Week Ahead on Wall Street: Macro Checkup

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Down the Golden Path

It’s still early days in earnings season but results have continued to surprise, coming in 5.0% above consensus estimates. Now, the rate that companies have been beating expectations has been lower than the 5-year average rate of 8.6%, but better than expected is still better than expected.

That sets up this week as an important checkup for markets and investors. Not only is earnings season ramping up considerably with 137 companies, or 27% of the S&P 500, set to report results , but we’re also going to get important economic data at the end of the week. More specifically, second quarter gross domestic product will be released on Thursday, giving us a comprehensive look at economic growth, while the Fed’s preferred measure of inflation, the core PCE price index, will be released on Friday. That will add some perspective to all these earnings beats. After all, it would have consequences if the economy started to crumble.

Currently, consensus estimates are for GDP growth of 1.9%, and core PCE of 0.2% m/m and 2.6% y/y. Relative to data we were getting earlier in the year, those sorts of numbers would represent slower but solid growth, as well as inflation that has been trending lower but remains slightly above the Fed’s target.
Since last summer, Chicago Fed President Austan Goolsbee has referred to the golden path, which is getting inflation down without causing a recession. The U.S. economy has been able to stay on that path despite some inflation bumps in the road. But with unemployment rising and earnings results beating expectations by less than the historical average, there could be some recessionary road bumps out in the distance. Staying on the golden path isn’t guaranteed, so we’ll see what this week’s data say.

Economic and Earnings Calendar

Monday

• June Chicago Fed National Activity Index: This is a monthly index put together by this regional Fed that incorporates 85 indicators from four categories: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories.
• Earnings: Alexandria Real Estate Equities (ARE), Brown & Brown (BRO), Cadence Design Systems (CDNS), IQVIA Holdings (IQV), Nucor (NUE), NXP Semiconductors (NXPI), Truist Financial (TFC), Verizon (VZ), W R Berkley (WRB)

Tuesday

• July Philadelphia Fed Non-Manufacturing Activity: The Philadelphia Fed’s survey of services executives in the region on business conditions and their outlook. 
• July Richmond Fed Manufacturing Activity: The Richmond Fed’s survey of manufacturing executives in the region on business conditions and their outlook. 
• July Richmond Fed Non-Manufacturing Activity: The Richmond Fed’s survey of services executives in the region on business conditions and their outlook. 
• June Existing Home Sales: Most home transactions in any given month tend to come from the existing market, and as a result set the tone for the broader housing market.
• Earnings: A O Smith (AOS), Avery Dennison (AVY), Chubb (CB), Comcast (CMCSA), Capital One Financial (COF), CoStar Group (CSGP), Quest Diagnostics (DGX), Danaher (DHR), Enphase Energy (ENPH), EQT (EQT), Freeport-McMoRan (FCX), General Electric (GE), General Motors (GM), Alphabet (GOOGL), Genuine Parts (GPC), HCA Healthcare (HCA), Invesco (IVZ), Kimberly-Clark (KMB), Coca-Cola (KO), Lockheed Martin (LMT), Moody’s (MCO), MSCI (MSCI), NVR (NVR), PACCAR (PCAR), PulteGroup (PHM), Packaging of America (PKG), Philip Morris International (PM), Pentair (PNR), Sherwin-Williams (SHW), Seagate Technologies (STX), Tesla (TSLA), Texas Instruments (TXN), United Parcel Service (UPS), Visa (V)

Wednesday

• June Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain. 
• June Wholesale and Retail Inventories: Wholesalers and retailers often operate as intermediaries for the sale of manufactured products, serving as a key part of the goods supply chain. 
• July S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment. 
• June New Home Sales: While only a minority of home transactions in any given month come from new constructions, these home prices tend to be more cyclical and give insight into developing trends.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Earnings: Align Technology (ALGN), Allegion (ALLE), Ameriprise Financial (AMP), Amphenol (APH), Boston Scientific (BSX), CME Group (CME), Chipotle Mexican Grill (CMG), Edwards Lifesciences (EW), Ford (F), Fiserv (FI), Fortive (FTV), General Dynamics (GD), GE Vernova (GEV), Globe Life (GL), International Business Machines (IBM), Invitation Homes (INVH), International Paper (IP), Interpublic Group of Companies (IPG), KLA-Tencor (KLAC), Las Vegas Sands (LVS), Lamb Weston (LW), Molina Healthcare (MOH), NextEra Energy (NEE), Newmont Mining (NEM), ServiceNow (NOW), Old Dominion Freight Line (ODFL), O’Reilly Automotive (ORLY), Otis Worldwide (OTIS), Raymond James Financial (RJF), Rollins (ROL), Roper Technologies (ROP), Republic Services (RSG), AT&T (T), Teledyne Technologies (TDY), TE Connectivity (TEL), Teradyne (TER), Thermo Fisher Scientific (TMO), Tyler Technologies (TYL), Universal Health Services (UHS), United Rentals (URI), Westinghouse Air Brake Technologies (WAB), Waste Management (WM).

Thursday

• 2Q GDP First Estimate: The primary measure of economic growth in the United States, which is measured as total expenditure on a country’s goods and services. This will be the first reading of activity. 
• June Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators. 
• July Kansas City Fed Manufacturing Activity: The Kansas City Fed’s survey of manufacturing executives in the region on business conditions and their outlook.
• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.
• Earnings: American Airlines Group (AAL), AbbVie (ABBV), Arthur J Gallagher & Co (AJG), Baker Hughes (BKR), Carrier Global Corp (CARR), CBRE Group (CBRE), Cincinnati Financial (CINF), CMS Energy (CMS), Deckers Outdoor (DECK), Digital Realty Trust (DLR), Physicians Realty Trust (DOC), Dover (DOV), Dow Inc (DOW), DTE Energy (DTE), DexCom (DXCM), Edison International (EIX), Eastman Chemical (EMN), Hasbro (HAS), Hartford Financial Services Group (HIG), Honeywell International (HON), Juniper Networks (JNPR), Keurig Dr Pepper (KDP), L3Harris Technologies (LHX), LKQ (LKQ), Southwest Airlines (LUV), Masco (MAS), Mohawk Industries (MHK), Nasdaq (NDAQ), Northrop Grumman (NOC), Norfolk Southern (NSC), PG&E (PCG), Principal Financial Group (PFG), Pool (POOL), Raytheon Technologies (RTX), Tractor Supply Company (TSCO), Union Pacific (UNP), Valero Energy (VLO), Veralto Corporation (VLTO), VeriSign (VRSN), West Pharmaceutical Services (WST), Willis Towers Watson Public (WTW), Weyerhaeuser (WY)

Friday

• June Personal Income and Spending: These numbers give insight into how Americans are doing, which is important since consumer spending accounts for about two-thirds of economic growth in the United States. 
• July Kansas City Fed Non-Manufacturing Activity: The Kansas City Fed’s survey of services executives in the region on business conditions and their outlook.
• June Personal Consumption Expenditures Price Index: The Fed targets this inflation measure for its price stability mandate and believes PCE to be the best measure of consumers’ spending habits.
• July University of Michigan Consumer Sentiment: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.
• Earnings: Aon Plc (AON), Franklin Resources (BEN), Bristol-Myers Squibb (BMY), Charter Communications (CHTR), Colgate-Palmolive (CL), Centene (CNC), 3M (MMM), Royal Caribbean Cruises (RCL), T Rowe Price Group (TROW)

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