Graphic: Take Five: Retail, PMIs and a timely tantrum anniversary

Altex Industries

14/05/2021 08:16

1/ RETAIL HEAVEN 
    As a strong U.S. first-quarter reporting season winds up,
retailers are getting started - Walmart  WMT.N , Target  TGT.N ,
Home Depot  HD.N , Lowe's  LOW.N , L Brands  LB.N  and Ralph
Lauren  RL.N  release results next week. 
    The numbers will show how consumer spending is shaping up as
the economy rebounds from the coronavirus. And after U.S.
consumer prices rose by the most in nearly 12 years in April,
investors will want to see whether price pressures are building
for companies.
    S&P 500 firms are set to post a 50.4% increase in quarterly
earnings from a year ago, according to Refinitiv IBES data, with
the consumer discretionary sector posting a jump of almost 189%.
    - U.S. consumer prices post largest gain in nearly 12 years
in April  urn:newsml:reuters.com:*:nL1N2MZ15U    
    2/ TECH-TONIC SHIFT
    The much-loved tech darlings of 2020 face strong headwinds.
Rich valuations, inflation jitters, the possibility of higher
U.S. corporate taxes and anti-trust crackdowns have dragged down
Amazon  AMZN.O , Apple  AAPL.O  and Tesla  TSLA.O . 
    The tech-centric Nasdaq  .IXIC  has underperformed the
broader S&P 500  .SPX ; the S&P information technology index
 .SPLRCT  has fallen 8% in two weeks. 
    As Taiwan grappled with a major power outage and the threat
of a fresh COVID-19 lockdown, concern about further disruptions
to an already tight chip supply chain also weighed. 
    Chinese tech giants Baidu  9888.HK  and Tencent  0700.HK 
report earnings next week, as do U.S. firms Applied Materials
 AMAT.O  and Palo Alto Networks  PANW.K . 
    But cash remains cheap, market corrections have proved
shallow so far, and it is unclear that the ongoing inflation
pick-up is the real deal. Investors may not yet be ready to turn
their back on tech.      
    
    - Traders not betting on a quick U.S. market rebound as tech
stocks tumble  urn:newsml:reuters.com:*:nL1N2MZ2NA
    3/ PMI CENTRAL  
    Economic data is back in focus after a raft of mostly upbeat
readings in recent weeks. Cue flash Purchasing Managers' Indexes
(PMIs) for May across much of the developed world at the back
end of the week. Before that, on Tuesday, investors will be able
to chew on Japanese and euro zone first-quarter GDP numbers. 
    Vaccine rollouts and signs of recovery mean PMIs in major
economies should hold comfortably above the 50-line dividing
expansion from contraction. 
    Perhaps more market-moving will be the prices-paid
component, an inflation indicator. Note, the euro composite
input prices index jumped to 64 in April - the highest in 10
years.         
    
    - What U.S. inflation signs would cause the Fed to change
course?  urn:newsml:reuters.com:*:nL1N2MZ2NP
    
    4/ EIGHT YEARS ON FROM A TANTRUM   
    On May 22, 2013, then Federal Reserve chief Ben Bernanke
said that over the coming months the bank could "take a step
down in our pace of (asset) purchases." Those remarks set off a
months-long selling storm - the taper tantrum.
    Eight years on, are markets in for another tantrum? 
    There was taste of it in a panicky reaction to Treasury
Secretary Janet Yellen's comment, quickly walked back, that
rates would have to rise someday. Still, a strong economy
suggests the Fed will have to soon start hinting at unwinding
asset-buying stimulus; tapering could even start by end-2022. 
    Recent data, including the blowout April inflation print,
has sown fear that rates may rise sooner than expected. One
worrying change since 2013 is the $70 trillion-plus rise in
global debt. If wobbly markets fail to get reassurance from Fed
speakers in the coming days, a mini-tantrum could follow.    
    
    - The great exit: central banks line up to taper emergency
stimulus  urn:newsml:reuters.com:*:nL8N2MT64V
    5/ JOBS UP DOWN UNDER
    Whether Australia's jobs boom can survive without government
support could become clear from labour data due on Thursday. It
should reveal that jobs lost during the pandemic have been more
than recouped, but the reading for April is the first official
data since wage subsidies expired at end-March.
    Job ads and surveys point to a chance they could confound
government forecasts for losses and show a small gain in
employment - a surprise which could renew chatter about policy
tightening.
    The Reserve Bank of Australia wants to see long-elusive wage
growth, and doesn't expect it before 2024. But, as Deputy
Governor Guy Debelle puts it: "It is the state of the economy
that is the key determinant of policy settings, not the
calendar."
    
    - Australian jobs machine hits overdrive, passes
pre-pandemic peak in March  urn:newsml:reuters.com:*:nL4N2M74YH
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Key U.S. retail share performance in 2021    https://tmsnrt.rs/3obh9r7
Falling FAANGs    https://tmsnrt.rs/3eDpkcU
Composite PMIs: the world at a glance    https://tmsnrt.rs/3eIdDBI
Taper tantrum    https://tmsnrt.rs/3hmT27r
Australia's jobs rebound faces its first test    https://tmsnrt.rs/2QaguK2
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Tom Westbrook and Vidya Ranganathan in Singapore,
Stanley White in Tokyo, Lewis Krauskopf in New York, Sujata Rao
and Dhara Ranasinghe in London; Compiled by Dhara Ranasinghe;
Editing by Mark Heinrich)
 ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))