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Economic Calendar - Top 5 Things to Watch This Week

EconomyMar 22, 2020 07:58AM ET
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© Reuters.

By Noreen Burke

Investing.com - This week market watchers will be looking at economic data releases for early indications of the scale of the impact from the coronavirus pandemic, but the main focus will continue to be on the response from governments and central banks who are ramping up stimulus measures amid market fears over whether steps announced so far will be adequate. Here’s what you need to know to start your week.

  1. Data to show early economic hit from virus

Few doubt that the global economy will tip into recession as countries around the globe go into lockdown amid ongoing virus containment efforts. It goes without saying that large drops are likely in PMI data coming out this week in the U.S., Eurozone and the U.K.

The PMI surveys are typically conducted in the second half of a month and the data in the "flash" survey is usually collected in the week or so before the data is released, so economists reckon next week's PMIs will provide the most comprehensive overview so far of the coronavirus impact.

Meanwhile, Thursday’s figures on initial jobless claims will be the first to show the full extent of the impact on the U.S. labor market. Economists at Goldman Sachs have estimated claims are set to jump to a record 2.25 million, according to an analysis of preliminary reports across 30 states.

  1. U.S. government response awaited

Republicans and Democrats in the U.S. Senate on Saturday continued with efforts to reach a deal on a $1 trillion-plus bill aimed at mitigating the coronavirus pandemic’s economic fallout for workers and businesses.

White House economic adviser Larry Kudlow said he expects the final legislative package to be worth $1.3 trillion to $1.4 trillion.

Taken together with steps already taken by the U.S. Federal Reserve and the administration, the prospective bill would have a $2 trillion net impact on a U.S. economy, according to White House officials.

  1. Liquidity squeeze to ease?

A liquidity squeeze prompted the Federal Reserve on Friday to enhance the dollar liquidity swap line arrangements it has with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank.

To see if that does the trick, watch for dollar exchange rates to stabilize.

Demand for the world’s reserve currency had jumped amid a rush for cash in anticipation of a prolonged pandemic, with there being a substantial liquidity mismatch between global demand for U.S. dollars and those on offer.

  1. U.S stock valuation picture may become clearer

As the U.S. stock market has tumbled, valuations have also come down sharply.

The S&P 500's price-to-earnings ratio, based on earnings estimates for the next year, has dropped from over 19 times in late February to 14.2 times as of last Wednesday, according to Refinitiv data, taking the valuation below its historical average.

But the picture is complicated by the fact that earnings estimates may have not come down enough to account for the coronavirus fallout.

The picture may become clearer in the coming weeks, as the first quarter comes to an end and companies start preparing their results. Last week, FedEx (NYSE:FDX) and Marriott (NASDAQ:MAR) withdrew their 2020 financial forecasts because of the outbreak.

Nike (NYSE:NKE), Micron Technology (NASDAQ:MU), and KB Home (NYSE:KBH) are among the U.S. companies due to report results this week.

  1. Emerging markets

Emerging market assets have been hammered, with currencies plunging to fresh record lows, bonds plunging and stocks down nearly 10% last week. Several factors have contributed - the strong dollar, a darkening economic outlook, tumbling oil prices as well as rising borrowing costs.

Investors piling into the greenback have seen enduring stresses in dollar funding markets, with hurried swap lines between central banks earlier in the week doing little to alleviate the credit strains at the heart of the problem.

Central banks in the United States, the euro zone, Canada, Britain, Japan and Switzerland stepped in again on Friday, agreeing to increase the frequency of their one-week U.S. dollar credit facility.

In emerging markets, policymakers that lack the firepower to support currencies or face challenges to cut rates, will be keeping their fingers crossed that steps taken by major central banks will be enough to end the crisis.

--Reuters contributed to this report

Economic Calendar - Top 5 Things to Watch This Week
 

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Comments (12)
Juan Jose Moreno
Juan Jose Moreno Mar 22, 2020 7:22PM ET
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When I was young , I had an unforgettable experience in FIAT (Cassino Plant), there we worked (about 2000 people) in 24H car production support. There were 3 turns , 22:00-8:00 am , 8:00-14:00, 14:00-22:00. Now my question is:  Are we doing this ? do you have discipline or , just a storm comes , strikes you and you run off.  I see Bouses are doing exactly this.
Justin General
Justin General Mar 22, 2020 6:11PM ET
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I hope the markets are 20% limit down tomorrow, on second thought, I hope the last slide happens in the last 15 min so it can go 30% down
Martin Wyckoff
Wyckoff Mar 22, 2020 12:39PM ET
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keep safe, don't overtrade. this week will be highly volatile due to virus spread in USA.
Edward Chong
Edward Chong Mar 22, 2020 12:39PM ET
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well say. dont overtrade.
Daniel Sky
DanielSKY Mar 22, 2020 12:39PM ET
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Keep safe. Hope both of us still could do trading in next year.
Eleftherios Papadopoulos
Greco Mar 22, 2020 12:18PM ET
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death rate decreased in USA !!!!
saul sierra
saul sierra Mar 22, 2020 12:18PM ET
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that is false
Kyle Mack
Kyle Mack Mar 22, 2020 11:37AM ET
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Just buy walmart stock and hodl
Hans Eriksson
Hans Eriksson Mar 22, 2020 11:29AM ET
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In Finland the company Faron Pharmaceuticals is developing a medicine for the Lung disease. Caused by covid-19. Can have an effect on the mortality.
Hans Eriksson
Hans Eriksson Mar 22, 2020 11:23AM ET
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France fake news about cure
Mohammad Hatami
Mohammad Hatami Mar 22, 2020 11:03AM ET
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Junk Man
Junk_Man Mar 22, 2020 10:36AM ET
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Perhaps shut the market down for a week... Have everyone focus on social distancing?
Crystal Mann
Crystal Mann Mar 22, 2020 10:36AM ET
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That would cause a run on the banks as people would freak out about liquidity.
nick bryson
nick bryson Mar 22, 2020 10:36AM ET
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wrong format to mention that ***
Abeyek Dunblex
Abeyek Dunblex Mar 22, 2020 10:36AM ET
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That wouldcause more panic than the virus
chip isbell
Chip Mar 22, 2020 10:36AM ET
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Markets are pretty much all electronic. That would keep peoples assets out of reach.  It would also cause a liquidity crunch as people sold stock to raise and pull out cash.
Jayson Eubanks
Jayson Eubanks Mar 22, 2020 9:47AM ET
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It's called an AUTOCLAVE folks. They have been around since the 1890s. Find a way to manufacture a medical mask that can survive the high heat conditions of steam cleaning and you will become a billionaire.
Sam Patel
Sam Patel Mar 22, 2020 9:44AM ET
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The S&P P/E ratio for the past 20 years has averaged in the low to mid 20s. Why do we still benchmark its average as being in the mid to high teens based off of data from many decades ago? The world and companies have fundamentally shifted and how they generate revenue has as well with the introduction of ARR, digital marketing and consumer refresh cycles that should warrant a higher average P/E ratio. My opinion is by keeping the benchmark average so low we're forcing ourselves to continuously say we're in a bubble.
Elvis Durant
Elvis Durant Mar 22, 2020 9:44AM ET
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generate revenue or generate DEBT...???
Sam Patel
Sam Patel Mar 22, 2020 9:41AM ET
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The S&P P/E ratio has been at an average of lower to mid 20s for the past 20 years (since 2000)...at what point do we consider that to be the new normal instead of the mid teens? How many companies generate their revenue now vs 100 years with the introduction of ARR and refresh cycles has drastically changed. Why do we still benchmark based off of things decades ago?
 
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