Besides the upcoming FOMC meeting on May 2-3, and French & Italian politics - the decisive runoff round of the French election takes place this Sunday - this week's releases are dominated by US payrolls expected to come around 170k. The busy release calendar continues with Norges bank and RBA meetings as well as global manufacturing PMIs.
The market’s focus during the week of 5/1 will begin to shift away from the micro as the CQ1 earnings season winds down and back to the macro w/a slew of eco data and some central bank decisions scheduled (including the FOMC on Wed 5/3 and US jobs on Fri 5/5; also note that Yellen is scheduled to speak Fri after the jobs report at 1:30pmET). The eco data out this week could be crucial in helping to resolve the current debate around growth
In the US, the data calendar will be very busy this week, highlighted by Monday’s personal income and spending data (including the PCE Deflators) and Friday’s April employment data. We expect solid income, modest spending, and relatively soft deflators, continuing the theme of very tame inflation data that we have seen over the past quarter. On employment, we expect a solid rebound in payroll growth following last month’s weather-induced disappointment and the overall tone will be consistent with the notion that the labor market is at or near full employment. Specifically, we also expect that AHE will rise on trend and that the unemployment rate will be unchanged at 4.5%. Rounding out the calendar, Wall Street expects modest declines in the ISM indexes, though both will remain at solid outright levels, a bump in auto sales following the March swoon, and solid construction spending as well.. In addition, there are several scheduled speaking engagements by Fed officials this week.
FOMC decision preview – the Fed statement on Wed (there won’t be a supplemental or Yellen presser) is expected to be pretty innocuous. JPM believes the Committee’s goal will be to acknowledge the softer run of data while still keeping June on the table as a live meeting. The bank continues to expect the Fed to hike rates at the June meeting, but does not think the statement will send a strong signal of impending action. Look for the statement to say that economic growth slowed early in the year, but to add that it is in part due to transitory factors. The second paragraph of the statement will continue to note that risks are roughly balanced.
Earnings preview - this week is another fairly big one for earnings with 131 S&P 500 companies and 85 Stoxx 600 companies reporting. Amongst the big names are Apple (Tuesday), BP (Tuesday), Facebook (Wednesday) and Shell (Thursday). As Jim Reid notes, we’ll see if they can continue what has been a decent start to earnings season to date. Indeed the trend so far is one of the strongest on record. In the US we have had reports from about 60% of the S&P 500 and 81% have beat at the earnings line, coming in 6.7% above consensus. This compares to the historical beat of 73% of companies and a median beat of 3.4%. This is made even more impressive by the fact that consensus estimates were not downgraded in the month leading up to earnings season compared to a typical 1% downgrade. He notes also that the results so far point to 15% EPS growth in Q1 which is the fastest pace since 2011. Our European equity strategists note also that EPS growth of Stoxx 600 companies has accelerated to 23% with reported earnings being 13% above pre-season expectations.
Breakdown of key events by day from Deutsche Bank:
On Monday, with it being a public holiday in the UK, Germany and France amongst other countries today, the main focus will be on the US session where there are a number of important releases include the PCE core and deflator readings and personal income and spending reports for March, as well as the ISM manufacturing reading for April and construction spending in March.
Tuesday kicks off in Asia with the Japan services and composite April PMIs and Caixin manufacturing PMI in China. Over in Europe all eyes will be on the final April manufacturing PMIs as well as a first look at the data for the periphery and UK. The Euro area unemployment rate will also be released. In the US tomorrow the only data due out is vehicle sales in April.
Kicking things off on Wednesday will be Germany where the April unemployment numbers are due to be released. Shortly after that we’ll get Euro area PPI for March and then the advanced Q1 GDP report for the Euro area. In the US on Wednesday we’ll get the ADP employment change report in April and the final April PMIs and ISM non-manufacturing reading. Also on Wednesday all eyes then turn over to the Fed meeting.
In Asia on Thursday the early data is out of China with the remaining April Caixin PMIs. In Europe we’ll also get the remaining April services and composite PMIs as well as Euro area retail sales in March and UK money and credit aggregates data. In the US on Thursday the data includes initial jobless claims, Q1 nonfarm productivity and unit labour costs, March trade balance, March factory orders and the final revisions to March durable and capital goods orders.
With little of note in Europe on Friday the main focus will be on the US where we’ll get the April employment report including nonfarm payrolls.
