Tags: earnings | fed | gdp | investors

Fed Report, GDP, Trade Data Add to Next Week's Earnings Storm

 a money avalanche tsunami tidal wave

Mike_kiev | Dreamstime.com

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Friday, 19 October 2018 04:31 PM Current | Bio | Archive

If you thought either of the last two weeks were busy or volatile for the stock market, our advice is hold onto your hats next week because it looks to be the busiest week we’ve had in months.

We say this because not only will there be a hefty dose of economic data coming at us, but more than 700 earnings reports on deck as well. That’s a sizable jump from just under 200 such reports this week. Such a tidal wave also is likely to keep the market on its toes as investors digest that frenzy of activity and revise their expectations for both the current quarter as well as other companies that have yet to issue their quarterly results.

To put some perspective around it, next Thursday alone more than 300 companies will be reporting. Yes, you read that right.

On the economic front next week, we have several pieces of housing data to be had following the weaker than expected September housing starts and existing home sales reports. These include the August reading for the FHFA Housing Price Index and September new home sales. Given the inching up of interest rates and the drop off in mortgage originations, odds are slim we will see a surprise to the upside from new home sales, due in part to the continued upward trend in average home prices.

We’ll also get the durable-goods report for September, and as usual we will cut through some of the items, such as defense and transportation orders to zero in on core capital goods orders. As reminder, those are a barometer of business investment spending. With the passage of the $717 billion defense bill in mid-August, we would expect to see the spigot begin to open and translate into improved defense orders in September with more to be had in October and November.

Not that those are small potatoes but the three economic reports that investors will focus on next will be the Federal Reserve’s Beige Book, which many will be eyeing for signs of inflation and the speed of the economy; the first look at September quarter GDP and the September data for international trade.

As we close out this week, the Atlanta Fed’s GDP Now reading for the September quarter sits at 3.9% while the New York Fed Nowcast stands at 2.13% for the same period.

While many will be watching the headline figure, we will be digging into the internals of the report to determine not only what drove the quarter’s strength but to ascertain how sustainable that growth is.

For example, if much of the quarter’s growth was due to inventory building ahead of tariff implementation between the U.S.-China, that’s not something that will be a factor for growth in the current quarter. Currently the New York Fed Nowcast model is calling for a sequential uptick in GDP to 2.43% for the current quarter.

As we mentioned above, we will be drinking from the earnings fire hose this week, and as tends to be the case the velocity of reports will build throughout the week, peak on Thursday and finish up on Friday.

For the week in full, next week will see 158 S&P 500 companies and 10 Dow 30 components report, which means exiting the week we will have a much better feel for high the likelihood is for the expected 22% year over year EPS growth the S&P 500 group of companies is expected to deliver in the current quarter.

Out of those hundreds of stocks to report, here are the ones that we’ll be eyeing closely next week:

  • Amazon (AMZN)
  • Altria (MO)
  • Alphabet/Google (GOOGL)
  • United Parcel Service (UPS)
  • Chipotle Mexican Grill (CMG)
  • Caterpillar (CAT)
  • McDonald’s (MCD)
  • 3M (MMM)
  • Kimberly Clark (KMB)
  • Verizon (VZ)
  • AT&T (T)
  • Visa (V)
  • Microsoft (MSFT)
  • Ford (F)

Christopher (Chris) Versace is the Chief Investment Officer at Tematica Research, editor of the newsletter Tematica Investing, co-host of the Cocktail Investing Podcast and is a featured columnist to The Street.com as well as a contributor to Business Insider and Forbes.com.

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The three economic reports that investors will focus on next will be the Federal Reserve’s Beige Book, which many will be eyeing for signs of inflation and the speed of the economy; the first look at September quarter GDP and the September data for international trade.
earnings, fed, gdp, investors
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2018-31-19
Friday, 19 October 2018 04:31 PM
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