Week Ahead starting 9/10/23: Inflation; FOMC minutes; big US bank earnings; PepsiCo

(Video Transcript)

A busy week on the economic front

Hello, welcome to IGTV. I'm Angeline Ong, and this is your special Look Ahead to the week starting 9 October 2023. And what a week it will be.

First up, we've got plenty of economic data from Germany. We've got industrial production numbers. And also, there's going to be quite a bit of talk of interest rates again, because somewhere midweek we've got the Federal Open Market Committee (FOMC) minutes.

But before that, on Tuesday, let's have a look at what else we've got: from the UK, the British Retail Consortium (BRC) Retail Sales Monitor. From Australia, consumer confidence and business confidence data will be key after the Reserve Bank of Australia (RBA) kept rates on hold.

UK's GDP and trade balance numbers out

And from the United States, wholesale inventories. Midweek, as I mentioned earlier, we've got the minutes from the FOMC, producer price index (PPI) data from the US, as well as American Petroleum Institute (API) crude oil inventories, too.

And we finish up the week on Thursday with monthly gross domestic product (GDP) numbers, trade balance figures from the UK and industrial production.

Plus, watch out for the consumer price index (CPI) after the US: this could move the dollar. Anything inflation related, of course, might give us a sense of what the Fed might do before the end of this year. Initial jobless claims and the US Energy Information Administration (EIA) crude oil inventories, too.

And, on Friday, we end with quite a bit of data out of China: its inflation figures, PPI as well and trade balance numbers out of the world's second-biggest economy.

Germany sending mixed signals on production

We also get industrial production figures out of the Euro Zone after quite mixed signals from Germany, it must be said, and the consumer confidence reading out of the US and the Baker Hughes oil rig recount.

Let's join my colleague Tony Battista from Tasty now. Bat, thank you so much for joining us all the way from Chicago. It's so early. And also sending this pin here, which has just arrived. In terms of volatility and next week, where is the volatility if you're looking for that? And of course, the VIX has spikes, hasn't it?

TB: Yeah, it sure has gone from around 15 to 18, almost a 20-ish percent jump on its high of over 20 at one point. We want volatility in the market because we believe that it's mean reverting more than price of stocks.

So for us, volatility is actually a good thing, some volatility, like Goldilocks. Volatility's mean is around 18, and that's right where we sit right now. So a good opportunity for bulls and bears right now.

Oil volatility percolating

You've got some stocks that have gotten beaten up. You've got some stocks that have held in there pretty nicely. You also have oil volatility percolating. I know you mentioned a bunch of numbers coming out for oil, which is kind of cool. So you're going to have an exciting week this week.

AO: And stay right there, we'll come right back to you. Of course, rising bond yields, higher for longer rates, recession fears, consumption that is looking weak, all that will also feed into volatility.

And you're right, it's a big week for corporate news. We are gearing up for the start of the earnings season. Let's see what we've got on deck here. And our first up in the week, we've got Real Estate Investment Trusts (REITs) and PepsiCo handing in some of their numbers.

Pepsico is reporting third-quarter earnings. And then, later on in the week, look out for PageGroup, which gives us an oversight into how hiring is picking up or slowing down in different jurisdictions.

easyJet, Hays, Delta Air Lines and Walgreens Boots all have either trading statements or third-quarter earnings. This is on Thursday.

IPO-linked banks worth watching

And then on Friday, that's when the big names appear: the big US banks, JP Morgan, Wells Fargo, Citigroup, UnitedHealth Group. Many watching this sector saying that the banks, the ones to look out for are the ones with exposure or links to the initial public offering (IPO) market, which is starting to gather steam now after a two-year drought.

UnitedHealth, also interesting, given the strikes across the US medical sector. Bat, just coming back to you now, I guess, perhaps with many investors waiting on more data to show us where the Federal Reserve (Fed) might move in terms of rates, perhaps earnings might be in closer focus when it comes to prompting volatility.

TB: Yeah, it's amazing. You mentioned Pepsi was the first one. It's amazing how we forget about these stocks. Pepsi pays almost a 3% dividend. I remember when 3% dividend meant something to people. Here's a stock that's gone from $200 in the last couple of months down to $160.

One of those stocks, I was just talking about that, you know, if you were looking for something that's more of an allegedly a stable stock, here's one that has a nice dividend and is making new lows as we speak.

JP Morgan, on the other hand, a little bit of a different story in that whole kind of sector of the Russell and the banking stocks.

They've been getting a little bit beat up too, not performing as well as the Nasdaq and the E-Mini S&Ps. But JP Morgan in particular, another one that pays almost a 4% dividend, 3.78. It's about only $10 off its highs. So you've got a tale of two different takes here.

You've got an old stock like Pepsi that's getting beat up really out of favour. And you've got a JP Morgan that's kind of going sideways with a very high implied volatility relative to itself.

AO: Thanks very much, Bat. I'm sure we'll check in with you on all that. It's interesting that you also mentioned the Russell 2000, because some out there say that it more accurately reflects the US economy, given it has smaller firms and more exposed to macro-economic conditions.

Well, those are all our highlights to the Week Ahead. For more analysis and trading insight, do join me on @AngelineOng on IGTV. Thank you.