Away from the data, this week’s Fedspeak is reserved for Friday when we’ll hear separately from Fischer, Williams and Yellen, as well as a panel debate with Rosengren, Evans and Bullard. Over at the ECB this week we are due to hear from Nouy and Nowotny on Tuesday and Lautenschlaeger, Praet, Draghi and Mersch on Thursday. At the BoJ we are due to hear from Kuroda on Tuesday, as well as receiving the minutes from the BoJ meeting last month. Other important events this week include a Fox interview with US Treasury Secretary Steven Mnuchin today, a meeting between Germany’s Merkel and Russia’s Putin on Tuesday, Wednesday’s live televised debate between French presidential candidates Macron and Le Pen, Wednesday’s meeting between President Trump and Palestinian Authority President Abbas and UK local elections on Thursday.
Finally, expect earnings to also be a big focus for markets this week with 131 S&P 500 companies reporting and 85 Stoxx 600 companies reporting. Amongst those reporting are Apple, BP, BNP Paribas, Facebook, Merck, Tesla, Time Warner, Pfizer, HSBC, BMW, Shell and VW.
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Another weekly calendar, this time from JPM:
- Calendar for Mon May 1 – the focus will be on the US Mar PCE at 8:30amET (this will be watched very closely after the very soft Mar CPI; the St is modeling core -0.1% M/M and +1.6% Y/Y), US Apr manufacturing ISM at 10amET (the St is modeling 56.5, down from 57.2 in Mar), Bernanke’s CNBC interview (he will co-host CNBC from 8-9amET), and earnings (CAH, DISH, GGP, L, PLT pre-open and AMD, CC, CYH, DNB, FLS, FMC, IDTI, SBAC, VNO after the close).
- Calendar for Tues May 2 – the focus will be on the Eurozone manufacturing PMI for Apr (4amET), US auto sales for Apr (JPMorgan is modeling US SAAR rebounding to ~17.1MM vs. Mar’s disappointing 16.5MM http://bit.ly/2oJ5i3i), some analyst meetings (RHT and SSNC), and earnings (ADM, AET, BP, CDK, CHTR, CMI, COH, COP, CVS, EMR, ETN, FIS, GWR, HCA, HLT, MA, MO, MOS, MRK, OZM, PFE, WDR, XYL pre-open and AAPL, AKAM, ALL, CSOD, DVA, DVN, FEYE, FSLR, FTR, GILD, GDDY, HBI, HUBS, IPHI, MDLZ, MTCH, NFX, OCLR, PAYC, PRO, QLYS, TEX, TWLO, VIAV, WU after the close).
- Calendar for Wed May 3 – the focus will be on the Eurozone Q1 GDP numbers (5amET), the US non-manufacturing ISM (the St is modeling 56, up from 55.2 in Mar), the FOMC decision (2pmET), the French presidential debate between Macron and Le Pen, and earnings (ADP, BG, BNP, CDW, CLX, CVLT, DLPH, EL, FLOW, GRMN, HUM, ICE, MCK, NYT, Q, RAI, S, SPGI, SO, SPR, TAP, TWX, VSH, WCG, YUM pre-open and AIG, ALB, ALL, ANSS, ARRS, CAKE, CAR, CATM, CF, CRUS, CTL, DDD, FB, FIT, IAC, KHC, LNC, MET, MUR, NXPI, PRU, QRVO, RIG, SQ, TIVO, TSLA, TTMI, WMB after the close).
- Calendar for Thurs May 4 – the focus will be on the Eurozone services PMI for Apr, US productivity numbers for Q1 (the St is modeling +0.00% vs. +1.3% in Q4), the US trade balance for Mar at 8:30amET, US factory orders/durable goods for Mar at 10amET, Trump’s speech aboard the Intrepid in NYC, and earnings (ABC, Adidas, AMCX, Anheuser Bush, APA, ARW, BLL, BMW, CCOI, CHD, CHH, CHK, COMM, D, DBD, DNKN, FLR, H, K, LITE, MSCI, MSG, OXY, REGN, RLGY, Siemens, SNI, SocGen, TPX, VIA’b, WIN, WLTW, ZTS pre-open and AAOI, ABCO, AGO, ATVI, CBS, HLF, IMPV, INFI, LC, MOH, MRO, MSI, MULE, OLED, SHAK, WEB, ZEN, ZG after the close).
- Calendar for Fri May 5 – the focus will be on US jobs report for Apr at 8:30amET, Fed speakers (including Yellen speaking at Brown University at 1:30pmET), and earnings (CI, CTSH, MCO, MSGN, NPTN pre-open). US jobs – it’s been several months since a monthly jobs report created a lot of controversy and the Apr release will likely remain innocuous (even the Mar 98K “miss” really wasn’t “weak” although another sub-100K print could add somewhat to recent growth anxieties). For Apr the St is modeling total adds of 190K (up from 98K in Mar) w/an UR of 4.6% (up small from 4.5%) and wages +0.3% M/M and
- Calendar for Sun May 7 – the French election run-off will take place this day and Macron is expected to win (by ~20 points according to recent polls).
