The main event is CPI: Global Week Ahead – March 13, 2023


In this upcoming global week, I’d bet that new February US Consumer Price Inflation (CPI) data will be our main macro event.

I wrote macro event people.

No credit event!

In Europe, traders will receive a UK budget on Wednesday and a European Central Bank meeting will end on Thursday.

In Asia, the People’s Congress ends in mainland China.

Will any of this address the mounting concerns in the financial markets?

Since only a weaker CPI value has a chance.

Last week, sentiment was rattled by a fall in bank stocks Silicon Valley Bank (SIVB free report) the 18th largest bank in the US by assets, experienced a major bank run and an epic panic hit its regional bank stocks.

The FDIC, Federal Reserve and US Treasury strengthened over the weekend.

President Biden takes office today, Monday, March 13.

Here are Reuters’ five most recent global market themes, rearranged for stock traders:

(1) On Tuesday at 8:30 am ET we get the FEB data of US consumer price inflation.

US inflation data has been the linchpin for markets and Tuesday’s report is likely to be momentous as investors gauge whether the Federal Reserve will return to the gargantuan rate hikes that rocked markets last year.

Fed Chair Jerome Powell told US lawmakers last week that the central bank may have to raise interest rates more than previously expected if data continues to show inflation remains high despite a spate of rate hikes already in place.

This could be bad news for investors hoping for US stocks to continue their early-year rally that has melted amid rising Treasury yields and the Fed’s renewed hawkish stance.

At the moment the markets are preparing for higher interest rates.

Investors on Thursday priced in about a 70% chance that the Fed will hike rates by 50 basis points at its March 22 meeting.

Economists polled by Reuters expect consumer prices to rise +0.4% in February after rising +0.5% in January.

(2) The European Central Bank (ECB) meets on Thursday.

The European Central Bank has hiked interest rates by 3 percentage points to 2.5% since July and expects another hike of half a point on Thursday.

A surprise rise in euro area underlying inflation over the past month has policymakers concerned that price pressures may be more persistent than feared. Austria’s central bank chief Robert Holzmann wants to raise half a point at each of the next four meetings.

Markets, ready and willing to bet on how high rates will go, quickly positioned themselves for a move towards 4% by the end of the year. Morgan Stanley and BNP Paribas expect rates to peak here.

Expect ECB chief Christine Lagarde to get the hang of how high interest rates will go. The bond markets have already returned to a restrictive course, so there shouldn’t be too many surprises.

To the right?

(3) What about EM equity pains?

Emerging markets are facing their demons as traders speculate on whether the Fed will hike rates as high as 6.0%, a level many see as a test of emerging market pain points.

It’s not just the magnitude of rate hikes, but the speed that makes awkward reading for those who hold emerging-market stocks, bonds and currencies, who often buckle when global interest rates rise.

Riskier, more vulnerable emerging markets, particularly those with dual deficits, could take the biggest hit if the Fed goes all the way to 6.0%.

China’s reopening could provide a cushion for some emerging market assets.

A hawkish Fed also poses a conundrum for emerging central banks that beat major rivals in raising interest rates and are now leading the way in cutting interest rates – for example Hungary, Poland, Chile or Brazil.

But the timing of such moves now seems increasingly in flux.

(4) China’s National People’s Congress ends.

Clues as to whether China’s new 5% growth target is as modest as many suspect come with the release of the year’s first retail and factory data on Wednesday, two days after the conclusion of the week-long National People’s Congress.

At the finale of the annual parliamentary session on Friday, Xi Jinping secured an unprecedented third term as president.

Waiting Premier Li Qiang, best known for overseeing Shanghai’s stifling COVID-19 lockdowns, is close to being confirmed in China’s second-highest post on Saturday.

Li’s job will now be to guide China’s post-pandemic economic recovery. China grew just 3% in 2022, its worst result in decades.

December’s data wasn’t as hot for retailers as a surge in infections after pandemic-related curbs rolled back kept people at home.

