Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

April 15th - 20th

Market Snapshot:

Volatility paved the way for gains in most major indexes for the past week. Trade War fears with China were quickly surpassed and replaced with new political tension brought on by the Syrian missile strikes led by the United States, France, and Britain.

Strong earnings also helped improvement in the broad-based market as large-cap financial equities posted stable net income and earnings per share valuations; however, some investors were expecting more impressive results in justification of increased volatility, volume, and tax cuts in Q1. To no surprise, J.P. Morgan led the street during the recent earnings week as the investment bank posted record-setting net income at $8.7 billion, an increase of 35% from a year ago. Citigroup subsequently grew by 13%; Wells Fargo increased by 5% and PNC reported a 16% rise in earnings.

The Dow Jones Industrial Average rose by 427.38, along with the S&P 500 composite increasing by 51.83. Optimistic views from FB shareholders after Mark Zuckerberg’s testimony before Congress on Tuesday and Wednesday led to gains for the single stock as well as the tech comprised NASDAQ which now has increased by 2.94% year to date, to a level of 7,106.65 (+191.64 on the week).


Weekly Macro Outlook For The Upcoming Week:

Volatility is expected this week as tension between the White House and Moscow rises in response to the Syrian missile strike. The market opening bell Monday morning will be interesting to see how traders are repositioning themselves in a time of political disagreement and tension globally.

Another significant week of earnings reports are due out in a variety of sectors: Bank of America and Netflix will start out the week before market open Monday morning, Goldman Sachs, Johnson & Johnson, IBM, and United Healthcare will announce on Tuesday. Morgan Stanley and American Express will report on Wednesday, proceeded by Blackstone on Thursday. General Electric and Honeywell will bring the earnings week to a close. The earnings results of the above industry leaders are expected to be positive, as 20% growth is projected this earnings season with the help of the tax cuts.

The US Commerce Department will release statistics covering March retail sales on Monday. Economists are anticipating retail sales rising 0.4% for the month, coming off a disappointing February decline of 0.1%.

 The Federal Reserve Beige Book, reports on building permits, housing starts, and industrial production is also due to be released this week.

China Q1 GDP will be released on Tuesday, as the country as expected to report an increase of 6.8% growth.

United Kingdom inflation metrics will be announced on Wednesday. Economists are expecting a core inflationary increased of 2.4% to 2.5%, with annual CPI remaining constant.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

April 9th - 13th

Last Week in Review

The Dow Jones Industrial Average fell to a low of 23,933 this past Friday, a change of 572.46 on the day. The S&P 500 decreased 2.19%, dropping 58.37 points, and the NASDAQ declined by 161.44 during Friday’s volume off the heels of trade war uncertainty and a disappointing jobs report.



Economic Calendar for the Week Ahead

Earnings season kicks off this week with bulge bracket financial services companies leading the way. JP Morgan, Citigroup, Wells Fargo, PNC Financials will be reporting to close the week on Friday, with Blackrock scheduled set the stage on Thursday. Delta, Bed Bath & Beyond, and Rite Aid will also be in focus by investors around the street.

Economists along with research analysts are predicting earnings for the S&P 500 will rise 17% from this time 2017, and investment banks should report even stronger than this growth rate. Analysts are forecasting quarterly profit gains of 20% from Q1 2017 for BlackRock as well as Citigroup and a 40% increase for JP Morgan due to tax cuts and a more robust trading environment in accordance with a large uptick in volatility to boost bank profitability.

The Federal Reserve will release minutes from its last policy meeting on Wednesday. As a recap, the Fed raised interest rates by .25% in the latest meeting. The market is factoring in an 80% chance of another rate hike increase at the June FOMC meeting announcement.

March inflation statistics will be published on Wednesday. Economists expect the reading to be flat this month, a weaker metric from February’s 0.2% increase, core inflation is forecasted to 0.2%.