Global breakdown of key events courtesy of Bank of America:
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Full breakdown of main US events together with sellside estimates from Goldman
Monday, May 1
- 8:30 AM Personal income, March (GS +0.2%, consensus +0.3%, last +0.4%); Personal spending, March (GS -0.2%, consensus +0.2%, last +0.1%); PCE price index, March (GS -0.17%, consensus -0.2%, last +0.1%); Core PCE price index, March (GS -0.07%, consensus -0.1%, last +0.2%); PCE price index (yoy), March (GS +1.9%, consensus +1.9%, last +2.1%); Core PCE price index (yoy), March (GS +1.6%, consensus +1.6%, last +1.8%): Based on the Q1 GDP report and the January and February personal income and spending reports, we estimate that the core PCE price index fell 0.07% month-over-month in March and rose 1.61% from a year ago. Additionally, we expect that the headline PCE price index decreased 0.17% and rose 1.87% from a year earlier. We estimate a 0.2% increase in March personal income and a 0.2% drop in March personal spending (nominal, mom sa).
- 09:45 AM Markit flash US manufacturing PMI, April final (consensus 52.8, last 52.8)
- 10:00 AM ISM manufacturing, April (GS 56.9, consensus 56.5, last 57.2): Regional manufacturing surveys were mostly softer in April, and we expect ISM manufacturing to decrease by 0.3pt to 56.9 in the April report. The Philly Fed (-10.8pt to +22.0), Empire State (-11.2pt to +5.2), Kansas City Fed (-13pt to +7), Richmond Fed (-2pt to +22), and Dallas Fed (-0.1pt to +16.8) manufacturing sector surveys all declined while the Chicago PMI strengthened. Our manufacturing survey tracker—which is scaled to the ISM index—decreased to 56.5 in April from 59.0 in March.
- 10:00 AM Construction spending, March (GS +0.5%, consensus +0.4%, last +0.8%): We expect construction spending to increase 0.5% in March, on top of its 0.8% increase in February, as favorable construction fundamentals likely more than offset the negative impact of unseasonably cold and snowy March weather.
Tuesday, May 2
- 05:00 PM Total vehicle sales, April (GS 16.9mn, consensus 17.2mn, last 16.5mn); Domestic vehicle sales, April (GS 13.2mn, consensus 13.4mn, last 13.0mn)
Wednesday, May 3
- 08:15 AM ADP employment report, March (GS +175k, consensus +180k, last +263k): We expect a 175k increase in ADP payroll employment in March, reflecting a drag from the softer headline payrolls growth in February utilized in the ADP model. However, we expect this impact will be largely offset by encouraging hiring trends and net strength in the financial and economic indicators also used in the model. The ADP report introduced methodological changes with the October release and now offers more details by sector. While we believe the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, we find that large ADP surprises vs. consensus forecasts are directionally correlated with nonfarm payroll surprises.
- 09:45 AM Markit Flash US services PMI, March final (consensus 52.5, last 52.5)
- 10:00 AM ISM non-manufacturing, April (GS 56.0, consensus 55.8, last 55.2): We expect the ISM non-manufacturing survey to increase 0.8pt to 56.0 in the April report. Regional non-manufacturing surveys were mixed in April but all continue to signal moderate expansion in service-sector business activity. The Philly Fed (-5.3pt to +30.1), New York Fed (-4.6pt to +4.9, SA by GS), and Dallas Fed (-4.2pt to +9.0) surveys all moved lower while the Richmond Fed (+13pt to +22) increased sharply. Overall, our non-manufacturing survey tracker edged up to 55.8 in April (vs. 55.4 in March). We also expect a boost from a favorable swing in the weather and rebounding stock prices.
- 2:00 PM FOMC statement, May 2-3 meeting: As discussed in our FOMC preview, we expect the committee to keep policy unchanged next week and see only limited changes to the statement. Similar to the March statement, we expect constructive comments on economic activity, as we think Fed officials will view the slowdown in reported growth last quarter as temporary in nature, with underlying momentum considerably stronger. We do expect a brief acknowledgement of the softer March core inflation data, but we believe most of the inflation and inflation outlook language will remain unchanged. Given the extent of the balance sheet discussion in the March FOMC minutes, we expect a minor change to the balance sheet paragraph, with an allusion to possible eventual reductions. Finally, we look for the balance of risk assessment and the characterization of current policy (“accommodative”) to remain unchanged.
