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This Global Week Ahead is the first full week of October. We kick off the latest Q3 earnings season. The quarter is fully behind us now.
Indeed, the fresh driver behind Global Markets this opening week of October should shift from macro reports to initial Third Quarter (Q3) earnings reports. Including the Alcoa ( AA ) report on Thursday, this week will see Q3 results from a total of 24 companies. Five are S&P 500 members.
My colleague, Zacks Director of Research Sheraz Mian, wrote this as he issued his latest Q3 2015 update-
"The earnings growth picture isn't expected to improve in Q3. Total earnings for the S&P 500 index look down -5.6% from Q3 last year on -5.5% lower revenues.
"Headwinds from Q2 are at play in Q3. That's a combination of Energy sector weakness, US dollar strength and global growth uncertainty. Exclude Energy sector earnings, which are expected to be down -65.4% y/y. Then, total earnings for the S&P 500 index go up +1.6% on -0.5% lower revenues."
The bottom line: U.S. major company EPS growth and revenue growth show a dead calm without the Energy price collapse. The S&P 500's performance goes down solidly with the Energy price collapse.
Want a possible upside Q3 surprise? It may come from the S&P 500 EPS growth bar being set so low. Nobody looks for a cheap gas-at-the-pump dividend anymore.
Want a likely downside Q3 surprise? Evidence the Energy price collapse and strong US dollar malaise has sunk its teeth into more S&P 500 sectors.
On the monetary policy front, the week's central bank meetings of the Bank of England (BoE), the Reserve Bank of Australia (RBA), and the Bank of Japan (BoJ) could cough up a provocative comment or two. Don't look for much change in rates though, given the Fed held its hand.
This week, these central banker's comments get added spice with the issuance of the FOMC and ECB's latest minutes. Those two institutions are the supertankers setting the speed of the global economy.
If you are looking for a good stock, consider Lufthansa ( DLAKY ). This major European airline is a Zacks #1 Rank addition this week. The stock has a Zacks Value and Growth Rank of A to boot.
Another international stock that popped onto our radar screens this weekend is Israel Chemical Ltd ( ICL ). This specialty chemical industry player gets a Zacks #1 Ranking, and had Zacks Value and Growth Ranks of A, too.
These two stocks have that Growth at a Reasonable Price (GARP) combo. They are in industry sectors (Airlines and Specialty Chemicals) where the Energy sector collapse and strong US dollar are tailwinds, not headwinds.
That may be the company specific way to play any rebound in global stocks. Markets do climb a wall of worry. The higher that wall is, the bigger the climb.
Want the Zacks outlook for Alcoa? It is a Zacks #5 ranked stock. 'Nuff said there. Most Materials companies outside of the Paper group are in the tank with Energy.
Here's the Global Week Ahead for Macro Fundamentals:
On Monday , ANZ job adds came out at +3.9% m/m, well above the prior +1.3% m/m number.
Services PMIs in Europe came out well. The Eurozone services PMI was 53.7, just below the prior 54. France came at 51.9, Germany at 54.1, Italy at 53.3, and Spain at 55.1. However, only France's services PMI was better than the prior number.
The Eurozone composite PMI was 53.6, slightly below the prior 53.9, but still showing solid expansion.
Eurozone retail trade grew +2.3% y/y above the +3.0% y/y rate.
Markit Brazil composite PMI looks to be a very weak 45.2. Reading at 45 or below are recessionary.
Euro-area finance ministers meet in Luxembourg. There is a Eurogroup meeting there too.
The ISM non-manufacturing index looks to be a strong 57.5.
On Tuesday , the RBA (Reserve Bank of Australia) holds its interest rate meeting.
Germany factory not seasonally adjusted orders look to be up +5.6% y/y, rebounding strongly from a prior -0.6% y/y reading prior. In seasonally adjusted terms, the rebound is +0.5% m/m, up from a prior -1.4% m/m reading.
The EU finance minister meeting in Luxembourg continues.
The IMF releases its World Economic Outlook report.
On Wednesday , we get Japan's preliminary leading indicator. It should be 103.4, down from a prior 105. Japan's key machinery orders should rise to +3.5% y/y, better than the prior +2.8% y/y reading.
German industrial production should be +0.2% m/m, down from a prior +0.7 m/m reading.
Spanish industrial production should be +4.7% in y/y terms, down from a prior +5.2% y/y number.
The U.K.'s industrial production looks to be +1.2 y/y, up from a prior +0.8% y/y number.
The Bank of Japan issues a policy statement and Governor Kuroda holds a press conference.
Brazil's inflation rate looks to be stuck in high gear at +9.5%.
On Thursday , Greece's unemployment rate looks to be 24.6%.
The Bank of England (BoE) holds its monetary policy committee meeting and issues its rate decision.
The ECB minute from its prior meeting are released.
U.S. initial claims look to be 274K, very strong.
Mexican consumer prices look to be +2.6% y/y.
The FOMC releases the minutes of its latest meeting.
On Friday , France's industrial production should be +0.2% y/y, better than the prior -0.8% y/y reading. Manufacturing production should be up +0.7% y/y, rebounding from a -1.3% y/y reading.
The World Bank and IMF hold their annual meeting.
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