The U.S. week ahead: Financial Market Frenzy: Fed, Jobs, Earnings

Investors in the week ahead will be bracing for a busy calendar, including the Federal Reserve’s interest rate decision, an update on the U.S. employment situation, as well as a raft of corporate earnings.

Frenzied activity is set to envelop the financial markets straight out of the gates Monday, with notable quarterly results set for release by Google parent Alphabet (NASDAQ: GOOG, GOOGL), along with a gauge of some energy and chipmakers’ earnings.

The corporate numbers will be unveiled alongside further insights into personal income and spending figures, as well as core PCE prices – the Fed’s preferred measure of inflation.

Monday, April 29

Earnings

• Alphabet Inc (GOOG, GOOGL Q1’19)
• Anadarko Petroleum Corp (APC Q2’19)
• On Semiconductor Corp (ON Q1’19)
• Transocean LTD (RIG Q1’19)
• Vornado Realty Trust (VNO Q1’19)

Econ

• Personal Income & Spending (Mar)
• Core / PCE Price Index (Mar)
• Dallas Fed Manufacturing Activity (Apr)

Market participants will receive little respite Tuesday, when earnings updates from Apple (NASDAQ: AAPL), General Electric (NYSE: GE), General Motors (NYSE: GM), McDonald’s (NYSE: MCD) and Pfizer (NYSE: PFE), among a swarm of other companies, cross the tapes.

The Federal Reserve’s Open Market Committee (FOMC) also begins its two-day monetary policy meeting.

Tuesday, April 30

Earnings

• Apple (AAPL Q2’19)
• Frontier Communications (FTR Q1’19)
• General Electric (GE Q1’19)
• General Motors (GM Q1’19)
• Mastercard (MA Q1’19)
• McDonald’s (MCD Q1’19)
• Merck & Co. (MRK Q1’19)
• Mondelez International (MDLZ Q1’19)
• Pfizer (PFE Q1’19)
• Sprint Corp (S Q4’19)

Econ

• Redbook
• S&P-CoreLogic-Case Shiller Home Price Index (Feb)
• MNI Chicago PMI (Apr)
• Pending Home Sales (Mar)
• Conference Board Consumer Confidence (Apr)
• API Crude Oil Stocks

Eyes on the Fed

Although the focus mid-week will most likely center on the FOMC’s conclusion to its two-day monetary policy meeting, including its interest rate decision and subsequent press conference from Fed chair Jerome Powell, there will also be some top-tier economic data, including fresh manufacturing sector figures and an update on private payrolls from ADP, which is generally viewed as a warm-up act to the all-critical non-farm jobs report ahead of the weekend.

At its previous monetary policy meeting in March, the FOMC – the Fed’s policymaking body – elected to maintain the target range for the federal funds rate at 2.25-2.5%, with no plans in 2019 to hike interest rates further, as well as to cease other quantitative tightening measures, including ending its US$4trn balance sheet shrinkage in September.

In the minutes to that meeting, the FOMC reiterated it will be “patient” as it determines what future adjustments to the target range for the federal funds rate may be appropriate – in light of global economic and financial developments and “muted inflation pressures.”

Market participants will also likely continue looking for any signals that may point to a potential recession on the horizon following the recent inversion of part of the yield curve.

Fitch Solutions recently observed that there “appears to be a high level of uncertainty as to when a recession could strike.

“Indeed, several yield curve-based models continue to suggest that the U.S. (and hence, most likely, the global economy) could fall into recession any time between late 2019 and early 2021.”

When the yield curve inverts – when long-term rates fall below short-term rates – a recession typically ensues. This scenario has included the past two recessions, which occurred in 2001, as well as from 2007 to 2009.

Since the latest inversion of the 3m/10y curve, which had reverted to positive at the end of March, investors have been busy speculating about the FOMC’s path of monetary policy normalization, and whether the two rate hikes that were once on the table for 2019 could end-up being a cut instead.

Wednesday, May 1

Earnings

• Amc Networks (AMCX Q1’19)
• CVS Health Corp (CVS Q1’19)
• Humana (HUM Q1’19)
• Qualcomm (QCOM Q2’19)
• Yum! Brands (YUM Q1’19)

Econ

• ADP Employment Change (Apr)
• Markit US Manufacturing PMI – Final (Apr)
• ISM Manufacturing PMI (Apr)
• EIA Crude Oil Stocks

Fed

• Federal Reserve (FOMC) Rate Decision

Among the throng of companies on the radar for Thursday, WW (formerly known as Weight Watchers International – NASDAQ: WTW) is scheduled to reveal its first-quarter of 2019 results.

WW’s shares had plunged more than 30% after releasing is Q4’18 numbers, spurring analysts at Finimize to note that the company “hasn’t just changed its name: it’s in the middle of rebranding itself as a wellness company.

“Either that’s not working so well – or it’s working too well, and its subscribers don’t need it anymore.” Finimize observed the Oprah-backed firm’s profit was “well off its target weight, and it shed subscribers for the third quarter in a row.”

WW also said that 2019 wasn’t going as well as hoped, lowering its outlook for the year.

Thursday, May 2

Earnings

• CBS Corp (CBS Q1’19)
• CIGNA (CI Q1’19)
• Discovery Inc (DISCA Q1’19)
• Gilead Sciences (GILD Q1’19)
• Kellogg (K Q1’19)
• Shake Shack (SHAK Q1’19)
• Weight Watchers (WW Q1’19)

Econ

• Initial Jobless Claims
• Bloomberg Consumer Comfort
• Factory Orders (Mar)

Eyes on Jobs

Ahead of the weekend, investors will generally be watching for the April report on the U.S. employment situation from the Bureau of Labor Statistics, after the previous month recorded an increase of 196k jobs, with notable gains in health care and professional and technical services.  Also, February’s tally was upwardly revised to 33k from 20k, and the unemployment rate was unchanged at 3.8%.

Jefferies money market economist Thomas Simons noted that the March data pointed to “a labor market that remains solid.

“The payrolls bounce-back is the most important detail because it confirms that the soft February payroll rise was a once-off.”

He added that while the detail of the household survey was “unimpressive,” it posed “no reason for concern,” as it was probably “a hangover from the distortions to the January and February household survey that, unlike the establishment survey, were distorted by the government shutdown.”

Meanwhile, market participants will have a slew of other events and releases on the radar with which to keep busy, including –

Friday, May 3

Earnings

• Berkshire Hathaway (BRK.A Q1’19)

Corporate Events

• AMC Entertainment Holdings – Annual Shareholders Meeting

Econ

• US BLS Non-Farm Payrolls (Apr)
• Markit US Services PMI – Final (Apr)
• Markit US Composite PMI – Final (Apr)
• ISM Non-Manufacturing PMI (Apr)
• Baker Hughes Oil Rig Count

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