CONSERVATIVE RIGHT- "Rebellion to tyrants is obedience to God.": Key Events In The Coming Week: French Election, Earnings, Manufacturing, Housing

This week will be dominated by the first round of the French presidential election on Sunday. With the number of undecided voters remaining high, four candidates look set to fight for the two places in the second round on 7 May. On the data side, following China's strong economic report, attention will focus on US industrial production growth on Tuesday. In the euro area, flash PMIs for April due on Friday could point to moderation. In the UK, retail sales (Friday) should have dropped in March as rising inflation eats into real income growth. On Friday, the World Bank and IMF Spring meetings also start.

In addition, there are a few scheduled speaking engagements by Fed officials this week, including a speech by Vice Chair Stanley Fischer on Monday.

Focusing on the US, after lacklustre readings in January and February, industrial production data in March may finally have exhibited the kind of strength seen in the ISM factory index. Output readings early this year were held down by sharp declines in utilities output, which reflected unseasonably warm weather, but utilities output looks set to have jumped noticeably, which should help to drive the headline figure higher. Meanwhile, existing home sales may have climbed in March, although the expected gain was likely due in part to the unusually warm temperatures in February, which boosted demand in that month and may have propelling contract closings higher last month.

The key this week will be in France on Sunday where the first round of the French Presidential election takes place. Official exit polls are due at 8PM CET. The 11 candidates are then whittled down to two, with the second round runoff held two weeks later on 7 May. On the data front, it looks to be a quiet week. We expect softer numbers in Friday’s flash PMI release while consumer confidence should also moderate.

Finally, this is the first busy week for earnings season: with the following companies expected to report results:

Energy: SLB
Heatlhcare: JNJ, UNH, ISRG, ABT
Tech: NFLX, IBM, EBAY, QCOM, VZ
Real Estate: D.R. Horton, SL Green
Materials: CCK, KALU, PPG, SHW, STLD
Industrials: United Air, CSX, GE, Honeywell
Financials: BAC, GS, RF
Consumer: GNC, MAT, PM, SHOO

Finally, a full breakdown of the key daily events with consensus estimates, via Goldman

Monday, April 17

08:30 AM Empire manufacturing survey, April (consensus +15.0, last +16.4)
10:00 AM NAHB housing market index, April (consensus 70, last 71): Consensus expects the NAHB homebuilders’ index to edge down by 1pt in April from a post-crisis high of 71, after a strong report in March showed broad-based strengthening across all components and regions.
05:00 PM Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Board Vice Chair Stanley Fischer will give the Inaugural Lecture on Central Banking at the Columbia School of International and Public Affairs. The topic of his remarks will be “Monetary Policy Communication”. Audience Q&A is expected.
04:00 PM Total Net TIC Flows, February (last +$110.4bn)

Tuesday, April 18

08:30 AM Housing starts, March (GS -6.0%, consensus -2.8%, last +3.0%); Building permits, March (consensus +2.8%, last -6.0%): March weather featured above-average snowfall and a drop in seasonally adjusted temperatures. Additionally, the level of multifamily starts now appears elevated relative to permits, and we see signs of potential oversupply in that segment. At the same time, we believe favorable single-family fundamentals should help mitigate the winter storm impact as well as the negative impact of higher interest rates on single-family starts. Taken together, we expect a 6% drop in housing starts, reversing the 3.0% rise in February.
09:00 AM Kansas City Fed President George (FOMC non-voter) speaks: Kansas City Fed President Esther George will give a speech on “The Federal Reserve and Monetary Policy” at the 26th Annual Hyman P. Minsky Conference at the Levy Economic Institute of Bard College in New York.
09:15 AM Industrial production, March (GS +0.9%, consensus +0.5%, last +0.1%); Manufacturing production, March (GS -0.1%, consensus +0.1%, last +0.5%); Capacity utilization, March (GS +76.4 %, consensus +76.2%, last +75.9%): We estimate industrial production increased 0.9% in March, likely reflecting a sharp pickup in utilities output due to a sharp drop in seasonally adjusted temperatures. We estimate manufacturing production declined 0.1%, reflecting a pullback in motor vehicle production partially offset by modest growth in ex-auto manufacturing output.

Wednesday, April 19

12:30 PM Boston Fed President Rosengren (FOMC non-voter) speaks: Boston Federal Reserve President Eric Rosengren will give a speech on “The Federal Reserve Balance Sheet and Monetary Policy” at the 26th Annual Hyman P. Minsky Conference at the Levy Economic Institute of Bard College in New York.
02:00 PM Beige Book, May FOMC meeting period: The Fed’s Beige book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The March Beige Book reported that activity continued to expand across all districts, showing steady improvement. Consumer spending improved modestly, manufacturing activity strengthened somewhat, and the energy sector showed modest signs of improvement. In the May Beige Book, we look for additional anecdotes related to the state of consumption, manufacturing activity, price inflation, and wage growth.

Thursday, April 20

08:30 AM Initial jobless claims, week ended April 15 (GS 245k, consensus 240k, last 234k); Continuing jobless claims, week ended April 8 (last 2,028k): We estimate initial jobless claims rebounded 11k to 245k. Claims have returned to normal levels following two weeks of temporary elevation that likely reflected the impact of Winter Storm Stella (which hit the US during the week of March 18). However, the current level of jobless claims now appears abnormally low in a few large states such as New York and Pennsylvania, where we see scope for a rebound. Continuing claims – the number of persons receiving benefits through standard programs – have continued to trend down in recent months, suggestive of additional labor market improvement that we expect to continue.
08:30 AM Philadelphia Fed manufacturing index, April (GS +26.0, consensus +25.0, last +32.8): We expect the Philadelphia Fed manufacturing index to decline for a second month to +26.0 in April. In the March report, the headline index declined by 10.5pt to +32.8 while all underlying components improved in the March report. The index is likely to remain at levels suggestive of solid expansion in manufacturing activity.
08:00 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will participate in a moderated Q&A on “Capital Markets, Growth & the Economy of Tomorrow” at the Global Finance Forum in Washington, D.C.

Friday, April 21

09:30 AM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will take part in a Q&A on the state of the economy and the role of community developers in the financial system at the Hamline University Community Economic Development Symposium in St. Paul, Minnesota. Audience Q&A is expected.
09:45 AM Markit Flash US manufacturing PMI, April preliminary (consensus 53.8, last 53.3)
09:45 AM Markit Flash US services PMI, April preliminary (consensus 53.6, last 52.8)
10:00 AM Existing home sales, March (GS +3.0%, consensus +2.1%, last -3.7%): We look for a 3.0% rebound in March existing homes sales, following last month’s 3.7% drop. Regional housing data released so far suggest a moderate rebound in closed homes sales, consistent with improvement in February pending homes sales (which represent contract signings). Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.

Source: SocGen, GS