China Trade Data Report

In the midst of trade war discussion with the United States, China is expected to release trade metrics for the month of March to close out the week. Economists expect the report to show a surplus of $27.2 billion, slowing slightly from $33.7 billion for the prior month of February. Imports and Exports are also to be announced, with increases of 44.5% and 6.3% respectively from the proceeding month of February.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

April 2nd - 6th

Market Recap Last Week

The market inched up just over 2% last week on a shortened trading week with the Friday holiday. There has been volatility in a variety of sectors due to investors altering outlooks regarding global trade agreements, future monetary policy decisions both domestically & internationally, as well as the future of regulatory change in the technology sector who have churned massive profits in recent years.

The S&P 500 increased 2% to a level of 2,641, with a year to date performance of -1.2%. The NASDAQ rose 1% to a level of 7,063, with a year to date return of 2.3%, as tech stocks have performed strongly until the most recent weeks. The 10-year Treasury Yield has closed the week trading at 2.74%, reasonably flat as measured by the year to date performance barometer below.


Macroeconomic Outlook for the Week Ahead

US Employment Report

The United States Department of Labor Statistics is set to announce the nonfarm payrolls report for the month of March on Friday, before market open. Economists forecast the report will emphasize the growth of 198,000 jobs, with unemployment forecasted to fall from 4.1% to 4.0%. February’s report for the prior month showed the increase of 313,000 jobs. The chart below shows the breakdown of the nonfarm payroll reports over the past year.


Euro Flash Inflation & UK PMI

March inflation data will be published on Wednesday, as economist’s forecast is projected to portray consumer prices rising 1.4% versus the 1.1% increase in the previous month of February.

The UK will have a week packed with important economic data releases for the month of March. Tuesday will kick off the PMI report with manufacturing sector activity, which is forecasted to fall from 55.3 to 54.8 on the index scale. Wednesday will feature data released by the construction sector, which is anticipated to decrease from 51.4 to 51.2. On Thursday, the Services Sector report will close out the three-day review with the announcement forecast of 54.2, an expected decrease from 54.5 in the prior month of February.


Bank of Australia Monetary Policy Announcement

The bank of Australia will release the country’s latest interest rate policy decision on Tuesday. The economist’s forecast that the central bank will yet again elect to remain neutral and keep rates unchanged at the historic low of 1.5%. If this is, in fact, the case, the policy briefing will be the 18th consecutive decision to remain unchanged.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

March 26th - 30th

As a follow-up to last week’s FED rate hike decision, the market will have some key economic data announcements including consumer confidence and personal spending, plus several FED President orations to watch closely. In addition to the metrics that affect the US economic outlook described in detail below, the global marketplace will feature final fourth-quarter GDP results in the United Kingdom and Canada, along with German inflation statistics.


A Variety of FED President Outlooks

 Four Federal Reserve leaders with different state representations will be speaking publicly this week. These orations come at an important time off the heels of last week’s interest rate hike decision, as the market looks for further detail of future rate hike expectations.

The below is the speech schedule for the week:

Monday - New York Fed chair William Dudley will discuss regulatory reform at the United States Chamber of Commerce, in Washington DC. Cleveland Fed President Loretta Mester and Fed Governor Randal Quarles are also set to deliver statements on this date.

Tuesday - Atlanta Fed leader Raphael Bostic is scheduled to speak at the Hope Global Forums Annual Meeting.

Wednesday – President Bostic will also be speaking at the Atlanta Society of Finance and Investment Professionals luncheon.

Thursday - Philadelphia Fed President Patrick Harker will lead discussion at the New York Association of Business Economics luncheon.


Personal Income and Consumer Confidence Reports

The U.S. Commerce Department releases its report on February Personal income and Outlays data on Thursday. The most recent prior report on Personal Income increased $64.7 billion or 0.4% according to the Bureau of Economic Analysis. Disposable personal income increased $134.8 billion or 0.9% and personal consumption expenditures increased $31.2 billion or 0.2%. The PCE price index increased 0.4% for the most recent month. The most recent economists’ forecast personal income increased 0.3% in February. The chart below shows a detailed breakdown of the Personal Income and Consumption statistics over the past several monthly reports.



