(Before It's News)
The main economic release this week is US retail sales, ECB minutes and a series of Chinese economic releases. There are several scheduled speaking engagements from Fed officials this week, including a webcast address by Chair Yellen on Thursday. However, the highlight of the upcoming first full week of 2017 might well be President-elect Trump’s first news conference on Wednesday since his election win.
Trump’s tweets continue to be market moving events for the stocks and sectors it influences and very soon there will be more macro consequences of his musings and actual policy decisions. Also Trump’s inauguration is a week on Friday and we’ll soon be into the well watched first 100 days.
A preview of the week’s event on a daily basis, courtesy of DB, has the week kicking off in Europe where we get the latest reading for the November unemployment rate (printing at 9.8% as expected). Over in the US we’ve got the usual post-payrolls lull but the November consumer credit reading will be out this evening.
We’re kicking off Tuesday in China where the December CPI and PPI prints will be due. In Europe the only data due out is the latest industrial production numbers in France while in the US the NFIB small business optimism reading is due for last month, along with the November wholesale inventories and trade sales report and also the November JOLTS job openings report.
Wednesday kicks off in the UK with the November trade data and also industrial and manufacturing production prints. There’s no data of note in the US on Wednesday.
Japan gets things going on Thursday with November trade data. During the European session we’ve got inflation data in France, GDP in Germany and industrial production data for the Euro area all due. Over in the US the data includes initial jobless claims, import price index and the December monthly budget statement. During the Asia session on Friday the highlight is likely the December trade report in China.
It’s a quiet end to the week in Europe with no notable releases due. In the US we finish the week with the December PPI report and retail sales, November business inventories and finally a first look at the January University of Michigan consumer sentiment reading.
Away from the data the Fedspeak this week consists of Rosengren and Lockhart today, Harker, Evans, Bullard and Kaplan on Thursday and Fed Chair Yellen early on Friday morning when she is due to host a town hall meeting with educators from across the country. Q&A is however expected. Other speakers:
- Fed’s Powell (Voter, Neutral) states that he does not see “broadly unsustainable asset prices”, low interest rates have led to support for progress on inflation and unemployment.
- Fed’s Kaplan (Voter, Neutral) states that they can raise rates in a gradual and patient way while the higher Feds Funds rate in 2017 is appropriate and that the 2H of 2016 was very strong.
- Fed’s Evans (Voter, Dove) states that the current global economic climate is weak and uncertain while two hikes in 2017 not unreasonable, three hikes is not implausible.
- Fed’s Harker (Voter, Neutral) states that he is pencilled in for 3 rate hikes for 2017.
- Fed’s Lacker (Non-Voter, Hawk) states that rates may have to climb faster than expected by markets, he expects the economy to grow by around 2% this year and that rates likely need to raise above the current market expectations.
- Fed’s Mester (Non-Voter, Hawk) states that she is more hawkish than consensus on the Fed.
- Fed’s Williams (NonVoter, Soft Hawk) said that the US doesn’t need fiscal boost in the short term from Congress as they are already at full employment and inflation is near target.
The ECB will also release the minutes from the December policy meeting on Thursday. Meanwhile, this week earnings season will start to kick into gear with JP Morgan, BofA and Wells Fargo all reporting on Friday. Perhaps the most hotly anticipated event this week however will be President-elect Trump’s aforementioned general news conference on Wednesday, the first since his election victory. That will also come one day after President Obama’s televised farewell speech from Chicago.
Additionally, on Friday, DBRS is scheduled to potentially review Italy’s credit rating after putting its credit worthiness on negative watch on 5 August. On 5 December, DBRS issued a press release declaring that they would wait for the impact of the Italian referendum result on the continuation of the reform push before making the final decision. In case of a downgrade, the haircut for a 5y BTP used as collateral for ECB operations, as an example, would rise from 2% to 10%.
Additionally, there is the risk of another Italian referendum incoming: On Wednesday, the Italian constitutional court decides on the admissibility of a referendum, supported by trade unions, with the potential to neutralize Renzi’s labor market reform (Jobs Act). If the referendum is considered admissible and is held later this year there could be two main effects 1) a return to the old labor normative may play against businesses and have long-term negative consequences on the Italian economy, 2) at the extreme, it may influence the proclamation date of the next Italian elections given that part of the parliament may want to postpone the referendum after the new elections (by law, a referendum can be held 365 days after the proclamation of elections). This said, various newspapers cite an inadmissibility judgment as the most
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Going back to just the US, here is a full preview with estimates of the key events:
Monday, January 9
- 09:00 AM Boston Fed President Rosengren (FOMC non-voter) speaks: Federal Reserve Bank of Boston President Eric Rosengren will give the keynote address at the Connecticut Business & Industry Association’s annual Economic Summit in Hartford, Connecticut. President Rosengren will rotate off as a voter in the FOMC this year.
- 02:00 PM Atlanta Fed President Lockhart (FOMC non-voter) speaks: Federal Reserve Bank of Atlanta President Dennis Lockhart will present an annual financial forecast update to the Rotary Club of Atlanta. President Lockhart will also rotate off as a voting member this year.
