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Economic Calendar - Top 5 Things to Watch This Week

Economy Jul 26, 2020 07:35AM ET
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By Noreen Burke

Investing.com -- As Congress continues to debate more fiscal aid the Federal Reserve will likely hold fire at the conclusion of its policy meeting Wednesday but stick to a cautious tone on the economic outlook. With market participants weighing escalating coronavirus cases in southern and western U.S. states and rising tensions between the U.S. and China some of the biggest names in big tech will report earnings. The highlight on the data calendar will be Thursday’s first estimate of U.S. second quarter GDP which will show the full scale of what is expected to have been the largest quarterly contraction ever. Meanwhile, German and euro zone second-quarter GDP figures are also expected to show steep contractions. Here’s what you need to know to start your week.

  1. Stimulus debate

Approximately 32 million Americans on unemployment benefits are currently receiving $600 per week in expanded jobless benefits, but this is due to expire on July 31st.

U.S. Treasury Secretary Steven Mnuchin on Saturday said that the Trump administration supports extending enhanced unemployment benefits until the end of the year in the next round of coronavirus aid, albeit at a reduced level.

The administration and the U.S. Congress have been trying to hammer out a deal on the next round of pandemic relief and Republicans are expected to unveil their proposed measures early in the week which will then be debated. However, it is unclear whether an agreement can be reached before the current package of expanded jobless benefits expires, which means there could be harder times ahead.

  1. Federal Reserve meeting

The Fed will probably sit on its hands at its July 28-29 meeting after already slashing interest rates to near zero and pledging unlimited financial asset purchases. Officials are likely to reiterate guidance that rates will remain near zero until the economy gets back to normal.

Fed policymakers have become more downbeat on the economic outlook in recent weeks, with some cautioning that recent improvements in economic data such as job gains may be fleeting amid a resurgence in the coronavirus pandemic.

“The pandemic remains the key driver of the economy’s course. A thick fog of uncertainty still surrounds us, and downside risks predominate,” Fed governor Lael Brainard said earlier this month.

  1. Tech earnings

The rally on Wall Street that has brought the S&P 500 to nearly 5% below its record high reached in February and seen the Nasdaq gain more than 15% year-to-date will be tested this week, with dozens of major companies reporting earnings.

Facebook (NASDAQ:FB) is due to report on Wednesday, while tech bellwether Apple (NASDAQ:AAPL), along with Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) are due on Thursday. Other companies scheduled to report include pharmaceuticals Merck (NYSE:MRK), Pfizer (NYSE:PFE) and Eli Lilly (NYSE:LLY), as well as McDonald’s (NYSE:MCD), Procter & Gamble (NYSE:PG) and Starbucks (NASDAQ:SBUX). Results from energy giants Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) are due out Friday.

Facebook, Amazon, Apple, Microsoft (NASDAQ:MSFT) and Google, the five largest U.S. stocks, now account for 22% of the S&P 500’s market capitalization, analysts at Goldman Sachs (NYSE:GS) Goldman Sach said in a recent report.

  1. U.S. GDP

The U.S. Commerce Department is due to give its first take on second-quarter GDP on Thursday, with analysts forecasting a bruising 34% annualized decline during the three-month period.

The recovery now looks at risk as cases of the virus have exploded across the country, prompting some authorities in the hard-hit South and West regions to either shut down businesses again or pause reopenings.

“Even as the Fed maintains its ultra-loose policy stance and Congress provides further fiscal support, ongoing social distancing requirements are likely to keep GDP well below its pre-virus trend and the unemployment rate elevated over the coming years,” said Paul Ashworth, chief U.S. economist at Capital Economics.

While data on Monday is expected to show another increase in durable goods orders, Thursday’s figures on initial jobless claims are expected to remain elevated.

  1. Euro zone GDP

Figures from Germany on Thursday and the wider euro zone on Friday will show the extent of the economic contraction caused by lockdowns during the second quarter. Germany’s economy, the euro area’s largest is expected to contract by 9% while the euro zone is set to slump 11.2%.

The euro hit 21-month highs above $1.16 on Friday after the European Union set aside differences and agreed a COVID-19 recovery fund. This signal of solidarity, combined with monetary and budget stimulus, could propel the currency to $1.20, some predict.

The optimism could take the sting out of the dismal GDP data.

