This week, investors are being challenged by an incredible amount of event risk. Earnings reports, central bank meetings, and a major economic report are all on this week's calendar.
If you're aware of these risks, congratulations. I hope you've limited your account's risk in anticipation of potentially volatile price swings.
If you don't understand what all of this means, now is the best time to learn.
We'll start with a simple task. For this week only, keep these three figures in mind -- 107, 3, and 190,000.
This is the number of companies in the S&P 500 that are reporting earnings this week. On Thursday alone, Apple (AAPL) , Amazon (AMZN) , and Alphabet (GOOGL) are all scheduled to report. We'll also hear from big pharma companies Bristol Meyers Squibb (BMY) and Eli Lilly & Co. (LLY) .
While those names will garner a ton of press, I'm fascinated by the recent report from appliance manufacturer Whirlpool (WHR) . Whirlpool beat adjusted earnings estimates and missed on revenues, but the company's forward guidance sent shares higher in after-hours trading.
According to the company, "The expected demand recovery during the second half of the year has Whirlpool well positioned to deliver sustained shareholder value."
Whirlpool's guidance indicates strong economic growth, something that won't please central bankers.
Speaking of central bankers...
Three major central banks are expected to raise interest rates this week. In addition to the Federal Open Market Committee meeting, which concludes on Wednesday, the European Central Bank and the Bank of England are expected to raise rates. The Fed funds rate is expected to bump higher by a quarter-percentage point, while the European Central Bank and the Bank of England are expected to deliver half percentage point hikes.
While there is little chance for anything other than a 25-basis point hike from the Fed, I'm interested to hear the subsequent press conference. Last week's economic stats included 2.9% GDP for the fourth quarter, and unemployment claims of only 186,000.
Will the Fed be as sanguine as many investors appear to be? Or will solid earnings and continued employment growth cause the Fed to ramp up its rhetoric?
Speaking of employment growth...
That's the anticipated number of jobs created in December, according to the upcoming non-farm payroll report from the Bureau of Labor Statistics. The report is scheduled to be released at 8:30 a.m. ET on Friday.
A strong job market is great for employees, but it's frustrating the Fed's plan to stifle inflation. If job creation remains at a high level, the Fed could be forced to prolong its rate hike campaign.
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