Besides the continuation of earnings, investors will turn their attention to Fed speakers as we have a slow economic week ahead. On the economic front, we have CPI and PPI readings.
Fed Members Speak: This week, we have 4 FOMC members scheduled to give speeches across the country. These are their first speeches since the latest Fed Meeting and July’s Unemployment Rate figures. Investors will continue to listen for clues as to the timing of the unwinding of the Fed’s balance sheet. Any additional hints or potential dovish comments could send the broader markets higher.
Earnings: Earnings intensity continues to go downhill as we only have 32 S&P 500 companies scheduled to report this week. Traders will continue to see individual stocks have huge price swings if a company’s earnings outpaces or fall short of what the street expected. According to Thomson Reuters I/B/E/S, we have now seen 84% of S&P 500 companies report 2nd quarter earnings so far. Of them, 69% reported revenue above expectations while 73% have reported earnings above expectations. What’s surprising of these figures is the revenue being so high. The past 4 quarters have only seen 56% of S&P 500 companies beat revenues estimate. This will be the highest % for a quarter since Q2 2011.
Wildcard Trump: After the news broke on Thursday afternoon (8/3) of Mueller widening the probe by convening a grand jury, the broader markets fell on the news. Investors will be waiting for the latest Trump tweet or update on Muller’s investigation, which could adversely affect the markets. Trump’s wildcard play have the potential to rattle the very low volatile markets at any time.
DAWG Days of Summer: Summer is traditionally the lowest volume trading month of the year. Traders are on vacation so nobody is around to let the algos go wild. Because of the low volume, stocks have the opportunity to have outsized gains or loses if they have little liquidity (actual people to trade with).Investors may try to capitalize on these situations but it will be on an individual basis and tough to predict until it actually happens.
Reserve Bank of New Zealand: On Wednesday, (8/9) New Zealand has their version of England’s “Super Thursday” by publishing their policy statement, Inflation statement, Official Cash Rate and Press Conference. For the country of 4M Kiwis, New Zealand will give us their latest ratio of sheep to people and consumer consumption of Tui beers. Additionally, the higher the ratio of sheep to people, then fewer farmers are converting their farms to cows to sell milk to China, signaling a slowdown in China.
Mountain Day: Japanese Banks and markets will be closed Thursday (8/11) for Mountain Day. The day off only started last year and the holiday is a chance to provide people (I’m not making this up) to get familiar with mountains. Waiting for the US’s first Mountain Day where I actually get off.