Week Ahead 7/8/23: UK Halifax House Price Index; US jobless claims; Deliveroo earnings

(Video Transcript)

German industrial figures drop

Hello, I'm Angela Barnes and welcome to the Week Ahead starting 7 August 2023. And there's plenty to watch out for in economic news and on the corporate front.

Well, let's start with the economic calendar. We have Germany's industrial production data for June, which declined unexpectedly in May. In the UK, Halifax reveals what house prices look like in July. It comes after Nationwide reported that average house prices fell 3.8% in the year to July, making it the biggest annual drop in 14 years.

Also on Tuesday, we will have UK BRC retail sales for July, a Westpac consumer confidence data and business confidence data from Australia. In China, a July trade balance update and an assay from the US, also API crude oil inventories.

Moving on to Wednesday, we have the China consumer price index and producer price index for July and also the US EIA oil inventories out too. Well, it's a busy week.

And then on Thursday, we'll have a consumer price update for July and US initial jobless claims as well from the US.

And then let's move on to the economic calendar and a busy day, Friday, but with similar second quarter UK GDP figures and add trade balance update and a trade balance update from the UK, as well as June's industrial production data. In the US, we have July's producer price index, Michigan consumer sentiment for August and the Baker Hughes oil rig count.

And then we move on to corporate news. So let's start then with Monday. And we're going to be hearing from Pagegroup announcing its first-half results, and then beyond meet second-quarter earnings as well.

On Tuesday, we hear from Abrdn and Glencore. With first half-of-the-year results, we also get fixed and Bayer's second-quarter results. And in the US, we will have key key results from Eli Lilly and Lyft.

On to Wednesday, we get financial updates from Flutter and Bellway, Delivery Hero, TUI, A-Hole, Delhaize and Continental.

And then on Friday, among the companies reporting, it's the turn of Sir Simon and Kane, Antofagasta, Deliveroo, Henkel, HelloFresh, Zurich Insurance, Deutsche Telekom, Metro and Alliance, to name a few.

And on Friday, to commodities, more oil when we get the latest OPEC report. So, a very busy week on the corporate calendar looking ahead.

But let's cross now to Tom Sosnoff in Chicago from Tasty.

AB: Tom, it's a quieter week on the earnings front, but very busy on the corporate front as well. Of course, there's always lots going on. What do you think investors should be looking out for in the week ahead?

TS: Well, you're going to hate me for saying this, but investors should be looking out for none of that economic numbers or any of that data that you just talked about in the sense that, you know, this market is, we've been in an incredible bull market and the last week, it's shown a few cracks.

And I think that once you get done with earnings, the market gets to focus on really, you know, where it is relative to its own price extreme. And so I think that investors aren't going to be focusing necessarily on economic numbers because the bond market is on a multi-year low and the stock market's on a multi-year high.

So I think as the week kind of unfolds, you know, investors are going to get a feel for, you know, hey, what happens after you get an unwind of very mediocre earnings reports, which is essentially what happened this cycle. Everything was kind of inside the range. There were no bust outs to the upside.

So I think next week investors are really going to be focusing on, has this market capitulated, has it run out of steam or do we still have, you know, a little bit of room to go on the upside? And I think that's going to be the real question. And I think that's going to sort itself out with the tape action more than it is with the economic numbers.

'The Fed made its bed'

AB: And what about US initial jobless claims, trade balance and crude oil inventories?

TS: We've seen some interesting action from oil over the last few days, for example, on the up supported by these Saudi cuts. You know, what's your thoughts on those specific pieces of economic data?

So with respect to the US, you know, jobless claims and things like that, I think the bond market has already kind of, you know, the bond market along with the Federal Reserve Bank (Fed), has already basically made its bed. And their stances at this point, I don't think there's much less they can do.

And the bonds yesterday traded, the long bond yesterday traded down to 120 in the US, which is the lowest it's been almost in two years. So, I think price-wise, those are the highest interest rates on the long side. The short side has already been up in the stratosphere. The yield curve has been inverted for the whole year.

So, I think as far as jobless claims go, as far as unemployment, jobless claims and all that, I don't think they'll have much of an impact on the bond markets at all. I don't think they'll have much of an impact on the dollar.

Crude oil rallies

Crude oil is a little bit different. Crude oil has had a really nice rally. So I think, at this point, crude oil and commodities tend to be more emotionally influenced on a short-term basis by numbers. So maybe crude oil has a little bit of volatility left into it, but it's had a huge move. It's up again this morning. It's at that 82 level. And the 82 level has been a difficult spot for crude oil. So, my guess is here that crude oil is going to play a tug-of-war.

This is where the shorts will come out right here at about 82. And this is where the longs want to see it bust out to the upside. So, personally, we're leaning a little short here. I think the street's leaning a little long. I think it's going to be a good tug-of-war right here on crude oil. I don't know if the inventory numbers are going to matter that much, but I think crude oil is at a really interesting trading level.

AB: Interesting, Tom. And when we get to that $90 level, who knows? Of course, that's what the bulls are wanting to see, isn't it?

TS: Not what we want over here. Nobody wants $90 crude oil.

AB: No, absolutely not at the petrol pumps. Definitely not. Well, Tom, thank you ever so much for joining us.

Tom Sosnoff there joining us from KSG in Chicago. Always a pleasure. Thank you very much. And that's it from all of us here at IGTV. Thank you for watching our look ahead.