Are you ready?
It's back to a full week of trading this week as the velocity of corporate earnings picks up again as we close out the first month of 2019. The number of reports will total nearly 400, a 57% increase compared to last week. We will also have several economic reports coming at us as well as the results of the Fed's January FOMC monetary policy meeting. Given the data of late that in aggregate has confirmed a slowing domestic and global economy, not to mention the effects of a government shutdown that is a growing economic headwind, odds are high the Fed will not boost interest rates at next week's meeting.
Following that decision, the economic calendar is slated to bring the December Personal Income & Spending report, which may offer some insight on the holiday shopping season. We will also get the January Employment Report (non-farm payrolls) on Friday, and the tone for that will be set by the January ADP Employment Report that hits the tape on Wednesday. Rounding out the week, we will get the January reading on the ISM Manufacturing Index and the IHS Markit January PMI readings for the four economic horsemen of the global economy, namely Japan, China, the eurozone and the United States.
The other key event that could drive the market higher or lower depending on the outcome is the next round of U.S.-China trade talks scheduled for this week. Key sticking points remain on intellectual property and technology, which, given the history between the two countries on those matters, could lead to heated negotiations ahead of the phase-in for the next round of tariffs on Chinese goods. If there are positive developments, there could be an extension of that timetable. However, the substance of any would-be agreements is far more important than any potential announcement.
Earnings on Tap
-- Caterpillar (CAT) and its comments on the global economy;
-- Paccar (PCAR) and its view on truck demand, which is a key indicator for the health of the domestic economy;
-- Rockwell Automation (ROK) to determine whether spending on productivity improvements waned or improved in the back half of 2018 and what the prospects are for 2019;
-- Alibaba (BABA) to better understand if Chinese consumers are slowing their spending or if it's shifting more online like we have seen in the U.S.;
-- Cirrus Logic (CRUS) to corroborate Apple's comments on near-term demand dynamics;
-- Facebook (FB) to see if its monetization efforts have improved outside of the U.S. and if its domestic user base for Facebook has fallen further;
-- Tesla (TSLA) given recent comments by Elon Musk that have painted a challenging profit picture for the company as the Model 3 ramps;
-- Ferrari (RACE) to determine the outlook for high-end spending as the global economy slows; and
-- Nokia (NOK) to understand how it sees 5G network deployments in 2019.
It's going to be frenetic, so rest up get ready for what the week will bring. We'll be here to guide you through it.
This commentary is an excerpt from the Trifecta Stocks Roundup, a weekly feature sent to subscribers of Trifecta Stocks. Click here to learn more about this portfolio, trading ideas and market commentary product.
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.