What to Expect in the Week Ahead (Inflation Data, Banks Kick off Earnings Season)

Moomoo Breakfast US wrote a column · Jan 8, 2023 19:30

What to Expect in the Week Ahead (Inflation Data, Banks Kick off Earnings Season)

The holidays are over and it will be a busy week for investors: the start of fourth-quarter earnings season and the latest inflation data will be the highlights.

Earning season kicks off on Friday, with results from several big banks and other notable companies. $Bank of America(BAC.US)$, $Citigroup(C.US)$, $JPMorgan(JPM.US)$, and $Wells Fargo & Co(WFC.US)$ will all report before the market opens, as will $Blackrock(BLK.US)$, $Delta Air Lines(DAL.US)$, and $UnitedHealth(UNH.US)$.

On Thursday, the Bureau of Labor Statistics will report the consumer price index for December. On average, economists are predicting no change in the index in the last month of 2022. That would mean a 6.6% year-over-year increase, after a 7.1% rise in November.

The core CPI, which excludes food and energy prices, is expected to have risen 0.3% in December, for a one-year gain of 5.7%. That would be down from the 6% annual rate of growth through November.

Other economic-data releases on the calendar include a pair of sentiment indicators. On Tuesday, the National Federation of Independent Business will release its Small Business Optimism Index for December. On Friday, the University of Michigan will publish its Consumer Sentiment index for January. Both are expected to be up at least slightly from the prior month.

Monday 1/9

The Federal Reserve reports consumer credit data for November. In October, total consumer debt increased at a seasonally adjusted annual rate of 6.9% to a record $4.73 trillion. Revolving credit, which is mostly credit-card debt, jumped 10.4% as more consumers tap credit to pay for living expenses.

Tuesday 1/10

The National Federation of Independent Business releases its Small Business Optimism Index for December. Consensus estimate is for a 91.5 reading, roughly even with the November data. The index remains mired near eight-year lows from last summer as small-business owners continue to cite inflation as their No. 1 issue.

Thursday 1/12

The Department of Labor reports initial jobless claims for the week ending on Jan. 7. The U.S. economy added 4.5 million jobs last year, or about 375,000 a month on average. The second half of 2022 did see a slowing of job growth from the first half's blistering pace but nothing that portends a recession in 2023, which the majority of economists are forecasting.

The BLS releases the consumer price index for December. Economists forecast a 6.6% year-over-year increase, after a 7.1% jump in November. The core CPI, which excludes volatile food and energy prices, is expected to rise 5.7%, slightly slower than the 6% rate of growth previously.

The CPI peaked at 9.1% in June of 2022, while the core CPI hit its top at 6.6% in September. The past two CPI reports have seen a sharp deceleration in inflation, but the Federal Open Market Committee has stressed that it needs to see many months of data before even considering an end to its interest-rate hiking campaign.

Friday 1/13

Earnings season kicks off with the four largest U.S. banks announcing quarterly results. $Bank of America(BAC.US)$, $Citigroup(C.US)$, $JPMorgan(JPM.US)$, and $Wells Fargo & Co(WFC.US)$ all report before the market open.

$Bank of New York Mellon(BK.US)$, $Blackrock(BLK.US)$, $Delta Air Lines(DAL.US)$, $First Republic Bank(FRC.US)$, and $UnitedHealth(UNH.US)$ release earnings.

The University of Michigan releases its Consumer Sentiment index for January. The consensus call is for a 60.5 reading, about one point more than previously. In December, consumer expectations for the year-ahead inflation hit an 18-month low of 4.4%.

Sectors Performance