Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Big Bank Reports Hang Over Trading: Global Week Ahead

Equities started Global Week Ahead trading with a cautious, albeit positive tone.

Trading floors in all regions of the world must be busy, preparing for the U.S. Q1 earnings season. This should be the fourth quarter in a row for S&P 500 earnings declines.

According to S&P Global Market Intelligence, analysts expect S&P 500 earnings to fall -8.1% in Q1, weighed down by a -105.3% decline from the energy sector, gratis weak oil prices. At Zacks, we think Q1 EPS data shows total S&P 500 earnings down -11.1% on -2.3% lower revenues.

Keep your thought wheels turning on this: With a turn up in global Energy prices in hand, is the U.S. earnings recession bottom in?

Hanging above the well-understood U.S. Energy sector earnings debacle, headline-grabbing EPS news this week likely comes from the biggest U.S. banks.

A weak rate environment and volatile Q1 risks are about to deliver a weak set of quarterly Big Bank reports.
  • On Wednesday, JP Morgan (JPM) reports before the market opens.
  • On Thursday, Wells Fargo (WFC) and Bank of America (BAC) report before the market opens.
  • On Friday, Citigroup (C) reports in the morning.
  •  
Away from the U.S. earnings season, the IMF and World Bank kick off their annual Spring Meetings in Washington DC.

Each spring (according to the IMF.org website) thousands of government officials, journalists, civil society organizations and participants from academia and private sectors, gather.
At the heart of the gathering are meetings of the IMF's International Monetary and Financial Committee and the joint World Bank-IMF Development Committee. They discuss progress on the work of the IMF and the World Bank Group.
Also featured are seminars, regional briefings, press conferences and many other events focused on the global economy, international development, and the world's financial markets.

This year’s Spring Meetings events take place April 12-17. Added to that, OPEC issues its last Monthly Oil Market Report, the last one before its critical April 17th confab.

Anything coming from these two groups – the IMF/World Bank Spring Meetings and OPEC outside the U.S. – likely eclipse anything said by the numerous Fed presidents who speak on U.S. monetary matters this week.  

However, nothing outside the U.S. is likely to dominate U.S. earnings reports.

Do you want to look into non-U.S. stocks this week?


Take a look at Stora Enso ADRs (SEOAY). This stock got a fresh Zacks #1 Rank (Strong Buy) stock. It also shows us a solid long-term Zacks VGM rating of B, delivered by an A rating in Value and a B rating in Growth.  

The paper & related products industry is in the Materials industry. If a price bottom is indeed in for oil and commodities, this could be a good stock.

Another Zacks #1 Rank (Strong Buy) stock is KT Corp. (KT) resting inside the attractive wireless non-US industry (an industry ranked by Zacks at 88 out of 265 at the moment). KT also garnered a very strong Zacks VGM rating of A.


It is in a defensive niche. KT Corp. provides telco services in South Korea. This company was formerly known as Korea Telecom Corp. Recent share price momentum is very positive.

Global/macro fundamentals that matter this week—

On Monday
, China’s CPI came in at +2.3% y/y, while the PPI came in at -4.3% y/y.  The prior PPI at -4.9% y/y was worse, suggesting some improvement there.

In other China data out this week, official figures could show industrial production growth rose from last month's +5.4% y/y rate.

Real GDP grew may have grown by just under +7% y/y. It is unclear how credible China reports are. Some economists suspect the economy is growing only half as much as official data say.

In Mexico, industrial production (not seasonally adjusted) looks to be up +1.3% y/y, better than a prior +1.1% y/y rate. The call for a -0.3% m/m rate looks weak this month.

The Fed’s Dudley speaks in NYC. The Fed’s Kaplan speaks in Louisiana.

On Tuesday, Germany’s final HICP inflation rate should come out at +0.1% y/y.

For Brazil, retail sales should decline -7.1% y/y, better than a prior -10.3% y/y rate, but still lousy.

Mexico should say formal job creation was +125K, worse than a prior +142.3K but still strong.

The latest U.S. budget figures get announced.

The Fed’s Harker speaks in Philadelphia, the Fed’s Williams speaks in San Francisco and the Fed’s Lacker speaks in North Carolina.

On Wednesday, the French HICP rate comes out and it look to be weak again at -0.1% y/y.  The Spanish HICP rate should be -1.0% y/y, which isn’t good either.  Those two figures say deflation is a term that is still appropriate to use in Europe.

Eurozone industrial production should be +1.3% y/y, worse than a prior +2.8% y/y number. This won't be as bad as it seems. Output surged by +2.1% in January. So the fall is likely consistent with an upward trend in production.

The U.S. PPI (ex-Food & Energy) should be up +0.1% m/m, while U.S. retail sales (ex-Auto) should be up +0.4% m/m.  This data reverses the slump seen in the prior -0.1 m/m and -0.1% m/m figures, respectively.

OPEC releases its monthly oil market report.

On Thursday, the Australian unemployment rate should be 5.9%, worse than the prior 5.8%, but not threatening either.

The core Eurozone HICP inflation rate looks to be 1.0% y/y, the same as before, and still quite weak, though positive.

The Bank of England (BoE) monetary policy committee meets and issues a fresh rate decision.  The base rate should remain at 0.5%.

The U.S. CPI (ex food & energy) should be +0.2% m/m, slightly worse than a prior +0.3% y/y rate.

U.S. initial claims should be 265K, which is strong data.

The Fed’s Lockhart speaks in Chicago, and the Fed’s Powell speaks to the Senate Banking Committee.

On Friday, Japan’s industrial production looks to fall -6.2% m/m, and -1.5% in y/y terms. Those data are NOT comforting to any economist.

The U.S. capacity utilization rate should be 75.3%, worse than a prior 76.7%.  

The University of Michigan sentiment index, in preliminary terms, should be 92, which is better than the prior 91.

There is a big week-long World Bank and IMF meeting. It runs to April 17th.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
STORA ENSO -ADR (SEOAY): Free Stock Analysis Report
 
KT CORP (KT): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
CITIGROUP INC (C): Free Stock Analysis Report
 
BANK OF AMER CP (BAC): Free Stock Analysis Report
 
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research