ChiXi Consultants – Week Ahead – Federal Reserve, US China Relations and Economic Calendar

MANHATTAN, N.Y. - Nov. 25, 2018 - PRLog -- The Thanksgiving holiday-shortened week ended with the S&P 500 falling 3.79%, while the Dow tumbled 4.26%, and the Nasdaq closed down 4.26%. This was the worst week for the Dow and Nasdaq in 8 months, and the S&P 500 slipped into a correction on Friday. It was also the worst Thanksgiving week for the stock market since 1939, when President Franklin D. Roosevelt moved the holiday to the third Thursday of November.

American workers head back to work on Monday to do some Cyber Monday shopping. Traders and investors may or may not decide to trade what they've gleaned from the Black Friday shopping data. According to ShopperTrak, in-store traffic was down 1.7% on Thanksgiving and Black Friday as compared to last year. However, according to Adobe Digital Insights, online purchases on Friday were up nearly 24% ($6.22 billion) compared to last year.

This week, the spotlight shifts toward policymakers. On Tuesday, Fed Vice Chairman Rich Clarida speaks in New York at The Clearing House 2018 annual conference. On Wednesday, Fed Chair Jerome Powell speaks at the Economic Club of New York. Rounding out the week, the closely-watched G-20 summit will take place in Argentina from Thursday to Saturday.

Expect Powell and Clarida to 'strike a more balanced tone'

Economists will be paying close attention to Powell and Clarida's language. It is expected that the Fed will raise interest rates during its next meeting in December. However, the Fed's recent tone has been more dovish than anticipated.

"Recall that over the past two weeks, financial market expectations for 2019 rate hikes declined by nearly 20 basis points, partly in response to dovishly-perceived comments from Powell and Clarida," a ChiXi economist wrote on Friday. "As we stated previously, we do not believe their comments at the time reflected a material rethinking of the Fed's base line expectation for another rate hike in December and three more next year. In turn, we expect their speeches—which contrasts with the interviews that the two Fed leaders conducted two weeks ago without prepared remarks—will strike a more balanced tone and should clarify the message with respect to the Fed's views on the latest developments."

Trump and Xi could avoid escalation, but risk is present

Thursday, leaders of the G20 nations will gather in Buenos Aires, Argentina to discuss the most pressing issues plaguing the world. Two big topics that are expected to be addressed are climate change and trade. As tensions run high between the U.S. and China, the two presidents are expected to make progress towards a possible resolution. This is the first time President Trump and President Xi will be meeting since the Trump administration slapped $250 billion in tariffs on Chinese goods. The two-day meeting will end on Saturday, December 1.

"We are optimistic about the summit as an opportunity to avoid further escalation, but not as an opportunity to roll back what is already in place or has been announced," ChiXi economists wrote on Wednesday.

Relations remain tense. Just last week, the U.S. Trade Representative published a report blasting Chinese intellectual property practices, saying "China has not fundamentally altered its unfair, unreasonable, and market-distorting practices." Also, the Commerce Department said it would finalize a rule identifying technology products that would be restricted from being exported to China.

"Both the tariffs and the Commerce ruling are a relatively normal part of the US-China relationship but the timing of the actions, days before the G20, is not optimal," ChiXi economists said. "We see some risk that the G20 meeting could trigger an escalation of tensions rather than lead to détente."

Earnings calendar

The notable earnings reports next week include tech giant Salesforce.com and retail companies Tiffany & Co and PVH. Analysts are expecting Salesforce.com to report earnings of 50 cents per share on $3.37 billion in revenue. Tiffany & Co is expected to earn 78 cents per share on $1.05 billion of revenue for Q3, and PVH is expected to report earnings of $3.15 per share on $2.53 billion in revenue, according to analysts polled by Bloomberg.

Tuesday: Salesforce.com reports after market close
Wednesday: Tiffany & Co reports before market open
Thursday: PVH reports after market close

Economic calendar

On Wednesday, new home sales data is expected to show growth of 5.2% in October to a seasonally adjusted annual rate of 582,000 units after declining 5.5% to 553,000 units in September. Rising interest rates and higher costs have been hammering the housing market. Furthermore, initial jobless claims for the week ending November 24 will be released on Thursday.

Tuesday: FHFA house price index, September (+0.4% expected, +0.3% prior); House price purchase index, Q3 (+1.1% prior)
Wednesday: MBA mortgage applications, week ending November 23 (-0.1% prior); Wholesale inventories month-on-month, October (+0.5% expected, +0.4% prior); Retail inventories month-on-month, October (+0.1% prior); New home sales, October (582,000 expected; 553,000 prior); New home sales month-on-month, October (+5.2% expected; -5.5% prior)
Thursday: Initial jobless claims, week ending November 24 (220,000 expected, 224,000 prior); Continuing claims, week ending November 17 (1.668 million prior); Pending home sales month-on-month, October (-3.4% prior)

About ChiXi Consultants:

ChiXi Consultants is a Financial Planning and Investment Advisory firm that is geared toward individuals and institutions who are looking to achieve extraordinary levels of success. Our clients range from entrepreneurs, executives, board members and institutions who demand the same excellence in their advisors that they have demonstrated in their own lives. They require an intensely personal approach that relies upon years of experience, attention to detail, and above all else, objectivity and this is what ChiXi Consultants prides itself on providing.

To find out more about ChiXi Consultants, contact us at info@chixi-consultants.com for further information or visit our website at www.chixi-consultants.com