It’s jobs week in America.
With U.S. economic data coming in overwhelmingly positive, hopes are high that the BLS’s employment situation report will be encouraging.
Meanwhile, a banker named Haruhiko Kuroda will take the helm at the Bank of Japan, and his monetary policy is expected to rock the world of exchange rates.
- GDP Growth Is Returning To Trend: While the markets were closed on Friday, a new BEA report showed that personal incomes and spending were stronger than expected. Encouraged by the data, Deutsche Bank’s Joe LaVorgna tweeted that Q1 GDP growth could be as high as 4 per cent. That’s extremely bullish in this post-financial crisis environment.
- The World Welcomes Mr. Kuroda: On Wednesday, the Bank of Japan will be holding its first monetary policy meeting with Haruhiko Kuroda in charge. The uber-dovish banker was chosen by Prime Minister Shinzo Abe to unleash extremely easy monetary policy in an effort to stimulate the economy. “Kuroda’s first meeting is highly anticipated by markets, and we expect he will not disappoint in taking bold measures to combat inflation,” says Morgan Stanley’s Dara Blume. “Aggressive monetary easing should lead Japanese investors to increase risk exposure overseas, weakening Japanese yen and offering support to other yielding currencies.”
- Auto Sales (Tuesday): The auto sector is a bastion of American manufacturing. Analysts estimate seasonally-adjusted annual rate of sales of 15.3 million units. “Expect a good month with a forecasted March SAAR of 15.3 million,” said Citi’s Itay Michaeli. “We expect full-size pickup truck sales to rise 15-20%, outpacing the industry.”
- Jobs (Friday): Economists estimate that U.S. firms added 200k jobs in March, down slightly from 236k in February. The unemployment rate is expected to be unchanged at 7.7 per cent. Wells Fargo’s John Silvia is a bit more optimistic. “We expect nonfarm payrolls rose by 221,000 in March with the unemployment rate declining slightly to 7.6 per cent,” he wrote in a research note. “We expect payroll growth to continue and anticipate sustained average monthly payroll growth in the 200,000 range by the end of the year.”
The S&P 500 closed Friday at an all-time high. But experts aren’t ready to say sell just yet.
“As long as we see caution, concern, scepticism, disbelief and dubious analysis, the market will continue higher,” wrote market guru Laszlo Birinyi according to USA Today.
Barron’s Randall Forsyth writes, “There Is No Alternative to U.S. stocks as a place to store your money.”
The CEO.ca blog sees a “cash is trash” bubble, which may be encouraging investors to move more of their money into stocks.
However, this bullish mindset could easily break after one bad jobs report. Watch our full preview of this Friday’s jobs report here://