Market Update: Monday, March 19, 2018

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Daily Insights

  • The stock market’s “Sweet 16.” In the spirit of March Madness and an exciting NCAA college basketball tournament that has already brought some historic upsets and exciting buzzer beaters, our latest Weekly Market Commentary features our “Sweet 16” keys for stocks over the remainder of the year, which we will preview today on the LPL Research blog. Among the positives: U.S. and global economic growth, earnings, and technicals; among the negatives: trade policy. Collectively, we expect these drivers to push stocks higher over the balance of 2018, though we acknowledge that volatility could stay with us. We’ll take a deeper dive into some of these market drivers next week in our “Final Four.”

  • Fed monetary policy meeting headlines the week. The U.S. economic calendar includes new and existing home sales, the Leading Economic Index, the Kansas City Federal Reserve (Fed) Manufacturing Index, and durable goods orders. However, investors’ focus will be on the Fed’s monetary policy meeting on Tuesday and Wednesday, where analysts expect a 0.25% rate hike announcement. Overseas, manufacturing and services Purchasing Managers’ Index reports for the Eurozone, France, and Germany should garner attention, in addition to ZEW surveys for the Eurozone and Germany. In the pacific region, Japan is set to release a series of economic data covering trade, inflation, and manufacturing, while China reports foreign direct investment and property prices, a closely watched metric tied to the health of the Chinese consumer.

  • Another shutdown? Political risk is hardly new for investors, but markets may be increasingly focused on Washington, D.C. this week amidst the latest round of budget battles and the flurry of headlines surrounding the Mueller investigation. Congress must agree to details on its spending bill by the end of the week or face another partial government shutdown. A shutdown, which we view as unlikely, would almost certainly be short-lived; but with 60 votes needed in the Senate, an impasse is possible.

  • Fed outlook expected to hold steady despite more optimistic economic projections. Fed Chair Jay Powell will preside over his first monetary policy meeting on Tuesday and Wednesday. With a rate hike at the conclusion of Wednesday’s meeting already priced in according to Fed fund futures, market participants will be focused on changes to the Fed’s economic projections, last released in December 2017, and Powell’s press conference following the meeting’s conclusion. We expect economic projections to rise, based on fiscal stimulus from the new tax law and an increase in spending limits over the next two years, but until we see stronger signs of a pick-up in inflation, our base case remains three rate hikes over the course of 2018. We explore in more detail later today in this week’s Weekly Economic Commentary.

 

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Click Here for our detailed Weekly Economic Calendar

Monday

  • Bostic (Dove)
  • Eurozone: Trade Balance (Jan)
  • Italy: Industrial Production (Jan)
  • Italy: Trade Balance (Jan)

Tuesday

  • Germany: PPI (Feb)
  • UK: CPI & PPI (Feb)
  • UK: Core CPI (Feb)
  • UK: House Price Index (Jan)
  • Germany: ZEW Survey (Mar)
  • Eurozone: ZEW Survey (Mar)
  • Eurozone: Consumer Confidence (Mar)
  • Japan: Leading Index (Jan)
  • Japan: Machine Tool Orders (Feb)
  • China: Foreign Direct Investment (Feb)

Wednesday

Thursday

  • Weekly Jobless Claims (Mar 17)
  • FHFA House Price Index (Jan)
  • Markit Mfg. & Services PMI (Mar)
  • LEI (Leading Index) (Feb)
  • Kansas City Fed Mfg. Activity (Mar)
  • France: Markit France Mfg. & Services PMI (Mar)
  • Germany: Markit Germany Mfg. & Services PMI (Mar)
  • Eurozone: Markit Eurozone Mfg. & Services PMI (Mar)
  • Germany: IFO (Mar)
  • Eurozone: Current Account Balance (Jan)
  • Italy: Current Account Balance (Jan)
  • UK: Retail Sales (Feb)
  • ECB: Publishes Economic Bulletin
  • BOE: Bank Rate
  • BOE: Asset Purchase Target
  • BOJ: Outright Bond Purchase
  • Bank of Canada: Wilkins
  • Japan: All Industry Activity Index (Jan)
  • Japan: CPI (Feb)

Friday

  • Durable Goods Orders (Feb)
  • Cap Goods Shipments & Orders (Feb)
  • New Home Sales (Feb)
  • Revisions: Industrial Production & Capacity Utilization
  • Bostic (Dove)
  • Kashkari (Dove)
  • Canada: Retail Sales (Jan)
  • Canada: CPI (Feb)
  • Bank of Russia: Key Rate
  • Bank of Russia: Nabiullina

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

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