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    BRAND MARKET ANALYSIS AND NEWS The Economic Week Ahead Market News

    Main Macro Events This Week

    • United States: economic data will resume after today’s Presidents Day holiday, starting with the Empire State index (Tuesday) forecast rebound to -12.0 in February (median -10.0) from -19.4 in January. The NAHB housing market index is also set to tick up to 61 in February from 60, while the Treasury International Capital (TIC) flow release is due late in the session. The MBA mortgage market report (Wednesday) is on tap and headline PPI should come in tame at -0.1% (median -0.2%) vs -0.2%, or 0.1% for core vs 0.2%. Housing starts are expected to increase 1.8% to a 1,170k unit pace in January, while permits may rise to 1,210k. Industrial production is forecast to be flat for January (median 0.3%) vs -0.4% in December, while capacity use may dip to 76.4% (median 76.6%) from 76.5%. FOMC minutes to the January meeting (Wednesday) aren’t likely to get the usual scrutiny they would otherwise receive, primarily since Chair Yellen’s testimony last week provided a more up-to-date dovish outline of Fed thinking. The Philly Fed index is set to remain damp (Thursday) at -3.0 in February (median -2.8) vs -3.5, while initial jobless claims may tick up 5k to 274k and leading indicators rise 0.2% (median -0.2%) vs -0.2. CPI rounds out the week on its lonesome (Friday), set to sink 0.1% headline and rise 0.1% core. Fedspeakers pile up starting this week (Tuesday) with Philly Fed’s Harker will discuss the economic outlook at the University of Delaware. Minneapolis Fed president Kashkari will analyze the lessons of the financial crisis at a Brookings event. Note, Kashkari was instrumental in implementing the TARP program while at the Treasury Department during the crisis, which could make this speech especially informative. Boston Fed dove Rosengren will mull the economic outlook as well. St. Louis Fed dove Bullard (Wednesday) will discuss the economic and monetary policy outlook at a Fed forecast dinner. SF Fed dove Williams will take a look at the economic outlook (Thursday) at a town hall meeting in L.A. Wrapping it all up will be Cleveland Fed hawk Mester (Friday), who will mull the economic outlook before the Global Interdependence Center.
    • Canada: a holiday-truncated calendar has a steady schedule of key economic reports. Markets are closed today for Family Day. Manufacturing (Tuesday) is expected to rise 0.5% m/m in December after the 1.0% bounce in November. Wholesale shipments (Thursday) are seen growing 0.2% m/m in December after the 1.8% rise in November. Retail sales (Friday) are projected to fall 1.0% m/m in December after the 1.7% surge in November. Sales excluding the autos aggregate are projected to fall 0.7% following the 1.1% gain in November. Total CPI (Friday) is expected to pick-up to a 1.7% y/y rate in January from the 1.6% clip in December. The BoC’s core CPI is seen growing at a 1.9% y/y pace in January, matching the 1.9% in December. Existing home sale for January are due on Tuesday. There is nothing from the BoC this week. 
    • Europe: ECB’s Draghi speaks today. Market volatility has increased, with large swings in peripheral stock and bond markets reminding the ECB that especially peripherals remain vulnerable and that Draghi’s promise has not solved the Eurozone’s fundamental problems. Draghi will have to pull quite a rabbit out of his hat in March and will have a first chance to try and placate investors on Monday, when he speaks at a European Parliament Committee. Data releases this week are unlikely to take any pressure off the ECB. The focus is on German ZEW Investor Sentiment (Tuesday), which we expect to fall into negative territory, thus highlighting that pessimists now outnumber optimists. We are looking for a sharp drop to -0.5% from 10.2 in January, a decline that will only add to mounting growth concerns. Similarly Eurozone Consumer Confidence (Friday) is seen falling further into negative territory at -6.5, despite the fact that at least so far the labour market continues to improve and reflecting mainly concerns about the general economic outlook. The Eurozone also has trade data today and BoP and Current Account data on Thursday, both for December. With Q4 GDP numbers already released the numbers are too backward looking to change the outlook and will bring mainly background information. German releases producer price inflation for January and France has the final reading of January inflation numbers, which are not expected to hold any surprise. 
    • United Kingdom: The calendar this week brings January inflation data (Tuesday), labour market numbers covering December and January (Wednesday), and retail sales (Thursday). Monthly government borrowing numbers are also (Friday). Last week brought unambiguously weak UK production data, while we expect this week’s releases to be a mixed bag, with unemployment expected to hit a new cycle low of 5.0%, retail sales expected to be perky, but inflation likely to remain benign, which, along with the backdrop of global market turmoil, should leave the BoE a no-hike-for-the-foreseeable policy standing. Markets have now priced out any chance of the BoE hiking rates before next year following last week’s publication of the BoE’s quarterly Inflation Report, which detailed lower growth and inflation projections.
    • China: In China, the markets reopen after the week long holidays and will have a lot of catching up to do. As for data, January Trade Balance numbers came in at $63.3B (previous $60.9B). January CPI and PPI (Thursday) are forecast at 1.7% y/y from 1.6%, and -5.5% y/y from -5.9%, respectively.
    • Japan: the December tertiary industry index (today) improved slightly to -0.6% in December (November: -0.9%). Revised December industrial production deteriorated further to -1.9 YoY from the previous number of -1.6%, while Q4 1st preliminary GDP (Tuesday) is forecast at -2.0%, from the previous 1.0%. December machine orders are seen rebounding 3.0% m/m, from the 14.4% fall previously. A JPY 500 bln deficit is expected for the January trade report (Thursday). The December all-industry index (Friday) is penciled in at -0.5% m/m from -1.0% previously.
    • Australia: calendar is highlighted by the January employment report (Thursday), expected to show a 5.0k gain in jobs following the 1.0k dip in December. The unemployment rate is seen at 5.8% in January, identical to the 5.8% in December. The minutes to the RBA’s February meeting will be released on Tuesday. The bank held rates steady at 2.00%, as expected, but opened the door wide to another rate cut if needed to support domestic demand. Assistant Governor (Financial System) Malcolm Edey speaks to the Australian Shareholders Association (ASA) Investor Forum in Sydney (Thursday).



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