This week in the U.S. economy presents a pivotal series of economic indicators that will offer deep insights into inflation, consumer behavior, and the job market. With the Federal Reserve’s cautious stance on interest rates, the upcoming CPI and PPI data will be critical in shaping expectations around inflation. Retail sales data will provide a window into consumer spending resilience, while jobless claims and manufacturing indexes will highlight the labor market and industrial sector’s health. Investors and traders will be closely monitoring these releases to gauge the economy’s direction in the face of prevailing uncertainties.
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The Hot Zones this Week
Each week there are zones where trading can get wild. I call these the hot zones.
This week is packed with key economic indicators that investors and traders should keep an eye on. Starting on Monday, the Monthly Budget Statement will be reviewed, offering insights into government finances. Tuesday brings a slew of data including the Consumer Price Index (CPI) for both overall and excluding food and energy, providing a clear picture of inflationary pressures. The same day also features Retail Sales data, shedding light on consumer spending habits. Thursday focuses on job market health with Initial Jobless Claims and manufacturing activity through the Empire Manufacturing Index. The week caps off on Friday with a diverse set of data including Housing Starts, Building Permits, and the Producer Price Index (PPI), offering a comprehensive view of the housing market and production costs.
Macro Market
Federal Reserve: The report suggests a cautious approach from the Federal Reserve, indicating that rate cuts are anticipated to begin in June. The emphasis is on gaining “greater confidence” before adjusting policy rates, suggesting a careful monitoring of economic indicators before making decisions.
Inflation: Inflation is described as moving in the right direction but remaining sticky, particularly in core services excluding housing. The expectation is for a gradual decline, with core PCE inflation forecasted to be slightly above the target by the end of the year.
GDP Growth: The expectation for GDP growth is cautiously optimistic, projecting a soft landing for the U.S. economy. Growth is expected to moderate but remain positive, indicating resilience in the face of slowing momentum.
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Week’s Numbers
Review Last week’s numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 23Q4 Y/Y earnings are expected to be 9.0%. Excluding the energy sector, the Y/Y earnings estimate is 12.5%.
- Of the 332 companies in the S&P 500 that have reported earnings to date for 23Q4, 80.7% have reported earnings above analyst estimates. This compares to a long-term average of 66.6% and prior four quarter average of 76.4%.
- During the week of February 12, 45 S&P 500 companies are expected to report quarterly earnings.
Global Spotlight
Indonesia Elections On February 14, Indonesia’s general elections will occur, with the presidency and all legislative seats up for grabs. Defense Minister Subianto Prabowo, endorsed by outgoing President Joko Widodo and running with Widodo’s son, is a strong candidate. A possible runoff is scheduled for June if no clear winner emerges. Policy continuity is expected with either Subianto or Pranowo, focusing on industrial and electric vehicle development and potentially moving the capital to Borneo, while an Anies victory might alter these directions.
US-Iraq Military Talks The US and Iraq will resume discussions on February 11 regarding the US military presence, vital for counterterrorism efforts. Following a US strike, Iraqi parliamentarians have pushed for the removal of foreign forces. These talks, delayed by a recent incident, are crucial for both nations’ strategic interests and will likely extend over months.
US-Israel Tensions US-Israel relations are tense as Israel plans an operation in Rafah, Gaza, raising concerns about civilian casualties and political fallout in the US. The operation’s timing is sensitive, considering humanitarian impacts and regional dynamics, including potential refugee movements to Egypt.
US Moon Mission A private US space company, in collaboration with SpaceX, aims for a lunar landing on February 14, targeting the strategic lunar south pole. This mission follows a previous failure and aims to precede NASA’s Artemis missions, highlighting the importance of private sector involvement in lunar exploration.
Stratfor.com
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