Thursday, May 4
- 08:30 AM Trade balance, March (GS -$44.5bn, consensus -$44.5bn, last -$43.6bn): We estimate the trade deficit widened in March. The Advance Economic Indicators report last week showed a partial reversal of February’s narrowing in the goods trade deficit, and we forecast a similar widening in the broader trade balance in this week’s report, based on an assumption of an unchanged services balance.
- 08:30 AM Nonfarm productivity (qoq saar), Q1 preliminary (GS flat, consensus flat, last +1.3%); Unit labor costs, Q1 preliminary (GS +2.6%, consensus +2.7%, last +1.7%): We estimate non-farm productivity was unchanged in Q1, below the 0.75% trend achieved on average during this expansion. We expect unit labor costs – compensation per hour divided by output per hour – for Q1 to increase 2.6% (qoq saar), reflecting firming wage gains and the lack of productivity growth.
- 08:30 AM Initial jobless claims, week ended April 29 (GS 240k, consensus 250k, last 257k); Continuing jobless claims, week ended April 22 (consensus 1,990, last 1,988k): We estimate initial jobless claims fell 17k to 240k after rising 14k in the previous week. The largest increases in that week were in New York (+13k) and California (+2k), and we suspect that some of these increases reflected seasonal adjustment difficulties in the weeks surrounding Easter and related spring break holidays. Continuing claims – the number of persons receiving benefits through standard programs – have continued to trend down in recent months, suggestive of additional labor market improvement that we expect to continue.
- 10:00 AM Factory orders, March (GS +0.0%, consensus +0.4%, last +1.0%); Durable goods orders, March final (last +0.7%); Durable goods orders ex-transportation, March final (last -0.2%); Core capital goods orders, March final (last +0.2%); Core capital goods shipments, March final (last +0.4%): We expect factory orders were unchanged in March following a 1.0% increase in February. Last week’s durable goods report showed an encouraging pickup in core capital goods shipments, which rose 0.4% in March, adding to the upwardly revised February increase of 1.1%. However, orders growth was somewhat softer, featuring a 0.2% decline in durable goods orders ex-transportation.
Friday, May 5
- 8:30 AM Nonfarm payroll employment, April (GS +200k, consensus +190k, last +98k); Private payroll employment, April (GS +200k, consensus +190k, last +89k); Average hourly earnings (mom), April (GS +0.3%, consensus +0.3%, last +0.2%); Average hourly earnings (yoy), April (GS +2.7%, consensus +2.7%, last +2.7%); Unemployment rate, April (GS 4.5%, consensus 4.6%, last 4.5%): We estimate nonfarm payrolls increased 200k in April, a sharp acceleration from March’s +98k pace and above the three-month moving average of +178k. Our forecast reflects encouraging labor market fundamentals and a favorable swing in the weather, with minor offsets from the tail end of the federal hiring freeze and a telecom strike that continued into the survey week (a -2k impact). Labor market fundamentals remained encouraging on the whole, as March exhibited improvement in regional service sector employment surveys, a further decline in jobless claims, and an elevated labor market differential reported by the Conference Board. Continuing claims also fell sharply from survey week to survey week, dropping at their fastest pace in two years (-64k). While April is a month with minimal snow, we expect that month-on-month payrolls growth should benefit from the timing of Winter Storm Stella, which hit the Midwest and East Coast during the March survey week. We estimate the unemployment rate remained stable at 4.5%, based on our expectation that household employment will hold on to its sharp year-to-date gains. Finally, we expect average hourly earnings to increase 0.3% month over month and 2.7% year over year, reflecting the interaction of firming wage growth with positive calendar effects.
- 11:30 AM Fed Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Vice Chair Stanley Fischer will give a speech on “Monetary Policy Rules and Committees” at a conference hosted by the Hoover Institution at Stanford University. Audience Q&A is expected.
- 12:45 PM San Francisco Fed President Williams (FOMC non-voter) speaks: San Francisco Federal Reserve President John Williams will give the keynote speech at the Shadow Open Market Committee’s meeting in New York. Audience Q&A is expected.
- 01:30 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will give a speech at the “125 Years of Women at Brown” event at Brown University in Providence, Rhode Island. Q&A is not expected.
- 01:30 PM Fed Presidents Bullard, Evans, and Rosengren speak: St. Louis Fed President Bullard (FOMC non-voter), Chicago Fed President Evans (FOMC voter), and Boston Fed President Rosengren (FOMC non-voter) will participate in a joint panel at the Hoover Institution’s Monetary Policy Conference held at Stanford University in California. Audience and media Q&A is expected.
- 03:00 PM Consumer credit, March (consensus +$14.0bn, last +$15.2bn)
Source: GS, BofA, DB, and Jefferies