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Week Ahead: Jobs, Earnings, Emerging Markets, Debt Ceiling & Twitter

Feb 3 2014, 1:03am CST | by

Week Ahead: Jobs, Earnings, Emerging Markets, Debt Ceiling & Twitter
 
 

Stocks in the Dow Jones have lost about 5% so far this year already – and in the next week U.S. shares will have to navigate another storm of big company earnings, data on job creation and other important economic indicators.

Throw in ongoing political, currency and economic turmoil in some emerging markets – with any slowdown in China a major concern — and the fact the United States could hit its debt ceiling again on Friday, February 7, and it becomes clear that this could be yet another choppy week for markets.

Many American companies like General Motors and Yum! Brands – operator of KFC, Taco Bell and Pizza Hut – get a big chunk of their profits in emerging markets. Both companies report earnings this coming week.

But let’s not forget U.S. stocks gained more than 30% in 2013 and many analysts have called for a 10% correction at some stage in 2014. Perspective is everything.

High on the news agenda this week will be Twitter’s first earnings statement as a public company late afternoon on Wednesday.

More than 80 of the companies in the S&P 500 report earnings. Firms announcing results this coming week will include General Motors, News Corp, LinkedIn, Zynga, Kellogg, Disney, Aflac, Time Warner, Merck, GlaxoSmithKline, AstraZeneca and Yum! Brands.

We may even get news of a new CEO for Microsoft, with Satya Nadella being touted as a strong internal candidate and Google’s Sundar Pichai seen as a serious external candidate.

Throughout the week though, U.S. investors will keep one eye on emerging markets for any trigger that might spread panic.

“China remains a really big question mark here,” said Jeremy Glaser of research firm Morningstar. “ … if we see some kind of financial crisis in China pop up. That would have ramifications across the entire global economy.”

However, Glaser added: “ … we are not necessarily on the precipice of a 1997-type crisis again (in emerging markets).”

Glaser concluded: “I think U.S. investors need to put this all in perspective. Yes, these (emerging markets) currency issues could be a headwind to earnings throughout 2014 and could slow dividend growth. But most of the strong U.S. companies that have great competitive advantages will be able to ride out anything that happens over the next couple of months.”

Monday brings data on U.S. manufacturing growth from the Institute for Supply Management at 10am and a speech from U.S. Treasury Secretary Jacob Lew that is expected to address the need for Congress to raise the country’s debt ceiling by Friday, February 7, to avoid yet another fiscal crisis in Washington that could damage markets.

Australia will announce closely watched details on shipments of iron ore to China, and vehicle sales data will be provided in the United States.

Companies with Monday earnings announcements will include Yum! Brands, operator of KFC, Pizza Hut and Taco Bell.

On Tuesday, the U.S. Congressional Budget Office is expected to make public its annual economic outlook, including details on the U.S. budget deficit, and U.S. factory orders for December will be announced.

Companies announcing earnings Tuesday will include Aflac, Toyota Motor, Mitsubishi, Panasonic and Munch Re.

Wednesday afternoon brings the first quarterly earnings statement from Twitter since it became a public company. According to Bloomberg, analysts expect it to announce a net loss on sales of about $217 million.

Other companies with earnings news on Wednesday will include Walt Disney, Time Warner, Merck, GlaxoSmithKline. Allstate and Prudential Financial.

Thursday brings a huge day of corporate earnings, including results from Kellogg, General Motors, News Corp, LinkedIn, Zynga, Vodafone, Credit Suisse, Akzo Nobel, AstraZeneca and Sony.

Thursday also sees big economic news on U.S. initial jobless claims, the U.S. December trade deficit, and interest rate decisions from the U.K. Central Bank and European Central Bank.

Friday morning brings what could be the most sensitive economic news of the week – the U.S. jobs report for January.

After December’s hugely disappointing U.S. jobs creation number that spooked markets, analysts are hoping for much better news this time around.

Friday is also the day by when Congress, technically, should have agreed to raise the U.S. debt ceiling so that the Treasury will not have to take extraordinary measures to make sure the Government can pay all of its bills.

We really could end the week with bang.

Source: Forbes

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