University of Michigan Consumer Confidence Report

Economists expect March’s final reading on Consumer Confidence to remain at a measure of 102. The chart below portrays the growth year over year from March of 2017 at an increase of 5.3%.

Enhanced Investor Weekly Macro Report


Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

 March 19th - 23rd

The market experienced some choppy trading this week, due to high volatility and increased volume during a session filled with anticipated yet unclear economic news announcements. The Federal Reserve Open Market Committee opted to raise interest rates by .25%, as correctly expected by economists forecast. A Hawkish tone by the committee “minutes” and corresponding FED chairman press conference, kept the consensus outlook for the number of future rate hikes this year uncertain. Furthermore, fears of a continued trade war and retaliation from China rattled the market, off the heels of the announced new U.S. tariffs on steel and aluminum.

The chart below details the overall market performance for the week with the Dow Jones Industrial Average closing down 5.7%, the S&P 500 falling 6%, and the NASDAQ Composite Index trailing 6.5%. The 10-year Treasury Yield is currently trading at 2.81%.

The Week Ahead

The market will look to erase last week’s losses with positive news on key economic data releases including consumer confidence, which will be reported on Thursday, and pending home sales data, which is scheduled to be released on Wednesday.

The chart below shows the potential positive forecast for March consumer confidence levels. Consumer sentiment rose in early March to its highest level since 2004. If the current level remains the same for Thursday’s final release, the year over year percentage delta from March of 2017 will be an increase of 5.3% from a rating of 96.9 to 102.

The graph below shows pending home sales data for the past five fiscal years. The next release is set for Wednesday, as economists will keep a close on this metric, which has been hovering around the same level since the middle of 2016.


Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University

Published by Aaron Gose

Last weeks Market Snapshot Review:


Upcoming Week Summary:

This week will likely feature some heavy trading volume and volatility with the Federal Reserve Interest Rate Decision headlining the news after its two-day policy meeting. There will also be policy announcements from the Bank of England and the Bank of New Zealand. Continuation of trade war fears may resume to unsettle markets as the G20 meeting is in session throughout the week. The recent U.S. recent trade policy changes are an agenda item for discussion amongst the leaders.


Federal Reserve Policy Meeting

The Fed is expected to raise interest rates by a quarter point at the conclusion of its two-day policy meeting at 2:00PM on Wednesday. Furthermore, the market will keenly look for more clues as for the Fed’s current confidence in the economy and expectations of future hikes this year. The anticipated interest rate hike by the FED this week has likely been already factored into the market, as the probability of a hike has been at an almost certain level concerning consensus sentiment. The below chart shows the Fed Funds rate graphed over the past few years to provide context of how the movement has progressed.



BOE & RBNZ Policy Announcements

No change in rate policy is expected for the Thursday Bank of England announcement. The market will be anxious to hear signs of the possibility of a May rate hike.

No change in monetary policy is expected from the Bank of New Zealand, but a change in leadership at the end of this month will mark the last meeting for the current governor.


G20 Meeting

Buenos Aires will host the G20 meeting this week, where Finance ministers and central bank governors representing the largest economies around the globe will be present. The purpose of the summit is to continue promoting global economic growth, international trade and financial market regulation. The likely meeting agenda items that will be prioritized may include:

State of the Global Economy, Interest Rates, Risks of Future Growth

Global Trade, as recent alternations of U.S. trade policy has heightened fear.

The regulation of cryptocurrencies, as concerns of late in terms of security fears led by Japan has caused tension.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University   

Published by Aaron Gose

March 5th - 9th

This week will feature global economic data news and highlight an anticipated US jobs report for February. Investors around the street are closely watching the unemployment data release, which is hovering around the 4% mark. Additionally, the ECB & BOJ will hold policy meetings, and China will be reporting trade import/export results for the most recent month.