--Reuters contributed to this report

Economic Calendar - Top 5 Things to Watch This Week
 

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Comments (14)
Strela Fxxx
Strela Fxxx Jul 26, 2020 4:36PM ET
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With a weak dollar, inflation in the US will explode, the Fed will raise rates!
Jae Ung Hwang
Jae Ung Hwang Jul 26, 2020 4:36PM ET
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no they won't lol raising interest rate at this time would cause chaos
Filipe Pereira
Filipe Pereira Jul 26, 2020 4:36PM ET
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yeah normally the rate rises Will com long later after the Crysis support money deliver and spent
Plopseven Schwartz
Plopseven Schwartz Jul 26, 2020 12:49PM ET
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How about the amount of defaults on rent, auto, credit card and loan payments due to the GOP stopping stimulus benefits? Who will be the first bank to fail?
Taylor Duran
Taylor Duran Jul 26, 2020 12:49PM ET
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Too early.
Easy Trade
Easy Trade Jul 26, 2020 12:49PM ET
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Taylor Duran  Yeah, gotta go to all time highs first knowing that consumers are not spending any money but  investors not caring in the face of record stimulus. Stimulus can not replace consumer spending, it's not feasible. Our economy is built on consumption, without it, it will fall apart.
Easy Trade
Easy Trade Jul 26, 2020 12:49PM ET
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It's frustrating that if the market is not crashing, it's melting up due to speculation. Every logical, rational person knew that Corona would have a "second" wave due to our lax policy. Everyone KNEW Q2 earnings would be at best disappointing. But because there was doubt, and tons of stimulus, investors HAD to buy because stocks were at a discount and there was a small chance that there would not be a second wave. Normally, speculators are a minority... but the bail outs, the stimulus, the too big to fail act has pushed every dip into a speculative must buy because the government is doing so much to protect their assets. It's annoying when the market has to wait to see the data before it can crash. When the data starts getting cooked, this will start to get real fun... when the market starts reacting to obviously fake but officially published data (we already seeing this starting with vaccine news)  it will start to be real ridiculous. Let's hope congress can start to clean this up.
Cryoman Frozen
Cryoman Frozen Jul 26, 2020 12:45PM ET
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Bought some more Bitcoin!
Fomo Overdrive
Fomo Overdrive Jul 26, 2020 12:06PM ET
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Phick you mods
Fomo Overdrive
Fomo Overdrive Jul 26, 2020 12:04PM ET
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"as job gains may be fleeting amid a resurgence in the coronavirus pandemic." The "gains" were false hope of half of america (small business) trying to reopen. It broke small business and without small business there isnt an america... only Public Private Partnerships
Fik Shawn
Fik Shawn Jul 26, 2020 11:18AM ET
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A lot of uncertainty this week but make sure you follow the market trend risk what you can afford and lock ur profits.
Jay West
Jay West Jul 26, 2020 11:18AM ET
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Very lofty generalized statement which investors and traders always have in mind. Are you short the market and hoping you can get inexperienced people to sell their investments? Day and swing traders dont need your advice. And investors think long term. So your comment is not beneficial. Trying adding some perspective to make your comments more beneficial or understood. Communication and dictation are key.
Easy Trade
Easy Trade Jul 26, 2020 11:18AM ET
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Jay West  If investors always look long term, why do markets crash? They should never, if you look far ahead enough you can see relief.
Jay West
Jay West Jul 26, 2020 11:08AM ET
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Both political parties should feel ashamed that the unemployment benefits are not solved. And now they want to give 70%. What a slap in the face. They should at least make people whole at 100% of pre-pandemic pay. It was their mistake of making some people receive more than previous pay, but now they want to punish all the unemployed. NOT GOOD. Extremely poor planning fueled by greed. Many unemployed are in the service industry depending on tips. I am one of these people. The $600 extra was still a significant pay cut for me, but it seemed somewhat fair considering the context. I want to go back to work, but my job does not exist. The federal government shut everything down and created this chaos. They should not be let off the hook so easily. I understand the reasoning for the shutdown, but the unemployment is still here. They should do right by their people. If they do not, Trump will lose many votes. I was standing behind him until now. If it falls through, I will simply not vote.
Chris Fran
Chris Fran Jul 26, 2020 11:08AM ET
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repubs never vote for stimulus as they don't want to pay taxes or divert from military spending. you know how many repubs voted for the stimulus in 2009? you know how many democrats voted against CARES ? that's zero and two to the above questions. and you still vote red? I guess you reap what you sowed no?
Plopseven Schwartz
Plopseven Schwartz Jul 26, 2020 11:08AM ET
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I was making $250 a day at work before the pandemic. Now I’ve been given $951 in unemployment FOUR MONTHS AGO and nothing since. All payments are marked pending. The system is broken.
Tom Jones
Tom Jones Jul 26, 2020 11:08AM ET
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70% of a W-2 salary, but self-employed and contractors (gig workers) don’t make salaries. What will happen to them, since many of their businesses gave gone to zero revenue, hence zero “salary”?
Jay West
Jay West Jul 26, 2020 10:48AM ET
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Will be red market until unemployment benefits are solved. If outcome of benefits is similar to what they are now, market will cheer. If benefits worsen, it will weigh on market. This is tied directly to consumer spending which is the fuel for the economy. The fact this is not solved yet is incredulous.
Baran HD
Baran HD Jul 26, 2020 10:16AM ET
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You should buy NETFLİX
Renee Brown
Renee Brown Jul 26, 2020 10:16AM ET
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Why?
Renee Brown
Renee Brown Jul 26, 2020 10:16AM ET
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Why
Jay West
Jay West Jul 26, 2020 10:16AM ET
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Renee Brown Baran must have call options out of the money or bought shares at a ridiculously high price. He possibly bought this as a safe haven during the pandemic, but then it dropped after earnings. He is known as a bagholder. This will not rebound for quite some time. Too much competition that keeps increasing such as Disney Plus. No good reason to buy Netflix at this time.
 
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