Jackson Hole annual symposium – Changing market structure and implications for monetary policy
With the Federal Reserve the only central bank on an aggressive tightening cycle the rise in the US dollar is likely to pose significant challenges for US policymakers on the coming months. With this being Jerome Powell’s first symposium as Federal Reserve chief markets will be looking for clues as to whether the recent currency crisis in emerging markets, and notably Turkey, is causing anxiety amongst US policymakers, at a time when they want to continue to normalise rates further.
Fed minutes (Jul) – 22/08
This weeks Fed minutes aren’t expected to be too instructive when it comes to expectations about how US policymakers view the US economy. A September rate rise still seems a done deal given that US policymakers upgraded their outlook for the US economy earlier this month. With GDP forecasts already towards the higher end of forecasts markets will be looking for any evidence that policymakers are becoming uncomfortable with rising inflation expectations.
ECB minutes (Jul) – 23/08
This week’s minutes of the recent ECB governing council is likely to shed some light on how deep any divisions were on when markets could expect to see a rate rise next year. There had been a lot of speculation on what Draghi meant when he stated that interest rates would stay low “through the summer” with various interpretations as to whether we might get a rate rise at the beginning of Q3, or more towards the end of the quarter. This week’s minutes could give us an indication as to how contentious this was as well as whether there were any concerns about the lack of pickup in the wider economy after the slowdown in Q1.
German and France flash PMI’s – 23/08
Recent PMI data from France and Germany has been a bit of a mixed bag, with French data showing little signs of a rebound in economic activity after a poor Q2 performance. Widespread industrial action, across the whole of France appears to have caused significant economic disruption with services in particular showing the biggest evidence of a slowdown. July’s numbers were also weak and today’s August numbers could also disappoint. German data has been slightly more resilient with Q2 showing a strong rebound despite softer PMI readings.
Persimmon (LON:PSN) – H1 – 21/08
At the end of the last financial year Persimmon saw profits rise by 25% prompting a firestorm of criticism over bumper pay-outs to senior management. The rise in profits was helped by strong demand for new homes, however the slowdown in the UK housing market in recent months has started to weigh on the company’s share price.
This slowdown could well impact on ongoing demand as buyers hold back in the wake of falling prices, so the company’s guidance is likely to be important against a backdrop of slowing house prices, even if most of the slowdown is in London and the South East where Persimmon has less exposure.
Target Q2 – 22/08
The US retail sector has been through a significant adjustment phase in recent years, with the growth of on line shopping and Amazon (NASDAQ:AMZN) causing significant declines in footfall amongst big box, and out of town mall retailers. It does appear that US consumers are slowly starting to open their wallets again and Wal-Mart’s bumper results last week showed that the sector can still do well despite changing consumer habits. This week’s update from Target is likely to be crucial in terms of its on-line offering, and its grocery business given the heavy investment in this area, which saw its Q1 numbers miss expectations. At that update management reassured that its full year guidance would still be met, despite ongoing challenges from lower margins.
HP (NYSE:HPQ) Q3 – 23/08
At its most recent trading update HP managed to post decent revenues of $14bn, helped by decent sales of notebooks and desktops, with sales and average selling prices also higher. Its printer division also did well helped by the acquisition of Samsung’s printer unit. This week’s Q3 update is expected to paint a similar picture, after the company raised its guidance in May.
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