This is the last full week before the 4th of July holiday when we will see a significant drop in volumes with lots of traders (and traders controlling the algos) on vacation. This week is supposed to be quiet but that can always change with a single tweet. On the economic front, this week we have Consumer Confidence, and US GDP. Traders will also be closing the 2Q at the end of the week.
GDP Final Release: On Thursday (6/28), we get our third and final release of US GDP for the 1st quarter. We get 3 releases, Advance, Preliminary and Final. The first release is the most impactful. However, if a line item were to surprise in the Final reading, the markets can react accordingly. The 2nd release had the US economy growing at 2.2%, down from 2.3% in the 1st reading. If this reading were to be even higher, we can expect to see equities go higher. If the report comes in substantially weaker, expect equities to fall.
Bank of England Stress Tests: Bank of England Governor Mark Carney is expected to announce the results of Bank Stress Tests. If the banks pass with flying colors, we will see equities go higher fueled by the rise in bank stocks. British Sterling would likely go higher. If individual banks were to fail, we would like see their stock tank.
Consumer Confidence: More soft data which seems to be down from previous month’s readings. On Tuesday (6/26) Consumer Confidence is released. Investors will be looking to see how much of an effect the rise in oil prices has affecting consumer’s willingness to spend. A scale back in this reading could see stocks slide.
And the Dow Dow Dow went Down Down Down: With potential trade worries, the Dow has finished down 8 of the last 9 days. Unless we see olive branches extended from the EU or China, we will continue to see the broader markets pull back. Any new announcements of potential tariffs will help sink the markets even further. Last Friday, the Dow avoided its first 9 day losing streak in 40 years.
More Tariffs: Last Friday, President Trump threatened European automakers with a 20% tariff if the EU does not rescind the tariffs they put on different US products such as Levi Jeans, Kentucky Bourbon and Harley Davidsons. From the Tweet (yes, Tweet, cause that is how a US President communicates today), European autos went down on the news. Investors will be listening to the latest tariff threats to see which industry could get hit next.