Weekly Forecast: Consensus 2018, Upbit Investigation and the Conclusion of Corporate Earnings Season
Traders of all persuasions will be drawn to the economic calendar this week, as a combination of market-moving data, industry summits and a federal investigation into a large crypto exchange set to drive headlines. On Wall Street, the bulk of earnings season is set to conclude with U.S. firms on track for their best quarter since 2010.
To get a better sense of what’s ahead, we encourage readers to go over latest Week in Review.
Upbit Investigation Widens
South Korea’s investigation into cryptocurrency exchange Upbit intensified over the weekend after Seoul’s Financial Supervisory Service (FSS) announced it has joined the federal probe.
News broke late last week that the Korean Financial Intelligence Unit (KIU) and the Financial Services Commission had raided Upbit over suspicion of fraud. On Friday, Upbit informed its users that the investigation would not impact operations.
South Korea’s probe disrupted a period of relative calm for cryptocurrencies, as the market plunged by as much as 17% through Saturday. The ongoing investigation will play an important role in influencing investor sentiment over the short term.
Crypto assets staged a large recovery on Sunday, with prices rebounding $25 billion.
More than 7,000 people will descend on New York City this week for Conensus 2018, a three-day blockchain technology summit that will feature some of the most prominent names in the industry. The summit, which runs from May 14-16, will feature more than 250 speakers, including Twitter CEO Jack Dorsey and St. Louis Federal Reserve Bank President James Bullard.
Attendees for this year’s summit include startups, investors, banks and policy experts. As Bloomberg reports, attendance has surged nearly 1,000% since Consensus began in 2015.
From the perspective of investors, the annual summit is usually associated with a dramatic rise in cryptocurrency prices. For example, bitcoin prices have gained between 10% and 69% during the last three Consensus events, with post-summit gains ranging between 78% and 138%.
Wall Street’s reporting season will continue this week, although the pace of the releases will slow significantly now that the bulk of S&P 500 companies have reported.
As of Friday, 91% of S&P 500 companies had disclosed their first-quarter results. Seventy-eight percent of companies have reported better than expected earnings and 77% have disclosed revenues that were higher than expected. Combined, their blended earnings growth rate is 24.9%, the highest since Q3 2010, when the U.S. economy was still recovering from its worst recession of a generation.
Three Dow blue chips are scheduled to report this week, including Home Depot (May 15), Cisco (May 16) and Walmart (May 17). Several others are also scheduled to report, including Nordstrom (May 17) and Deere & Company (May 18).
A steady stream of economic data will make headlines throughout the week, beginning on Tuesday with a slew of Chinese reports.
Beijing will report on retail sales, industrial production and fixed asset investment for the month of March. Retail sales are forecast to weaken slightly amid a faster pick up in factory output and fixed asset investment.
Later in the day, Germany and the broader euro area will release revised first-quarter GDP figures. Euro area GDP is forecast to expand 2.5% annually, unchanged from the previous close.
The U.S. Department of Commerce will report on retail sales at 8:30 a.m. ET. Receipts at retail stores are forecast to rise 0.4% during April.
The Japanese government will also report on first-quarter GDP on Wednesday, where the world’s third-largest economy is seen shrinking for the first time in two years.
Final April inflation data from the Eurozone will also make headlines in mid-week trading, as will U.S. housing starts and industrial production. U.S. factory output is forecast to rise 0.5% for April following similar gains the month before.
Currency traders will be on high alert for Australian and Canadian employment figures on Thursday. In the United States, initial jobless claims and regional manufacturing data from the Philadelphia Fed are also expected.
On Friday, the European Commission’s statistical agency will report on the March trade balance, which is expected to show little change on a seasonally adjusted basis. Meanwhile, the Canadian government will release the latest on retail sales and consumer inflation for the months of March and April, respectively.
There are no major policy meetings scheduled over the next five days, though several speeches from top central bankers could influence investor sentiment.
Federal Open Market Committee (FOMC) member Loretta Mester is scheduled to deliver a speech on Monday. On the same day, the Fed’s Bullard is scheduled to speak at the Consensus blockchain event in New York.
A monthly meeting of the Eurogroup is scheduled to take place on Tuesday. The event usually includes all 19 Eurozone finance ministers, as well as European Central Bank President Mario Draghi.
On Thursday, Fed Bank of Minneapolis President and FOMC member Neel Kashkari will deliver remarks. Kashkari is widely considered to be one of the Fed’s most dovish members.
Fed Governor Lael Brainard is scheduled to deliver a speech at the 8th Annual Community Development Conference in New York on Friday.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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