Welcome to the year 2020. What a roller coaster this has been already. Are inflation fears warranted this week? That is one question investors are asking. There are sseveral reports in the busy economic calendar this week. The Consumer Price Index CPI and the Producer Price Index PPI among others report this week.
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Nov 2019 CPI was a change of +.03%
The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. Nov 2019 was unchanged.
Both indexes are used by the Fed, among other points of data, to make the decision if inflation is being kept in check. Currently the Fed has mandated that 2% inflation is normal and will adjust rates and/or money supply to obtain that.
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Global Spotlight
The U.S.-Iran Confrontation Escalates. The United States and Iran are coming off one of the tensest weeks in their history. On Jan. 8, Iran responded to the United States’ targeted killing of Iranian Gen. Qassem Soleimani on Jan. 2 by launching ballistic missiles at U.S. military targets in Iraq.
Japan’s Leader to Visit the Middle East. Japanese Prime Minister Shinzo Abe will begin a five-day trip to Saudi Arabia, the United Arab Emirates and Oman on Jan. 11.
Brexit Bill Goes to the Lords. The British Parliament’s House of Lords will take up Prime Minister Boris Johnson’s Brexit withdrawal agreement next week after the House of Commons overwhelmingly approved the measure Jan. 9.
Turkish Foreign and Defense Ministers in Moscow. Turkish Foreign Minister Mevlut Cavusoglu and Defense Minister Hulusi Akar are expected to arrive in Moscow on Jan. 13, though not many details are known about who they will meet or what topics they will discuss.
Sahel Security Summit. French President Emmanuel Macron and his Group of Five (G5) Sahel counterparts will meet in Pau, France, on Jan. 13 to discuss the region’s degrading security situation.
Xi to Visit Myanmar. Chinese President Xi Jinping begins a two-day trip to Myanmar on Jan. 17 — the first by a Chinese president in 19 years — to reinforce China’s investment and support as Myanmar faces international criticism over its treatment of the country’s Rohingya Muslim minority.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- Fourth quarter earnings are expected to decrease 0.6% from 18Q4. Excluding the energy sector, the earnings growth estimate is 1.9%.
- Of the 19 companies in the S&P 500 that have reported earnings to date for 19Q4, 84.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 74%.
- 19Q4 revenue is expected to increase 4.2% from 18Q4. Excluding the energy sector, the growth estimate is 5.4%.
- 68.4% of companies have reported 19Q4 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 58%.
- For 19Q4, there have been 74 negative EPS preannouncements issued by S&P 500 corporations compared to 35 positive, which results in an N/P ratio of 2.1 for the S&P 500 Index.
- The forward four-quarter (20Q1 –20Q4) P/E ratio for the S&P 500 is 18.5.
- During the week of Jan. 13, 26 S&P 500 companies are expected to report quarterly earnings.
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