175 S&P 500 companies report this week, including Alphabet, Microsoft, Meta, Apple, and Amazon. The Fed is expected to raise rates 75 basis points, with markets pricing a 78.7% chance. Oil has slipped below $94 per barrel as the euro-area faces 8.7% inflation and Germany's business sentiment hits a two-year low.
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Okay, very good morning. Welcome to a brand new week. Before I begin, whether you're new to the channel or you watch more frequently, don't forget to like and subscribe to the channel. Be much appreciated. But look, let's get straight into it because a big week ahead. We've got a whole ton of earnings coming out from all of the mega-cap tech names. We've also got the FOMC meeting as well happening this week. So let's start with earnings. There are in fact 175 S&P 500 companies reporting this week, by far the busiest one that we'll see throughout the earnings season. And almost half, 12 of the Dow 30 components, are also reporting. As you can see here, some of the highlights include the likes of Alphabet and Microsoft aftermarket on Tuesday. We also get Boeing pre-market Wednesday with Meta aftermarket. And then Thursday, a big day because we get the likes of Apple and Amazon. And then if we just zoom out a little bit, we've got Exxon and Chevron to finish off the week on a Friday. So a super busy day ahead on that front and something I'll be going over in much more detail. If you want to follow us on LinkedIn, on other social channels, we'll be covering all of those in a lot more detail when they come out. Otherwise, the other things I'm looking at this morning are WTI crude trading a little bit lower. We've actually moved below a $94 handle going into the beginning of the week here in mainland Europe. And it comes, as you can see here, after capping a third weekly decline on Friday. What we saw last week, in fact, that's the longest streak of losses so far this year. Again, having been predominantly elevated by lots of other things, but namely that of the energy crisis. We're now reversing course of that, even though the fighting there, particularly in the eastern side of Ukraine, continues to rage on. Concerns predominantly outweighing that, though, are on the expectation of an economic slowdown overshadowing the tightness of the physical crude market. On the supply side as well, something to be aware of is that Libya updated at the weekend. Their National Oil Corporation, otherwise known as NOC, aims to bring back production of around 1— or bring back to production to 1.2 million barrels a day in the next 2 weeks as well. The other thing that potentially as well is feeding into this a little bit has been a little bit more of a positive development on the Chinese COVID situation, which we continue to watch with great interest. COVID-19 cases fell to their lowest in a week, even as officials in financial hub Shanghai and Macau, they continue to ramp up testing at this point in time. But moving forward into what are the main things we're looking out for this week, and undoubtedly the FOMC is really has top billing. As you can see here, the market implied rates would indicate around a 78.7% probability of a 75 basis point rate hike from the FOMC on Wednesday night. As they try to really arrest persistent inflation. That would take then the interest rate, the federal funds rate, to a new target range of 2.25% to 2.5%. Talk of a, of a Bank of Canada style 100 basis points, which was briefly priced in after we had that red-hot US inflation data print about 2 weeks ago, has dissipated. We've had a softer batch of recent economic activity data and indications or indicators have come out a little bit on the weaker side, and that's tempered those expectations a little bit in combination as well as some of the most hawkish members of the Fed, namely Bullard and Waller, have come out and really talked down 100 and more committed to 75 at this point in time. So hence the readjustment that we've seen. In terms of other things we're looking out for, US GDP also comes out this week and of course will be closely watched, as I mentioned, which is kind of weighing on concerns for oil markets. Is this inevitability around the potential for a US but more global level recession looming on the horizon and the impact that that will have on demand. And in terms of US GDP, on Thursday it's forecast to have risen annualized 0.5% during the April-June period, according to a survey from Bloomberg speaking to lots of different economists across the street. While inventories probably weighed heavily on the second quarter results, the demand picture also darkened as consumer spending, business investment, and housing may have all taken a bit of a step back. And of course, this is as that cost of living crisis really rages on. That's impacting, as we've seen from the likes of soft sentiment-based surveys like University of Michigan Confidence, has seen quite an aggressive fall in the state of the US consumer psyche. Other things to look out for in the US this week, we've got consumer confidence data happening on Tuesday, Durable Goods Wednesday, your weekly jobs claims as usual on a Thursday alongside core PCE pricing, next personal income spending, and Chicago PMI all happening on Friday. So pretty busy week really if you look at that calendar. Of all the economic data points. You got the FOMC with their expected 75 basis point hike as well, coupled in then with 175 S&P companies reporting with all the mega-cap tech names. Yeah, it's going to be quite a busy one for sure. Looking over in mainland Europe, one of the main things we've got, we've got German IFO, that's business sentiment, out later on this morning. It's expected by economists to touch a fresh 2-year low. Meanwhile, euro-area economic confidence on Thursday is anticipated to drop to its lowest since Feb. Of 2021, so really in the doldrums of where we were in the most onerous lockdowns that we had across Europe. Eurozone inflation is expected on Friday to accelerate to 8.7%. We're looking at euro area inflation rate year on year here on this chart. You can see, and hence there are the move that we had from the European Central Bank of last week who hiked rates of course for the first time in 11 years by a margin of 50 basis points, the largest then incline we've had since the year 2000, as they've chiefly got in mind trying trying to tackle this inflation issue. And we have actually seen one ECB member, Kazakhs, this morning who said that a large interest rate hike may not be over and too weak euro is a problem. The hike in September needs to be quite significant and should be open to larger hikes. And actually euro got a little bit of a bump this morning on the back of that comment, albeit from a lesser-known ECB council member. The other thing we've got from Europe to look out for is going to be that of here, euro area GDP. That's also coming out at the back end of the week. It's out to forecast and show a minimum, a bare minimum level of growth in the second quarter. This comes amid as well euro area economic confidence data we're going to get on Thursday, anticipated to as well drop quite sharply. The inflation reading, as I said, in combination with GDP. That's all going to be coming out on, on Friday, will be key ones to watch for the eurozone. And then finally, over in China, something that's probably not so regularly on your radar but worth just being aware of is the China Politburo. These are really the decision makers over top-level policy in China. They're likely to meet at some time later in the week, still yet to be confirmed the exact details. With the property market tanking, zero-COVID policy testing is, is very much in full flow at the moment, given a lot of the fresh upticks in cases, albeit slight tempering we've had in the last week. And then the global growth outlook dimming, a lot of people watching out for these talks or any signals of more monetary fiscal stimulus on their way, whether officials acknowledge or not that their 2022 growth target is unachievable. And this comes after that very minor growth print that we had out of China which continues to go through quite a steep deceleration of growth at this point in time. That is it. So hopefully that was useful. Again, don't forget to like and subscribe to the channel if you're new here. Really appreciate that. Otherwise, have yourself a good week ahead. Take care.
