Key Events This Week: Retail Sales, ECB, Fed Speakers And Earnings Galore

This week kicks off with a partial US holiday (Columbus Day) today where bond markets will be closed but with equity markets remaining open. The main news over the weekend has been from China where the highly anticipated Ministry of Finance press conference on Saturday was a dud, light on specifics of immediate stimulus measures, even as it yet another "strong forward commitment" and the announcement of a large-scale local government debt swap, suggesting it could mark a multi-year turning point in China's fiscal policy framework. DB, like Goldman, raised their 2024 GDP forecast to 4.9% (from 4.7%), based on already announced measures and are expecting more concrete measures to now appear at the upcoming NPCSC in late October.

Also over the weekend, data revealed that China’s September CPI rose by +0.4% year-on-year, the slowest in three months, compared to a +0.6% rise in August and below market expectations of a +0.6% increase. PPI fell by -2.8% year-on-year, the fastest decline in six months, compared to a -1.8% drop in the previous month and below the expected -2.6% decline. So weaker prices than expected all round, but with the subsequent stimulus announcement markets should be comfortable excusing recent data for now.

In terms of this week, the key events will likely be on Thursday with US retail sales and jobless claims, alongside the latest ECB meeting. Outside of this, US earnings season starts to accelerate after last Friday's unofficial start and there are plenty of central bank speakers to digest as well. Before we dig into these, the other main global highlights this week are the NY Fed 1yr inflation expectations (today), UK employment, German/European ZEW survey, ECB bank lending survey, Eurozone IP and Canadian CPI (tomorrow), UK inflation (Wednesday), US IP and NAHB housing index (Thursday) and US housing starts/building permits, China's monthly data dump (including Q3 GDP, retail sales, IP, and property data), alongside Japanese CPI to round out the week on Friday.

Digging a bit more into that week ahead now, of all the Fedspeak, Waller today may be the most interesting given he's traditionally a hawk and is a voter. In his last outing, Waller suggested that another 50bp reduction in an upcoming meeting was a possibility if the labor market weakened further or if inflation continued to come in softer than expected. Since then the opposite has seemingly occurred so will he revert back to more hawkish form?

Skipping to Thursday, September US retail sales will be a swing factor in putting together final Q3 GDP forecasts but jobless claims could spike a significant amount higher (DB forecast 270k vs. 258k last week) and to 3-year highs due to the latest storm. We were surprised that the market zoned in on the spike last week as much as it did as you have to assume for now that most, if not all, of the increase was storm related. The impact of the storm will also feed into this month's payroll data so there will be a lot of difficulty in assessing employment trends in the next several weeks. Even retail sales might spike up a little this week as storm preparation in Florida may have boosted sales at the end of September.

The highlight of the week in Europe will be the ECB decision on Thursday. DB economists expect a 25bps rate cut following recent lower-than-expected inflation prints as well as weaker growth. The central bank will also release its bank lending survey on Tuesday and the survey of professional forecasters on Friday. The lending survey is a good guage to see whether we're past the peak impact of the monetary transmission mechanism. In recent quarterly surveys, lending has improved with future expectations improving too so things have been looking up. Elsewhere in Europe keep an eye for the budget in Italy tomorrow, ahead of the EU deadline. Fitch and S&P are likely to opine on Italy's rating after the close on Friday. The former could influence the latter to some degree. Indeed, late on Friday Fitch placed France on negative outlook after its budget announcement last week saying that "Fiscal policy risks have increased since our last review." Over in Asia, the focus outside of China will be on the Japanese national CPI due on Friday.

In terms of earnings, we'll start to see some momentum with the highlights including key semiconductor firms TSMC (Thursday) and ASML (Wednesday). Otherwise, US bank results will continue to come in with Bank of America, Citigroup and Goldman Sachs (all tomorrow) the highlights, alongside large cap healthcare names including UnitedHealth, Johnson & Johnson (both tomorrow) and Abbott (Wednesday). Other notable names include Netflix and Blackstone on Thursday and Procter & Gamble on Friday.

Here is a day-by-day calendar of events

Monday October 14

Data: US September NY Fed 1-yr inflation expectations, China September trade balance
Central banks: Fed's Kashkari and Waller speak, ECB's Villeroy speaks, BoE's Dhingra speaks

Tuesday October 15

Data: US October Empire manufacturing index, UK August average weekly earnings, unemployment rate, September jobless claims change, Japan August capacity utilisation, Germany and Eurozone October Zew survey, Germany September wholesale price index, Eurozone August industrial production, Italy August general government debt, Canada September CPI, existing home sales, New Zealand Q3 CPI
Central banks: Fed's Daly and Kugler speak, ECB's bank lending survey, Nagel speaks
Earnings: UnitedHealth, Johnson & Johnson, Bank of America, Goldman Sachs, Citigroup

Wednesday October 16

Data: US October New York Fed services business activity, September import price index, export price index, UK September CPI, RPI, PPI, August house price index, Japan August core machine orders, Canada August manufacturing sales, September housing starts
Central banks: ECB's Lagarde speaks, BoJ's Adachi speaks
Earnings: ASML, Abbott, Morgan Stanley, Prologis, CSX, Kinder Morgan

Thursday October 17

Data: US September retail sales, industrial production, capacity utilisation, October Philadelphia Fed business outlook, NAHB housing market index, August business inventories, total net TIC flows, initial jobless claims, Japan September trade balance, August Tertiary industry index, Italy and Eurozone August trade balance, Canada August international securities transactions
Central banks: ECB decision, Fed's Goolsbee speaks, BoE's Woods speaks
Earnings: TSMC, Netflix, Blackstone, Intuitive Surgical

Friday October 18

Data: US September housing starts, building permits, China Q3 GDP, September new home prices, retail sales, industrial production, property investment, UK September retail sales, Japan September national CPI, Italy August current account balance, ECB August current account, Eurozone August construction output
Central banks: Fed's Kashkari and Waller speak, ECB's survey of professional forecasters
Earnings: Procter & Gamble, American Express, Schlumberger, Volvo

* * *

Finally turning to the US, Goldman writes that the key economic data release this week is the retail sales report on Thursday. There are several speaking engagements by Fed officials this week, including events with Governors Waller on Monday and Friday and Governor Kugler on Tuesday.

