Top Three Things to Watch this Week

Powell Town Hall and Fed Minutes

We just got through a slew of economic data and the macro action is not slowing down this week. On Tuesday at 12:30 pm CT, Fed Chair, Jay Powell, will host a virtual teacher town hall where educators and students from around the country will participate in a Q&A. In the Fed's commitment to maximum employment with a pulse on the real economy, markets are patiently waiting for any indication on tapering. However, as Bill Baruch has noted on the Morning Express, it is not about whether the taper will happen but more so about the extent to which the Fed is going to cut the monetary support pie.

Will the event bring a resolution to the taper chatter? Most certainly not. However, due to seasonal hiring distortions in the education sector as indicated during the last NFP report, Jay Powell's comments on the state of the jobs market will be of interest to the macro landscape.

Markets will stay busy with the release of FOMC Minutes on Wednesday at 1:00 pm CT. Ahead of Jackson Hole at the end of next week, traders will get a sense of the policy makers' state of mind. Please refer to our Top Three Things Fed in Review section from August 1 for the Minutes' benchmark in terms of the Fed's language; it is relative!



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Retail Sales

Retail sales numbers are due at 7:30 am CT on Tuesday. After weak consumer sentiment, we are aware but not worried about the health of the largest economic driver; we expect retail sales to stay on solid footing as restaurant reservations, TSA numbers, and support from monetary and fiscal factors have remained stable. Markets expect a -0.2% monthly deceleration after +0.6% last month. We will also monitor the inventories/sales ratio as the economy is looking at port congestions across Asia, chip shortages, and labor constraints as inflationary drivers.


We are also looking at a range of economic indicators out of China tonight:


Food for Thought

One article we wanted to share with you talks about the state of affairs amongst Wall Street analysts. After 87% of S&P 500 companies reported above-consensus EPS and revenues, 56% of all recommendations on S&P 500 enterprises are buy-ratings, the highest since 2002.

Wall Street Is the Most Bullish on Stocks in Almost Two Decades

The love for stocks is not isolated to U.S. equities and we see positive sentiment spread across Europe and Asia as well. Will the forward rate of change numbers be able to stay in line or top expectations from the street in the face of tougher comps going forward?


On the back of strong CPI and PPI numbers, rates did not follow through to the upside. Are markets thinking about inflation in transitory terms?

Different instrument, same story. The dollar reversed course above 93 after strong and persistent inflation figures across the board.


Earnings

Sea Limited ahead of the bell on Tuesday:

  • Consensus: EPS est. ($0.56); Revenue est. $1.94 bn

  • Digital Entertainment, E-commerce, Digital Financial Services

Nvidia after the bell on Wednesday:

  • Consensuses: est. $1.01 EPS; Revenue est. $6.31bn

  • Chip shortages, the Metaverse, and AI in a more digital world

John Deere ahead of the bell on Friday:

  • Consensus: EPS est. $4.49; Revenue est. $10.27bn

  • Strong grain prices as a catalyst

  • Potential supply chain constraints similar to the automakers

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