European Central Bank Policy Meeting

The European Central Bank is broadly expected to keep interest rates at their current record low levels and make no changes to guidance on future policy during it’s Thursday meeting.

This will be the ECB’s second meeting of the year.


BOJ Policy Announcement

The Bank of Japan is also expected to keep policy at its current pace at the conclusion of its two-day session on Friday.

The expectation is to keep short-term interest rates at minus 0.1%


US February Jobs Report

This upcoming Friday will be an important day for the markets, as the Bureau of Labor Statistics latest reading on employment in the United States is expected to show the addition of 205,000 jobs in February. The chart below interestingly shows the Bureau of Labor Statistics monthly employment report since the early 2000’s to present date.



Chinas Trade Data

China is set to release February trade statistics on Thursday.

Exports are forecasted to have climbed 13.9% from the previous year, following a gain of 11.1% in the month of January, while imports are expected to rise 9.7%, after rising 36.9% in January.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University   

Published by Aaron Gose

February 26th - March 2nd

The US & The Federal Reserve

On Tuesday, Jerome Powell, the new head of the Federal Reserve will deliver his inaugural monetary policy testimony on the economy before the Senate and House Committee in Washington D.C.

Inflation will remain in focus as the recent cause of volatility, as traders have been adjusting their books by a likely faster rate hike schedule than previously anticipated. Minutes of the speech will be released to the public before the actual live Powell oration.

The Fed’s next policy meeting is scheduled for March 20th-21st with a rate hike increase probability expected at 80%. Analysts across the street will jointly annotate the Powell speech minutes, as any language can forecast the Fed’s next transitory move in interest rates.

The Fed’s preferred method for inflation, Personal Income, and Consumer Spending Report will be published on Thursday. The Fed uses this metric as a benchmark in justification of keeping inflation at a steady rate of around 2%. Economists are predicting a 0.3% uptick in the index for January, following a 0.2% increase the month prior.



European economic data will also be in focus this week. Germany, France, Italy and Spain will publish each of their CPI reports throughout the upcoming week.

Bridgewater Associates, the world’s largest hedge fund, has increased its mega short position in European equities, bringing their total position value to an estimated $22 billion. European regulators require the disclosure of short positions of this size and caliber as the only intention that this data is publicly known. The reasoning behind BA’s position is not clear at the moment. However, some rationale will be discussed at the bottom of this page in the China section.

Positive inflation data in the Eurozone could contribute toward the ending of ECB stimulus. The economists’ consensus forecast is expected to show prices rose 1.2%, from 1.3% last month. The U.K. Will produce manufacturing data on Thursday, followed by labor and construction reports on Friday. The economists’ expectations are 55.0 from 55.3 in the previous month PMI metrics, and construction numbers are expected to increase slightly to 50.7 from 50.2.


Chinese Manufacturing Data

Wednesday will also highlight news out of China with CFLP manufacturing sector data for the month. The forecast for the outlook is relatively stable with a slight upturn to 51.4 from 51.3. For knowledge of this indicator, readings below 50 indicate contraction and above 50 signal expansion for growth.

Some analysts’ are anticipating the logic behind Bridgewater’s big bet against Europe is that it sees tougher times shortly for China, as the firm may recognize that European companies, such as auto manufacturers, are increasingly tied to Chinese consumer dynamics.

Enhanced Investor Weekly Macro Report

Jonathan Lepre and Adam Wood, Harvard University   

Published by Aaron Gose

February 20th - 23rd

FED FOMC Meeting Minutes

The Federal Reserve will release minutes from its most recent policy meeting on Wednesday at 2:00PM ET. The language from the minutes is carefully examined by the street in anticipation of future rate hike speed, in summation of the Fed’s current view of the economy. The Fed is scheduled to hold it’s next policy meeting on March 20-21.

