After ordering the latest gadgets on Cyber Monday, investors have a busy week ahead highlighted by OPEC meeting in Vienna to discuss a potential production cut. On the economic front, we have Manufacturing PMI, the Unemployment Rate and Non-Farm Payrolls.
OPEC Meetings: On Wednesday (11/30), OPEC meets in Vienna. Investors will be looking for any clues leading up to the meeting for a potential production cut agreement. If OPEC does decide to cut production between its members, we can expect a spike in the price of oil. Markets will react by going higher on the back of the energy sector. Sectors such as transportation where oil is a significant cost to their company’s bottom lines could react negatively to an agreement. In my opinion, as long as politics play a part of the deal and as we all know, none of them get along, do not expect a deal at this meeting which will send oil lower. The latest update had Saudi Arabia not attending the scheduled OPEC/Non OPEC meeting on Monday, signaling that a deal this week is unlikely, sending oil lower.
Black Friday & Cyber Monday: Investors will get their first readings into how Black Friday and Cyber Monday sales went over the course of the weekend. Should sales disappoint, we can see certain retailers fall on the news. Conversely, if sales beat expectations, we can see a spike in certain firms. Some food for thought. The National Retail Federation is forecasting 137.4M Americans to shop online or in stores between Black Friday and Cyber Monday. Approximately 126M Americans voted in the Presidential election.
Goooooold: Last Wednesday (11/23), a strong durable goods report sent gold crashing to below $1200 for the first time since Mid-February. We also witnessed the Chinese Yuan collapse to fresh lows sending the USD Index higher. The reaction to the gold sell off is also pushing bond yields higher. Investors will watch to see if the Chinese Yuan continues lower sending the Dollar higher and Gold lower.
US Dollar Strength: We have now seen the US Dollar spike to 13 year highs with the EUR now down to $1.05. In last Friday’s shortened trading session, the USD index fell off its recent highs as investors likely locked in profits after the recent run up. Investors will look to see if the US Dollar’s trajectory goes higher, or if it starts to scale back. As the markets continue to assess President elect Trump’s potential monetary policy, we may continue to see the Dollar strengthen helping markets climb to record highs.
Italexit: On Sunday (12/4), Italians will head to the polls to vote in a referendum on whether to overhaul their national constitution. It is not a vote to leave the EU, but the result could be the first step to the Italians potentially going down that road. Should the ‘no” votes win, we will likely see Italy’s Prime Minster resign. European Stocks would also go lower, with Italian bank stocks really getting hurt. As we get closer to the planned vote, the markets will rely on the polls to determine the outcome (since the polls have done such an excellent job in predicting the outcomes as of late (Kidding)).
Super Mario Speaks: On Monday (11/28) ECB President Mario Draghi is expected to speak about the consequences of BREXIT before the European Parliament’s Economic Committee. Investors will be listening to Draghi’s speech for clues to see if the ECB will extend their bond purchase program, which is scheduled to end in March. Should Draghi announce the expansion of the program, or further quantitative easing, expect stocks on both sides of the Atlantic to go up with the Euro and European bond yields going lower. If he does not mention any additional stimulus measures, expect the markets to potentially fall.
Non-Farm Payrolls & Unemployment Rate: On Friday (12/2), Non-Farm Payrolls and the Unemployment Rate are released. This will be the first time this data is being released after Donald Trump was elected President. Either way, expect 0 manufacturing jobs to be created with another 50K waiters and bartenders being added to the economy. Should the economy create more jobs (bartenders) than expected, we should see the markets go up with the odds of an interest rate hike by the Fed climbing.
4 records in 1 Day: Last Monday (11/21) saw the Dow, S&P 500, Nasdaq and Russell 2000 all hit new highs. This is the first time since 1999 that all 4 of these indices had hit a new high in the same day. This also happened again on Friday (11/25). Investors will look to see if all of them can continue to climb higher.
Sorry if many of you now have Manic Monday by the Bangles stuck in your head.