World Week Ahead: Focus on US earnings, retail sales, Fed speakers
By Margreet Dietz
April 16 (BusinessDesk) - Investors are gearing up for the latest earnings from US companies including Goldman Sachs and
Bank of America as well as a host of speeches by Federal Reserve officials and fresh reports on retail sales and
industrial production.
Morgan Stanley, Netflix, CSX, Johnson & Johnson, General Electric and Honeywell are also among US companies set to report their latest quarterly results this
week.
"We expect this earnings season to be another strong one, driven by solid global economic growth, robust manufacturing
activity, a weaker US dollar, and the benefits from the new tax law," LPL Financial Chief Investment Strategist John
Lynch said in a note on Friday.
For the group of FAANG stocks —Facebook, Amazon.com, Apple, Netflix and Google’s parent Alphabet, analysts expect
average first-quarter year-over-year earnings growth of 25.8 percent, about double the pace of gains in the fourth
quarter and the same period a year ago, according to Reuters.
“We feel good about three out of the five FAANGs—Amazon, Apple, Google,” Peter Tuz, president of Chase Investment
Counsel in Charlottesville, Virginia, told Reuters. His firm owns Facebook, Amazon, Apple and Google shares.
On Friday, the Dow Jones Industrial Average fell 0.5 percent, the Standard & Poor’s 500 Index slid 0.3 percent, and the Nasdaq Composite Index declined 0.5 percent. US Treasuries rose, sending
yields on the 10-year note two basis points lower to 2.82 percent.
For the week, however, the Dow climbed 1.8 percent, the S 500 rallied 2 percent, and the Nasdaq jumped 2.8 percent.
The latest US economic data scheduled for release include retail sales, Empire State manufacturing survey, business
inventories, and housing market index, due today; housing starts, and industrial production, due Tuesday; Fed's Beige
Book, due Wednesday; as well as weekly jobless claims, Philadelphia Fed business outlook survey, and leading indicators,
due Thursday.
"Undoubtedly, the Trump tax cuts are boosting companies’ bottom lines, Ed Yardeni, president at Yardeni Research, said
in a note on Thursday. "But the overall strength in the economy shouldn’t be underappreciated."
"Assuming a trade war will be averted, as we do, the good times are expected to continue for the remaining quarters of
2018," according to Yardeni.
Indeed, investors will eye this week’s speeches by a slew of Federal Reserve officials for signals they might step up
their pace of interest interest increases from their current guidance for another two this year on expectations of
positive economic momentum.
Fed policy makers set to speak include Raphael Bostic today, John Williams, Randal Quarles, Patrick Harker and Charles
Evans on Tuesday, Willam Dudley on Wednesday, as well as Loretta Mester on Thursday.
Investors will also keep eye on the spring meetings of the International Monetary Fund and the World Bank, starting in
Washington today, in particular for insight on the potential for a global shift to more protectionist trade policy
triggered by the Trump Administration.
In Europe, the Stoxx 600 Index ended Friday with a 0.1 percent gain from the previous day’s close.
Other economic data of note include inflation reports from the eurozone, Germany, and the UK as well as the latest gross
domestic product, industrial output and retail sales numbers from China and trade data from Japan.
(BusinessDesk)