May 14, 2018

Quincy Krosby: Connecting the Dots

An update on NAFTA negotiations, continued U.S.-China trade talks, retail data and a parade of Fed speakers may dominate market-related headlines this week, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.

 

A May 17 status report on NAFTA negotiations is expected under a deadline imposed by House Speaker Paul Ryan.

 

“The market is hoping for a solid report on negotiations toward a new agreement,” Krosby said.

 

Headlines surrounding continued trade negotiations with China should similarly garner investor attention.

 

“The President has suggested that he wants to help a Chinese company that has been struggling ever since it was announced that it could no longer receive American supplies,” Krosby said. “The headlines have certainly softened any sense of a strident tone towards China, and the market is receiving this news positively.”

 

Retail sales data released on Tuesday will be an important barometer of the health of the U.S. consumer, Krosby said. Earnings reports from bellwether consumer-related companies will also be closely watched.

 

“The U.S. consumer has been very important in the recovery from the recession,” she said. “We have seen a bit of a tapering off, but the hope is as we go into the second half of the year, we will see capital expenditures from corporate America pick up the slack.”

 

A parade of Federal Reserve speakers should offer insight into the Fed’s perspective on the economy and inflation expectations.

 

“Last week we had three very important data releases on prices, the PPI, CPI and import prices—all three were below consensus estimates,” Krosby said. “What we want to hear from the Fed is, do they see inflation gaining speed? Right now, the Fed funds futures market has downgraded its expectations of a fourth rate hike.”

 

Earnings to watch:

Home Depot

Macy’s

Walmart

J.C. Penney

Nordstrom

 

This week’s important data releases:

Tuesday: Retail Sales; NAHB survey (National Association of Home Builders)

Wednesday: Housing Starts; Industrial Production

Thursday: Leading Indicators

 

To talk to Quincy Krosby about her views of the market, contact Lisa M. Bennett or Dara Scerbo.

 

Read Quincy Krosby’s full Q2 Market Commentary: Regime Change.

The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

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Contact(s)

Lisa M. Bennett
phone 973-802-2894

Dara Scerbo
phone 973-367-9318