What to Expect in the Markets This Week

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It’s going to be a jam-packed week coming up. With earnings from some of the biggest tech companies, Fed announcements on Wednesday, and Brexit day on Friday, there’s plenty to keep an eye on.

Here’s how different asset classes have been doing year-to-date:

Here are some of the key economic events on the calendar for the week ahead:

Monday January 27

  • Market Holiday in Mainland China and Hong Kong due to Lunar New Year
  • German Ifo Business Climate Index (Jan.)
  • U.S. New Home Sales (Dec.)
  • U.K. Gross Mortgages (Jan.)

Tuesday January 28

  • Market Holiday in Mainland China and Hong Kong due to Lunar New Year
  • U.S. Durable Goods Orders (Dec.)
  • Conference Board Consumer Confidence (Jan.)

Wednesday January 29

  • Market Holiday in Mainland China due to Lunar New Year
  • U.S. Pending Homes Sale
  • U.S. Retail Inventories (Excluding Automobiles)
  • Preliminary Trade Balance in Goods (Dec.)
  • U.S. Fed Rates Decision and Press Conference

Thursday January 30

  • Market Holiday in Mainland China due to Lunar New Year
  • German Unemployment (Jan.)
  • Eurozone Unemployment Rate (Jan.)
  • Bank of England Interest Rate Decision and Meetings Minutes
  • U.S. Preliminary GDP (Q4)
  • German Consumer Price Index (CPI) (Jan.)
  • Tokyo Core CPI (Jan.)
  • Japanese Retail Sales (Dec.)
  • Japanese Industrial Production (Dec.)
  • Chinese Purchasing Managers’ Index, both manufacturing and non-manufacturing (PMI) (Jan.)

Friday January 31

  • French Preliminary GDP (Q4)
  • Eurozone Preliminary CPI (Jan.)
  • Eurozone Preliminary GDP Q4
  • U.S. Personal Consupmption Expenditures (Dec.)
  • Canadian GDP (Nov.)
  • Michigan Consumer Sentiment (Jan.)
  • Chicago PMI (Jan.)
  • Brazil Unemployment Rate (Jan.)

Brexit Day

Next Friday, the United Kingdom will officially leave the EU, barring any further delays. That said, the actual date of “Brexit” is a formality as the U.K. will enter a “transition period” during which it will stay in the EU customs union and single market. This will last until either a new trade deal is reached, or the end of 2020. The next big deadline is June 30, which is the deadline for the transition period to be extended. If there is no new trade agreement ratified, the U.K. will suddenly crash out of the single market and customs union in a sudden, radical switch in trade law that will likely be severely damaging to the U.K. economy. This is called a “no-deal Brexit.” Boris Johnson has claimed that there will be no extension of the transition period, but President of the European Commission, Ursula von der Leyen, has said that a December 31, 2020 deadline may not allow enough time to negotiate the U.K.’s entire relationship with Europe.

Big Tech Earnings

Earnings for some of the biggest tech giants come out next week, with Apple, Facebook, Microsoft, and Amazon all reporting. Amazon is trying to boost its profits back up after the expenses of implementing 1-day shipping hurt them last quarter. Microsoft is trying to face off against Amazon’s cloud service with its cloud service, Azure, which it’s been focusing on to boost growth. Apple’s stock has soared recently as it works to try and pivot to make more money from services, because of how much smoother and more consistent a revenue stream services provide than do iPhone purchases. Facebook will be trying to show that its business fundamentals, growth in its monthly active users and revenue-per-user, are strong enough to outweigh its consistent bad headlines. For more on these tech firms, check here for,Apple, Amazon, Facebook, and Microsoft.

QE or not QE?

Ever since the unexpected volatility in the U.S. repo markets caused rates to spike, the U.S. Federal Reserve Bank has been buying bonds to boost liquidity in a process that resembles quantitative easing (QE) in every way, but the Fed insists is not, in fact, QE. An injection of liquidity into the bond market by any other name would still ease volatility. However, this was meant to be a temporary measure and, while no one thinks the Fed will issue another rate hike on Wednesday, there is uncertainty as to whether they will taper off this not-QE.

Source: Investopedia

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