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Key Events For The Week Ahead: From Davos To Neflix Results

Published 2018-01-19, 09:40 a/m
Updated 2023-07-09, 06:32 a/m

1. U.K. wages and unemployment, Davos World Economic Forum: With headline inflation for December in the U.K. give conflicting signals earlier this week, with CPI slipping back to 3%, but RPI pushing further away from 4%, it is more important than ever that wages growth shows further signs of edging higher in the three months to November. The omens look positive having seen a significant increases in the minimum wage start to show up in the numbers. London wages have risen in excess of 4.5%, while elsewhere in the country we’ve seen rises of up to 3.6%, for up to 150k workers, and this really ought to start pulling the headline rate higher. We’ll find out on Wednesday. U.K. unemployment is expected to remain at 42 year lows of 4.3%, while on Friday the interim UK Q4 GDP is expected to come in at 0.4%.

2. It’s also the World Economic Forum, and while the great and the good are hob-nobbing in Davos getting an awful lot of media coverage, as far as the markets are concerned, it will probably be one big whoop, just like previous years.

3. ECB rate meeting – the recent rise in the euro and improvement in the economic outlook has been largely predicated on an expectations that the European Central Bank might well tweak their guidance around the current bond buying program. Previous indications have suggested that governing council will be reluctant to be too hawkish about their intentions as to when the program will expire, but investors are increasingly pricing in the prospect that the guidance will change soon and that despite weak inflation, we’ll get a hard date to end the asset purchase program. That is unlikely to come this week given recent comments from some senior ECB officials that the value of the euro is hindering efforts to hit the inflation target, but further clues could come in March.

4. Bank of Japan rate meeting – the recent move by the Japanese central bank to reduce by $10 billion the amount of its monthly bond-buying program jolted the markets earlier this month, particularly since the general consensus had been that the BoJ was in for the long haul. This month’s actions have shown that can’t be taken for granted, so markets will be paying close attention to not only what Kuroda does, but also about how guides future expectations of policy moves later on into 2018.

5. U.S. Q4 GDP – the U.S. economy appears to be in fairly decent shape despite the various weather-related shocks that we’ve seen at the end of 2017. From the transatlantic hurricane season to freezing weather at the end of December, the U.S. consumer has shown surprising resilience, while the other sectors of the U.S. economy have also performed well. Having seen annualized Q3 GDP come in at 3.2%, expectations are high that Q4 will be just as strong. This, in turn, will reaffirm or harden expectations about how many rate hikes to expect in 2018.

6. Kier Group, Van Elle Holdings – in the wake of the collapse of U.K. construction giant Carillion, the construction sector is set to remain in the spotlight this week. We’ve already seen a number of its peer’s report that they will have to set aside extra funds with respect to filling the gap left by Carillion’s departure for major infrastructure projects. This week we’ll be getting a trading statement from Kier Group, as well as a first half trading update from Van Elle Holdings, who last week said that it was owed £1.6m for work done for Network Rail, with a value of £2.5m extra work in the pipeline yet to be completed.

7. Netflix (NASDAQ:NFLX) Q4 results – in its last quarter, the company posted yet another bumper quarter in adding 5.3 million new subscribers, taking its total subscriber base to 109.3 million. The company was also bullish on its outlook, predicting that they expected to see another 6.3 million subscribers by year end. The company’s share price has continued to from strength to strength since then helped by price rises to a number of its content packages which don’t appear to be affecting demand for its content. This week’s Q4 update will tell us whether they met that 6.3-million subscriber target. Recently launched new series of “The Crown” as well as a new Star Trek franchise series could help in this regard, and they’ll need to help given that the company is looking to spend around $7 billion-$8 billion for this year on new content. Revenues for the year are expected to rise to $11.68 billion, from $10.8 billion a year ago.

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