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WEEK AHEAD
U.S. markets come off a week of strong economic data pushing up
against one-month highs in the stock market and notable
resistance levels in the bond market. The test will be whether
asset classes will try to keep moving higher, especially given
the high correlation between investors trading oil, stocks,
Treasury inflation securities and other assets. Earnings have
receded, and economic data is light, as are scheduled Fed
speakers, so that will keep the market reacting to overseas
events.
It is going to be a quiet week with only second-tier data due
for release. The Commerce Department's data on January wholesale
inventories on Wednesday could shed more light on how much of
drag inventories will be on first-quarter growth. Revised
fourth-quarter GDP data showed businesses had made less progress
than previously thought in reducing the inventory overhang
during the quarter. A Reuters survey of economists forecast
wholesale inventories falling 0.2 percent in January after
decreasing 0.1 percent in December. On Thursday, the Commerce
Department will release its quarterly services sector report for
the fourth quarter, which could impact on the consumer and
business spending estimates, and therefore GDP growth for the
final three months of 2015. The Labor Department's February
import prices report is expected to show dollar strength and
weak global demand keeping imported inflation pressures subdued.
According to a Reuters survey of economists, import prices
likely fell 0.7 percent in February after declining 1.1 percent
in January.
Dollar General Corp (NYSE:DG) reports fourth-quarter results on Thursday.
The No.2 U.S. discount retailer cut its full-year sales forecast
in December after sales growth slowed in its third quarter, as
its core low-income customer base held back spending. Weak
consumer spending likely weighed on results this quarter as
well, as larger rival Dollar Tree (NASDAQ:DLTR) and big-box rival Wal-Mart (NYSE:WMT)
reported lower-than-expected sales, hit by a strong dollar and a
drop in food prices.
On Wednesday, Square Inc (NYSE:SQ) will report its first quarterly results
since it made its market debut in November. The mobile payments
company, headed by Twitter (NYSE:TWTR) CEO Jack Dorsey, is expected to
report fourth-quarter revenue slightly below estimates,
according to Thomson Reuters StarMine data. The company faces
intense competition in the payments market and has been
investing heavily in new hardware.
On Tuesday, IMF First Deputy Managing Director David Lipton
speaks at the National Association for Business Economics Annual
Economic Policy Conference in Washington. On the same day, U.S.
Treasury Assistant Secretary for Economic Policy Karen Dynan is
scheduled to speak on "a view from the Treasury Department" at
the National Association for Business Economics Annual Economic
Policy Conference in Washington.
U.S. airlines will give presentations at the JPMorgan (NYSE:JPM) aviation
conference, beginning Tuesday. American Airlines, Southwest
Airlines and others will present to investors on their
financials and strategy at this annual conference. Investors
will be looking for any updates on the impact airlines have seen
from the Zika virus and for new forecasts, if any, on their
passenger unit revenue, an indicator of traveler demand.
The main event in Canada next week will be the Bank of Canada's
interest rate decision on Wednesday. The central bank is
expected to hold rates at 0.50 percent, opting for patience over
action as it waits to see what the impact of the government's
expected spending measures will be and as it allows the effects
of last year's two rate cuts to filter through the economy. The
other major economic release will be Friday's jobs report, which
is expected to show the economy added 5,500 jobs in February,
nearly offsetting the loss seen the month before. That is
expected to keep the unemployment rate at a two-year high of 7.2
percent.
On Tuesday, LATAM Airlines will report fourth-quarter and
full-year earnings. Economic woes in Brazil have weighed heavily
on Latin America's largest airline, not to mention currency
headwinds and now Zika, which is likely to affect long haul, the
one part of its business that was doing well. The company is
seen making a net loss for the third year in a row.
Mexico's inflation data for February will be available on
Wednesday. On Friday, industrial production data will be
released for January after the gauge fell for a third straight
month in December. On Thursday and Friday, finance minister Luis
Videgaray and central bank governor Agustin Carstens will
participate in the annual banking conference in Acapulco.
ON MONDAY, MARCH 7
Ahead of the Fed's next policy meeting, Federal Reserve Vice
Chair Stanley Fischer speaks before the National Association for
Business Economics Annual Economic Policy Conference in
Washington. Fischer has been a key voice trying to keep the door
open for rate hikes, arguing that the various headwinds should
prove temporary. He'll have a chance to refresh his views about
the risks facing the United States. (1230/1730) Federal Reserve
Board Governor Lael Brainard speaks before the Institute of
International Bankers conference in Washington. Brainard's
latest comments could give some perspective on whether she
thinks conditions in the United States are proving durable
enough for the Fed's liftoff to continue. (1200/1700) U.S.
Treasury Under Secretary Nathan Sheets will also be speaking at
the event. (1400/1900)
Urban Outfitters Inc (NASDAQ:URBN) is expected to report fourth-quarter profit
slightly above analysts' estimates, according to Thomson Reuters
StarMine. Strong demand for the apparel retailer's
bohemian-inspired Free People brand has lured shoppers to its
stores in the holiday season. However, an unusually warm winter,
which hurt sales of cold weather apparel like coats and jackets,
could affect the company's Anthropologie and namesake brands.
Investors will look for a commentary on store traffic and sales
for the first quarter.
After a slew of poorer-than-expected data for January,
economists are predicting the first monthly economic retraction
in Chile in January since 2009. The IMACEC economic activity
index, encompassing about 90 percent of the economy tallied in
gross domestic product figures, likely fell 0.1 percent in
January from the same month a year earlier. Separately, Mexico's
national statistics institute releases consumer confidence data
for February.
LIVECHAT - SIGNS THE U.S. ECONOMY IS STALLING with TrimTabs
Investment CEO David Santschi
U.S. Treasury income and employment taxes from the paychecks of
141 million U.S. workers are slowing, a worrisome and reliable
indicator that may signal U.S. recession, according to David
Santschi's TrimTabs Investment Research data and distinctive
methodology. (1200/1700) To join the Global Markets Forum, click
here By Nayyar Rasheed in Bengaluru; Editing by Maju
Samuel)