Monday, October 14

There are no major economic data releases scheduled.

09:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed president Neel Kashkari will participate in a panel discussion at the Central Bank of Argentina’s Money and Banking Conference. Speech text and a livestream of the discussion are expected. On October 3, Kashkari said “the economy is changing. We still have a strong labor market, and inflation is coming down. We’re not where we want to get to yet on inflation, but we’re making progress, and the labor market is still strong, though it’s softening.” Kashkari’s remarks predated the release of the stronger-than-expected September employment report.
03:00 PM Fed Governor Waller speaks: Federal Reserve Governor Christopher Waller will speak on the economic outlook at an event in Stanford, CA. Speech text and a Q&A are expected.
05:00 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed president Neel Kashkari will speak on the current state of US monetary policy at an event hosted by the Department of Economics of Torcuato di Tella University. A Q&A and livestream are expected.

Tuesday, October 15

08:30 AM Empire State manufacturing survey, October (consensus +3.6, last +11.5)
11:30 AM San Francisco Fed President Daly (FOMC voter) speaks: San Francisco Fed President Mary Daly will give keynote remarks followed by a moderated conversation at an event hosted by the NYU Stern School of Business. Speech text and a Q&A are expected. On October 11, Daly said “I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy."
02:00 PM Fed Governor Kugler speaks: Fed Governor Adriana Kugler will participate in a moderated discussion on career opportunities and diversity in economics. A Q&A and livestream are expected. On October 8, Kugler said “while I believe the focus should remain on continuing to bring inflation to 2 percent, I support shifting attention to the maximum employment side of the FOMC’s dual mandate… We don’t want a drastic slowdown in the labor market.” She went on to say, “we don’t want the labor market to weaken so much that it’s going to cause undue pain, when at the same time we have been seeing a serious reduction in terms of inflation, [which] is moving back to target.”

Wednesday, October 16

08:30 AM Import price index, September (consensus -0.3%, last -0.3%); Export price index, September (consensus -0.6%, last -0.7%)

Thursday, October 17

08:30 AM Retail sales, September (GS +0.5%, consensus +0.3%, last +0.1%); Retail sales ex-auto, September (GS +0.2%, consensus +0.2%, last +0.1%); Retail sales ex-auto & gas, September (GS +0.4%, consensus +0.3%, last +0.2%); Core retail sales, September (GS +0.4%, consensus +0.4%, last +0.3%): We estimate core retail sales expanded 0.4% in September (ex-autos, gasoline, and building materials; month-over-month SA), reflecting healthy growth in measures of card spending. We estimate a 0.5% increase in headline retail sales, reflecting lower gasoline prices but higher auto sales.
08:30 AM Philadelphia Fed manufacturing index, October (GS 2.0, consensus 3.5, last 1.7): We estimate that the Philadelphia Fed manufacturing index was roughly unchanged at 2.0 in October, reflecting mixed global manufacturing indicators.
08:30 AM Initial jobless claims, week ended October 12 (GS 250k, consensus 253k, last 258k): Continuing jobless claims, week ended October 5 (consensus 1,888k, last 1,861k)
09:15 AM Industrial production, September (GS -0.1%, consensus -0.1%, last +0.8%): Manufacturing production, September (GS flat, consensus -0.2%, last +0.9%); Capacity utilization, September (GS 77.9%, consensus 77.8%, last 78.0%): We estimate industrial production declined 0.1%, as weak natural gas production outweighed strong electricity and mining production. We estimate capacity utilization declined to 77.9%.
10:00 AM Business inventories, August (consensus +0.3%, last +0.4%)
10:00 AM NAHB housing market index, October (consensus 43, last 41)
11:00 AM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed president Austan Goolsbee will deliver opening remarks at the Chicago Fed Exploring Career Pathways event. A livestream is expected. On October 11, Goolsbee said “taking the long view, inflation is way down while on the job market side, it’s cooled from overly heated to something like steady state full employment… So if that’s normal, the interest rate, in my view, is still well above where the steady state is.” Goolsbee also mentioned that “rates will ultimately, over the next 12 to 18 months, go down to something like 2.5% to 3.5%, and we’re way above that now.”

Friday, October 18

08:30 AM Housing starts, September (GS +2.0%, consensus -0.4%, last +9.6%); Building permits, September (consensus -1.0%, last +4.6%)
10:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will moderate a keynote policy panel at the Macroeconomic Policy Perspectives conference series hosted by the Minneapolis Fed, the University of Chicago, and Stanford University. A livestream is expected.
12:10 PM Fed Governor Waller speaks: Fed Governor Christopher Waller will speak on decentralized finance at the Nineteenth Annual Vienna Macroeconomics Workshop. Speech text and a livestream are expected.

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