A dozen Fed representatives from different locations around the US will also be speaking this week with the focus on the recent uptick in inflation. Inflation has been in high concentration as this is one of the primary metrics kept in close watch by the Federal Reserve as its target comes into range, rates may begin to rise faster than anticipated as a result of this.


Economic Data Reports & Earnings

With a Monday holiday to begin the week, trading will pick up in full force on Tuesday in the US.

The National Association of Realtors will release data on January existing home sales at 10:00AM Eastern Time on Wednesday. The forecast estimates are 5.62M vs. 5.57M in December. In a close watch with the Existing Home Sales report, Home Depot (HD) will be reporting earnings ahead of the open on Tuesday, (results at the bottom of the page).

Jobless claims weekly figures will also be in focus, with the addition of manufacturing data activity domestically.


Japan Inflation Data Report

Friday will very importantly highlight the publishing of Japan’s January inflation numbers.

Market analysts expect the metric to remain positive, rising 1.3% y over y, which would be the 13th straight month of annual growth.


Euro-Zone Economic Reports

Preliminary data on manufacturing and service sector activity for February before market open on Wednesday.

Minutes from the ECB's January economic policy meeting will be released on Thursday.


Housing Market & Home Depot Earnings Tuesday Morning

Volatile weather patterns and rising interest rates have proved to be tailwinds for growth in the homebuilder sector. Consumers are renovating homes at high rates making this area a business unit of interest. The company also hiked dividends to increase shareholder value.

Earnings per share: $1.69, adjusted, compared with $1.61 expected

Revenue: $23.9 billion, compared with $23.7 billion expected

Same-store sales: an increase of 7.5 percent, compared with 6 percent expected

Enhanced Investor Weekly Market Snapshot

Jonathan Lepre and Adam Wood, Harvard University   

Published by Aaron Gose

February 12th - 16th


Friday, February 16th was the sixth straight day of gains for the Dow and S&P 500 after an exceptionally volatile prior week. The Dow concluded with over 4% gains to top it’s the best week since November 2016. The S&P 500 concurrently increased upwards of 4% to match the index’s best week since January 2013. The NASDAQ gained 5.3% with a record dating back to year-end 2011. The Equity market did slip Friday afternoon after a press release that a federal jury indicted Russian nationals about interfering in the recent U.S. elections. Political uncertainty in the market has caused price corrections in the past and will continue to do so in the future with consistency.



Signs that the economy is continuing to grow aided stocks in progressing ahead this week and provided a calming to the storm that was last week’s volatile losses. Essential readings on import prices for January showed a monthly increase of 1%. The metric is yet another sign that the inflation pressures are growing. Data earlier in the week showed a rise in consumer-price inflation, which is closely watched by the Federal Reserve regarding interest-rate hike plans. It will be explained below in this article how inflation fundamentally affects the treasury market. The Enhanced Investor Weekly Macro 1 The Enhanced Investor Weekly Macro February 17, 2018 Construction on new homes in the United States referred to as housing starts, leaped close to 10% in January to a yearly rate of 1.33 million. That is the second highest level since the 2009 recession. The University of Michigan announced its consumer-sentiment index rose more than expected to 99.9 in February, up from 95.7 in January and the second highest level in over a decade. This index is showing the consumer is confident in their discretionary spending ability, therefore justifying a growing economy.


Bond Yields

Tuesday - 10-year note yielded 2.83%.

Wednesday saw a 2.910% yield, up 2.7% in the daily session due to the Consumer Price Index data release which showed inflation much higher than what the Street anticipated.

Thursday - closed with a 2.889% yield.

Friday - 10-year note yielded 2.867%. (Flat for the week)


Earnings Continue to Show Strength

Among the 322 S&P 500 companies that have reported quarterly results so far this earnings season, 78% topped Wall Street estimates. These results are the best in any quarter since early 2009. Regarding sales revenue per company, the performance results are the best since the early 2000s.

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