1) U.S. payrolls – Dec. 6 – the low expectations around the October jobs report turned out to be a bit of a mixed blessing, as the better-than-expected 128,000 number along with an upward revision in the September numbers offset concerns about a fall in the wages data, and a rise in the unemployment rate. Expectations that the GM strikes would see a sharp fall in the headline number proved to be wide of the mark, and while the number was on the low side, it was well above the consensus 90,000. The coming week’s November numbers should see a pickup in seasonal hiring as well as the adding back in of the GM strike numbers, as the U.S. economy gears up for Thanksgiving and the pre-Christmas period. Over the last few years the last three months of the year has consistently seen decent job gains. This year isn’t likely to be any different, with a decent number here likely to keep the prospect of any further Fed rate cuts at bay until early next year.
2) U.K. election/Trump visit – as we head into the penultimate week of the U.K. election campaign and the markets still pondering the MLP YouGov poll and a potential 60+ majority for the Conservative party, there is still a sense of nervousness that it could still go horribly wrong this week. The biggest banana skin is the visit of U.S. President Donald Trump to the NATO summit, which starts on Dec. 3. One of Labour’s key attack lines has been to drive fear about the future of the NHS, with respect to any U.S. trade deal. Conservative headquarters will be hoping that Trump observes normal protocol and keeps his opinions to himself ahead of the Dec. 12 poll date. You can be sure that certain sections of the media will be trying to tease out a reaction from the U.S. president, which might invite further questions about the U.S./U.K. future relationship and help Labour’s poor polling numbers in the process. Any narrowing of the polls in Labour’s favour could well be to the detriment of the pound, which has made decent gains this week against the euro, hitting a six month high in the process.
3) Global manufacturing PMI’s – Dec. 2 – we have some evidence of a pickup in manufacturing activity in the last couple of months, particularly in China and the U.S., while manufacturing in Germany has also improved, albeit from very low levels. Whether it is enough to suggest that the trough is in is another matter, after all, most dead cats bounce, and while there is some optimism that we may see a rebound into year-end there is some scepticism that it can be sustained into 2020
4) Global services PMI’s – Dec. 4 – while we’ve started to see evidence of a pick-up in economic activity in the manufacturing sector, there is a concern that services is starting to feel some of the pain, that manufacturing has been feeling for most of this year. The resilience of the services sector at a time when manufacturing has been struggling has been particularly notable so far this year so it is concerning, although not surprising that we are starting to see a little weakness now.
5) Bank of Canada rate decision – Dec. 4 – this is likely to be a tricky decision for the Bank of Canada than it would have been five weeks ago. Up until then the Canadian economy had looked quite resilient, however, the recent payrolls data would appear to suggest a significant softening after an unexpected decline of 1,800. Markets had been expecting a gain of almost 15,000. It is important to note that the Canadian economy does have a tendency to see surprise drops in the employment numbers. We’ve seen three other declines this year already, so one shouldn’t read too much into one number, however, private ADP (NASDAQ:ADP) payrolls were also weaker. Nonetheless the weakness may well prompt the Bank of Canada to be more dovish than normal, if they don’t cut rates when they meet later this week.
6) OPEC meeting – Dec. 5 – oil prices have remained in a fairly steady range over the last few months with Brent prices fairly steady between $55 and $65 a barrel, apart from a brief spike above $70 after the drone attack on Saudi infrastructure in September. With the Aramco IPO set to launch sometime this month it is unlikely that we’ll see any significant changes to output given concerns about global demand, however, the Saudi’s will be keen to keep a floor under prices with the promise of future production cuts if prices fall too low.
7) Slack Technologies Q3 20 – Dec. 4 – it’s been almost six months since Slack Technologies Inc (NYSE:WORK) listed on the U.S. stock exchange, and the share price performance has been less than stellar. Priced initially at a premium to its $26 launch price the shares surged to over $38, however since then the shine has come off sliding below $26 in October. The new issues market has seen a lot of the gloss come off it in recent months, a trend that has been exacerbated by concerns over profitability, and valuations that appear to stretch credibility. Valued at $20 billion at the time of listing, the company has yet to make a profit, losing $138.9 million in its last fiscal year. Revenues have been growing, in September the company posted an increase in sales of 58% to $145 million, however its operating expenses more than trebled to $478 million partly as a result of the listing. To prevent further downward pressure on the share price markets will be looking for signs of increasing revenue growth and evidence that it was getting its costs under control. The company is still expected to post a loss of $0.08-cent a share, for the quarter and expected to post full year revenues of between $600 million and $610 million for the year.
8) Brown Forman Q2 20 – Dec. 5 – when Jack Daniels maker Brown Forman (NYSE:BFb) updated the market three months ago it was clear that the numbers were likely to have been impacted by the tariffs imposed by the EU in retaliation for U.S. tariffs on EU goods. As a result the company cut its forecasts for the current fiscal year by $0.10c with over half of the reduction being tariff related. Underlying sales growth was still expected to be in the 6% to 7% range, but nonetheless the trend was clear, despite the U.S. being its main market. Annual profits are now expected to come in between $1.65c to $1.75c a share, however the slowdown in Europe and other markets could see this guidance come under threat again later this week, especially if Q2 profits come in shy of the $0.52c a share the markets expect.
9) Tiffany Q3 20 – Dec. 5 – LVMH Moet Hennessy Louis Vuitton SE (PA:LVMH)’s acquisition of Tiffany & Co (NYSE:TIF) has seen the share price surge sharply in the last few weeks, after the French company slipped a $16-billion ring on the U.S. jewelry specialist, giving the French luxury giant a big slice of the U.S. market. This could well be the catalyst that Tiffany needed to turn around its fortunes. The brand had been struggling in recent months, and in Q2 the company missed expectations on revenue, though profits did beat expectations. The problems in Hong Kong were acting as a drag on its business, the company has several stores there, while weaker demand in Asia wasn’t helping. Its 93 U.S. stores were also being squeezed by its cheaper rivals like Pandora. Expectations are for Q3 profits to come in at $0.85c a share.
10) Kroger Company (NYSE:KR) Q3 20 – Dec. 5 – the company has been investing in new areas in order to take on the likes of Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), with the deal with Ocado Group PLC (LON:OCDO) expected to deliver results once it’s beyond the transition phase. The company is set to spend over $3 billion on revamping its stores this year, with a particular focus on digital sales. In November, the company forecast that it could see further improvements in profits and sales in the coming months, however, this turned out to be a little premature, after the company slowed down its renovation program in response to a weak sales uplift outside of its core competency which is the groceries business. Its ambition to compete with Amazon and Walmart remains undimmed, however management have realized that perhaps too much change too quickly can be counterproductive.