- 03:00 PM Consumer credit, November (consensus +$18.4bn, last +$16.0bn)
Tuesday, January 10
- 06:00 AM NFIB small business optimism index, December (consensus 99.3, last 98.4)
- 10:00 AM JOLTS job openings, November (consensus 5,517k, last 5,534k): Consensus expects job openings to fall to 5,517k in November following a modest decline in the October report.
- 10:00 AM Wholesale inventories, November final (consensus +0.9%, last +0.9%)
Wednesday, January 11
- There are no major economic data releases expected.
Thursday, January 12
- 08:30 AM Import price index, December (consensus +0.7%, last -0.3%): Consensus expects the import price index to advance by 0.7% in December. In November, the headline index softened by 0.3%, primarily due to a nsa drop in imported petroleum prices.
- 08:30 AM Initial jobless claims, week ended January 7 (GS 265k, consensus 255k, last 235k): Continuing jobless claims, week ended December 31 (consensus 2,077k, last 2,112k); We expect initial jobless claims to rebound to 265k after falling 28k last week to 235k, close to a cycle low. Initial claims can be difficult to seasonally adjust around this time of the year, and we suspect some of last week’s strength reflected a late start to year-end seasonal layoffs.
- 08:30 AM Chicago and Atlanta Fed President Evans (FOMC voter) and Lockhart (FOMC non-voter) speak: Chicago and Atlanta Fed Presidents Evans and Lockhart will participate in a discussion on current economic conditions and monetary policy at the American Council of Life Insurers Executive Roundtable in Naples, Florida. Audience and media Q&A is expected. President Evans is now a voting member of the FOMC this year.
- 08:30 AM Philadelphia Fed President Harker (FOMC voter) speaks: Federal Reserve Bank of Philadelphia President Patrick Harker will give a speech on the economic outlook at the Main Line Chamber of Commerce’s annual meeting in Malvern, Pennsylvania. Audience and media Q&A is expected. In an interview last week, President Harker indicated that he has “penciled in for three [funds rate] increases next year”. President Harker will be a voting member of the FOMC this year.
- 01:15 PM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give a speech on the economic outlook before the Forecasters Club of New York.
- 01:45 PM Dallas Fed President Kaplan (FOMC voter) speaks: Dallas Fed President Robert Kaplan will give a speech at the Dallas Regional Chamber’s annual meeting. Audience and media Q&A is expected. President Kaplan will be a voting member of the FOMC this year.
- 02:00 PM Monthly budget statement, December (consensus -$25.0bn, last -$136.7bn)
- 07:00 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give a speech on the mission and responsibilities of the Federal Reserve System via webcast at an event hosted by the Federal Reserve Board titled, “Conversation with the Chair: A Teacher Town Hall Meeting”. Chair Yellen will take questions from the audience as well as webcast participants.
Friday, January 13
- 08:30 AM Retail sales, December (GS +0.8%, consensus +0.7%, last +0.1%); Retail sales ex-auto, December (GS +0.6%, consensus +0.5%, last +0.2%); Retail sales ex-auto & gas, December (GS +0.5%, consensus +0.4%, last +0.2%); Core retail sales, December (GS +0.6%, consensus +0.4%, last +0.1%): Despite widely-publicized profit warnings from prominent department stores, we expect that broader measures of retail sales grew at an above-trend pace in December, with retail control accelerating to +0.6% (mom) after a subdued +0.1% in November. We observed positive anecdotes around online holiday shopping and favorable monthly same-store-sales data from several mass channel and clothing retailers. Accordingly, a continuation of the multi-decade shift in shopping patterns away from department stores seems more likely to us than a broader weakening in consumer goods purchases, particularly at a time when consumer confidence is making multi-decade highs and income growth remains solid. We would also note that industry sources suggest stabilization or even modest reacceleration in prescription drug spending, suggesting that pharmacy sales may begin to rise again after flat-lining since August. We forecast gains of +0.8% (mom) for headline retail sales and +0.6% for the ex-auto component, driven by a rapid rise in gasoline prices and cycle-high auto sales. We estimate the ex-auto ex-gas category rose +0.5%.
- 08:30 AM PPI final demand, December (GS +0.5%, consensus +0.3%, last +0.4%); PPI ex-food and energy, December (GS +0.2%, consensus +0.1%, last +0.4%); PPI ex-food, energy, and trade, December (GS +0.2%, consensus +0.2%, last +0.2%): We expect PPI to increase 0.5% (mom) in December, mostly due to recent energy price increases. In November, headline PPI rose 0.4%, primarily driven by higher food prices. We expect PPI excluding food, energy, and trade to rise 0.2%.
- 09:30 AM Philadelphia Fed President Harker (FOMC voter) speaks: Federal Reserve Bank of Philadelphia President Patrick Harker will give a talk on economic mobility at the Benjamin Franklin Birthday Celebration in Philadelphia. Audience Q&A is expected.
- 10:00 AM Business inventories, November (consensus +0.5%, last -0.2%): Consensus expects a 0.5% increase in inventory levels in November.
- 10:00 AM University of Michigan consumer sentiment, January preliminary (GS 96.5, consensus 98.5, last 98.2): We expect the University of Michigan consumer sentiment index to pull back modestly to 96.5 in the preliminary January estimate, after strengthening to a cycle high in the final December report.
Source: BofA, DB, GS