Lego is optimistic: most of the 145 new stores set to open this year will be in China.

(5) The British spring budget comes on Wednesday.

British Treasury Secretary Jeremy Hunt will present his spring budget on March 15th.

After September’s market chaos, when Hunt’s predecessor Kwasi Kwarteng and former Prime Minister Liz Truss announced generous tax cuts, forecasters expect Hunt to prioritize safeguarding public finances and resist giveaways that could destabilize sterling, equities or gilts.

So the main focus of traders is on growth and borrowing forecasts, which are published together with the budget.

The Office for Budget Responsibility forecasts GDP growth of +1.3% for 2024. The Bank of England forecasts a slight decline. An OBR downgrade could affect sterling, but the pound is moving mainly on interest rate differentials, with US rates expected to rise further than UK rates

UK public lending plans are expected to fall, which will potentially support Gilts. However, an expected increase in support for household energy bills can be seen as inflationary.

Zacks #1 Rank (STRONG BUY) stocks

Here are three new large-cap stocks to consider.

(1) Mercedes Benz (MBGAF Free report) : This is a $78 per share German multinational automotive company with a market cap of $83.8 billion. I see a Zacks Value score of A, a Zacks Growth score of D, and a Zacks Momentum score of F.

(2) Airbnb (ABNB Free report) : This is a $120 per share internet home rental/unique stay company with a market cap of $76.8 billion. I see a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of C.

(3) EssilorLuxottica (ESLOY Free report) : This is an $85-per-share lens, frame, and sunglass company with a market cap of $49.1 billion. I see a Zacks Value score of C, a Zacks Growth score of D, and a Zacks Momentum score of D.

What do exclusive luxury cars, unique homestay experiences and Ray-Ban sunglasses have in common?

They show a very busy shopper. One who is very mobile. Once again.

Important global macro

On Monday

there is a meeting of the Eurogroup.

On Tuesday, US NFIB Small Business Optimism Index for FEB is out. 90.3 was the previous reading.

Our main event comes on the tape at 8:30am ET: the US Consumer Price Index (CPI).

The Broad FEB CPI should come in at +6.2% yoy from a previous read of +6.4% yoy.

Core CPI should come in at +5.5% yoy, down slightly from +5.6% yoy.

On WednesdayUS Producer Price Index (PPI) for FEB should come in at +5.1%y/y versus a previous reading of 6.0%.

On ThursdayAustralia’s unemployment rate could rise to 3.9% from 3.7%.

We receive data on US launches and building permits. Launches may have declined -0.6% in February while approvals are down -0.5%.

The ECB shows us its latest monetary policy decision.

On Friday, the Euro-Zone Harmonized Index of Consumer Prices (HICP) for FEB should come in at +8.5% yoy. This is the same as the previous reading.


I’ll wrap up this upcoming global week with key win points from Zacks Research Director Sheraz Mian.

Its four key points:

(1) S&P500 headline earnings for Q1-23 are expected to be -9.0% down year-on-year on +1.9% higher earnings.

This would follow the -5.8% decline in profit in the previous period (Q4-22) on +5.5% higher revenues.

In short, Q1 looks a little worse.

(2) Estimates have fallen the most for the aerospace, materials, autos, consumer staples, retail, medical and transportation sectors.

Utilities is the only S&P500 sector to have enjoyed modest positive revisions since early January.

Just A Defensive S&P500 Sector Earnings Revisions Rise? That’s a soft outlook.

(3) The direction of earnings estimates for Q1-23 is in line with the trend we have observed over the past few quarters.

But the magnitude of the negative revisions is smaller compared to what we’ve seen in the prior two quarters’ comparable periods.


(4) Full-year 2023 earnings estimates are also down.

Since peaking in mid-April 2022, the total for the year has declined by -12.4% for the index as a whole and -14.5% excluding the contribution from the energy sector.

Conclusion: The concerns of the covering analysts are still not on the ground.

Have a great trading week.


John Blank

Zacks Chief Equity Strategist and Economist

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