Introduction: As we move into the final week of January, there are several key economic indicators being released that will give us a better understanding of the state of the economy heading into 2023. In this blog post, we will take a closer look at the US Q4 GDP, US Personal Spending/PCE, the Bank of Canada decision, Manufacturing and services flash PMIs, and the Associated British Foods Q1 23.( Week ahead=23/01/2023 to 27/01/2023)
US Q4 GDP – 26/01 Economic Indicator-1
- After starting the first half of last year with two successive quarters of negative GDP growth, the US economy saw a return to positive GDP growth in Q3, of 3.2%.
- Expectations are for a modest slide to 2.5% in Q4, although with signs in recent months that consumer spending is slowing, there could be considerable downside risks to that estimate.
US Personal Spending/PCE (Dec) – 27/01 Economic Indicator-2
- The last 2 months have seen a sizeable slowdown in US personal spending, with a solid rise of 0.9% in October followed by a sharp fall to 0.1% in November.
- This suggests a rising caution amongst US consumers, which when combined with US banks setting aside hefty loan loss provisions, could lead to consumers becoming more frugal with their spending.
Bank of Canada Decision – 25/01 Economic Indicator-3
- In October and December, the Bank of Canada raised rates by 50bps, suggesting that central banks are starting to wake up to the possibility that too aggressive rate rises could do more harm than good.
- With this week’s decision coming a week before a similar decision by the Federal Reserve, many are looking at the Bank of Canada for a steer in terms of whether we could see a step down from the Fed.
Tesla Q4 Earnings – 27/01 Economic Indicator-4
- Tesla is expected to report strong Q4 earnings, with analysts projecting a significant increase in revenue due to the continued growth of the electric vehicle market.
- However, the company’s future growth could be hindered by increasing competition in the EV market and potential challenges related to supply chain disruptions and logistics.
Microsoft Q2 Earnings – 28/01 Economic Indicator-5
- Microsoft is expected to report strong Q2 earnings, driven by the continued shift to remote work and online learning due to the pandemic.
- The company’s Azure cloud services and LinkedIn social media platform are expected to be major contributors to the quarter’s performance.
Boeing Q4 Earnings – 28/01 Economic Indicator-6
- Boeing has been hit hard by the COVID-19 pandemic, with a significant reduction in demand for air travel leading to a decline in orders for new planes.
- In Q4, the company is expected to report a loss, as the ongoing crisis continues to weigh on the global aerospace industry.
EasyJet Q3 Earnings – 26/01 Economic Indicator-7
- EasyJet, like many airlines, has been hit hard by the COVID-19 pandemic. In Q3, the company reported a loss of £420 million, compared to a profit of £292 million in the same quarter the previous year.
- The company has been cutting costs and raising funds in an effort to weather the crisis, but it remains to be seen if these measures will be enough to see EasyJet through to a post-pandemic recovery.
Diageo Q3 Earnings – 27/01 Economic Indicator-8
- Diageo, the world’s largest producer of spirits, is expected to report a solid Q3 earnings due to the strong demand of their premium brands and the shift of consumer behavior towards at home consumption.
- However, the company’s performance could be impacted by the ongoing COVID-19 pandemic and related lockdowns, which have forced many bars and restaurants to close.
Manufacturing and Services Flash PMIs (Jan) – 24/01 Economic Indicator-9
- In the past few months, we’ve seen evidence that due to the sharp declines in energy prices, economic activity is starting to pick up in countries like Germany and France.
- However, manufacturing in the UK has struggled and looks set to continue to do so, while services have been slightly more resilient.
Associated British Foods Q1 23 – 24/01 Economic Indicator-10
- Despite performing well despite challenging economic conditions, ABF shares fell to 10-year lows back in September.
- However, since those lows, the shares have recovered, and it will be interesting to see if this trend continues in the first quarter of 2023.
Poem on Economic Indicators
The Rhythms of the Economy The economy, a fickle beast to tame, With indicators, we play the game. Q4 GDP, a crucial sight, Will it bring joy or bring us blight? Personal spending, on a slide, Consumers cautious, banks in stride, Fed Reserve meets, what will they say? Will interest rates rise or stay? Bank of Canada's decision, a test, Will they raise rates or take a rest? Manufacturing and services PMIs, A glimpse of economic ease or disease. Earnings reports, a glimpse of truth, For EasyJet, Diageo, Tesla, Microsoft, and Boeing, a proof, The future's uncertain, but the data's clear, It's a journey, we must persevere.
Conclusion: This week will see a number of major companies reporting their earnings for the last quarter of the year. While some companies like Diageo, Tesla, Microsoft are expected to report solid results, others like EasyJet, Boeing are expected to report losses due to the impact of the ongoing COVID-19 pandemic. Investors will be closely monitoring these earnings reports to gain insight into the health of these companies and their prospects for the future.
Overall, the economic indicators being released this week will give us a better understanding of the state of the economy heading into 2023. While there are some signs of recovery, there are also concerns about a slowdown in consumer spending and the potential for too aggressive rate rises to do more harm than good. As always, it will be important to closely monitor these indicators and their impact on the markets.