Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.
My name is Matt, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.
Welcome back, Neil. It's great to have you here with us again.
Thank you very much Matt. It's great to be here.
Against a backdrop of increased geopolitical tensions, I think as we look into next week, we have an opportunity to perhaps focus on the data. So perhaps you can talk us through what you're going to have your eye on in the week ahead.
Yeah, absolutely. Thanks very much, Matt. It's been another complex week for financial markets with a continued acute market focus on the global growth and inflation trade off in respect of monetary and increasingly fiscal policy considerations and by extension differentials between countries and regions on that basis, a topic which we expand upon further in this week's blog. And of course, all of this set against, as you say, a very complex and uncertain geopolitical backdrop uncertainties that we expect to continue overcoming weeks, however, there are some known unknowns that we will be looking out for next week.
Firstly, it's the third week of the month, and that means it's a big week for UK data. We get the employment report on Tuesday, CPI on Wednesday, and retail sales on Friday, all for September. Now, following the downside missed the August CPI data this time last month markets have sharply curtailed further expectations of rate hikes in this cycle. Next week's data will be very important in this regard. Now we've been in a dovish camp on the bank of England for a long time now and continue to see the underlying growth momentum as weaker then the aggregate growth and inflation data suggest now the bank of England, Chief Economist, Hugh Pill said this week whether the bank of England have done enough on rates is a finely balanced issue for us this is a policy risk premium or a forward guidance from the bank of England to prevent a premature exit from restrictive policy, as far as market pricing is concerned, at least until inflation and or growth moderate more clearly.
Secondly, we'll be watching global data very closely next week. German's ZEW on Tuesday. Again, important to gauge the stabilization of sentiment in the region, aided in no small part on a forward looking basis by the suite of China data that we get on Wednesday, industrial production, retail sales, fixed asset investment and unemployment all for September. Now the Chinese incremental or targeted stimulus measures over recent months are in our view, increasingly sufficient to promote a rebound and activity into 2024. This week's official stock purchases from central Huijin increasing stakes in four major banks is a further positive likely aimed at improving confidence and investor sentiment into 2024 , and lastly perhaps not on everyone's radar japan CPI on Friday should be on the watch list after Bank of Japan board member Noguchi highlighted this week that inflationary pressures has been higher than expected, potentially significant for policy and market implications going forward there.
And then lastly, against the backdrop of the start of the Q3 earning season, we should also be paying attention to the small number of bank earnings releases in on Friday before the market closes this week. Next week, we will continue to get a raft of Fed speakers. Now, from our perspective and at this stage in the economic cycle listening to the evolving Fed narrative and likely the divergent views within the Fed will become increasingly important. Next week, we have scheduled speeches from Goolsby, Bostic, Harker and Barking as well as commentary from Treasury Secretary Yellen. But the big focus will be on commentary from Chair Powell from the Economic Club of New York, Thursday afternoon, another busy week for financial markets.
Thank you, Neil. Plenty to focus on in the week ahead. In the meantime, though, we have the weekend and I think there's plenty to focus on there too. So perhaps you can tell us, what have you got your eye on this weekend?
Absolutely. There is another fabulous weekend for sport. In football the premiership gives way to international friendlies and Euro qualifiers over what is essentially a very long weekend, all home nations in action, but for us, France versus Holland on Friday and England versus Italy on Tuesday night, the pick of the action. There's no Formula One ahead of the USGP from Texas in a week's time and some huge action in World Cup cricket with hosts India versus Pakistan on Saturday. Expect record viewing figures for that. But for me, it's all about the rugby. Quarterfinals of the World Cup, Wales versus Argentina, Ireland, New Zealand. England, Fiji, and France, South Africa. What more could you ask for?
A fantastic line-up of rugby there. Very much looking forward to that. .
Thank you so much for joining us and for outlining your thoughts on the week ahead. I look forward to catching up with you again soon.
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