Shiller Home Price Index |
February |
|
April 27 |
Consumer Confidence |
April |
|
April 28 |
Wholesale Inventories |
March |
|
April 28 |
Advance Goods Trade Balance |
March |
|
April 28 |
FOMC Rate Decision |
---- |
|
April 29 |
Initial Jobless Claims |
---- |
|
April 29 |
First Quarter U.S. GDP |
1Q 2021 |
|
April 29 |
Pending Home Sales |
March |
|
April 30 |
Personal Spending |
March |
|
April 30 |
Personal Income |
March |
|
April 30 |
Employment Cost Index |
1Q 2021 |
|
April 30 |
Chicago Purchasing Managers |
April |
|
April 30 |
University of Michigan Consumer Sentiment |
April |
