Ride Beaten-Down Shares Up the Wall of Worry: Global Week Ahead

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Across this Global Week Ahead, clarification on U.S. Fed views comes from every angle. FOMC minutes come out Wednesday. Chairwoman Yellen speaks Thursday. Regional Fed bank leaders speak each individual day.   

The Fed’s rate outlook needs to remain very flat to keep the bid alive for stocks everywhere. Expect Yellen’s comments (made in NYC) to be the most closely watched.

This U.S. bull is kept alive by a turn up in manufacturing, a turn up in oil and materials prices, and a tepid Fed rate hike outlook. All three factors need to remain in place for a sustained rally from higher share index levels. Can the S&P 500 get above 2,100? That is the next resistance technical to watch.

Outside the USA, traders likely focus again -- on riding beaten-down shares up the wall of worry!

Most major non-US indices should keep on with a recovery. A few ADR stocks signal bullish shifts in analyst outlooks.

(1) For example, are you looking for a new beaten-down Brazil stock play?

Take a look at Siderurgica Steel (SID). This company solidly beat on Q4-15 EPS recently. Iron ore prices have risen strongly in Q1-16.  On March 31st, a Zacks #1 Rank (Stong Buy) rating was granted to SID. At $2 a share, there could be significant upside ahead.

The Brazilian economy remains in trouble. But that keeps the Brazilian real weak, which benefits its exporters.

(2) How about Japanese stocks? Japanese shares are beaten down too.  

Japan’s leading indicators come out this week. They don’t look good. You will have to look past the palpable weakness in the Japanese economy to see the bargains on share prices.

Take a look at Konami Corp (KNMCY). This stock has a Zacks #1 Rank (Strong Buy) and holds a long-term Zacks VGM score of A (the Zacks Growth score of A is the sub-component that helps the most).

Konami Corporation and its subsidiaries produce and market game software for home video game systems, character products such as playing cards, amusement arcade games and gaming machines. They also operate health and fitness club facilities. These have dominant share in the Japanese market.

(3) Momentum has been on across European share indices.

On Tuesday, services PMIs come out for European countries. Forecasts look strong. The Eurozone composite PMI should be 53.7, which is the same strong overall reading as before.

For European ADRs, take a look at AXA SA (AXAHY). This multi-line insurance company has a $56 billion market capitalization. This stock just went back to a Zacks #1 Rank (Strong Buy).

Here are the coming Global/Macro fundamentals—

On Monday, the ANZ job additions data in Australia came out at +0.2% m/m, versus a prior -1.2% m/m. Australia’s building approvals also came out strong at +3.1% m/m, versus a prior -7.5% m/m number. Australian retail trade was flat.

The Eurozone Sentix leading indicator came out at 5.7, versus a 5.5 prior.  

The Eurozone unemployment rate fell to 10.3% from 10.4%.

The Fed’s Rosengren and Kashkari speak in Boston and Minneapolis, respectively.

On Tuesday, the Reserve Bank of Indonesia (RBI) should lower its repo rate to 6.5% from 5.75%.  

German factory orders should be up +2.2% y/y, versus a prior +1.1% y/y.

The Eurozone composite PMI should be 53.7, the same as before. Services should be strong again at 54.

• The Spanish services PMI should be 54.5, above the prior 54.1.

• The Italian services PMI should be 53.9, slightly better than a prior 53.8.

• The French services PMI should be 51.2, the same as the prior level.

The U.S. ISM non-manufacturing index should rise to 54 from 53.4.

Note the difference: The Markit Brazil composite PMI looks to be 39 and the Brazil services PMI should be 37. Brazil shows us deep recession PMI data.

The IMF’s Lagarde speaks in Frankfurt, as does the ECB’s Weidmann. Greece has been back in the headlines.

The Fed’s Evans speaks in Hong Kong.

On Wednesday, the Caixin China services PMI should be 51.2.

Japan’s leading indicator (preliminary) should be 99.8, which is below the prior 101.8.

German industrial production should fall -1.8% m/m, comparing poorly with a prior +3.3% m/m rate.

The Fed releases the latest FOMC minutes. The Fed’s Mester speaks in Cleveland.

On Thursday, the U.K.’s Halifax housing price index should be up +9.4% y/y, versus a prior +9.7% reading.

Unemployment in Greece should be 24.2%.

Inflation in Brazil should be 11.04%

U.S. initial unemployment claims look strong at 279K.

Fed Chair Yellen speaks in NYC. The Fed’s Kaplan speaks in Dallas.

On Friday, French industrial production should be up +2.1% y/y, slightly bettering the prior +2.0% y/y rate.

The U.K.’s industrial production looks flat at 0.0% in y/y terms, worse than a +0.2% y/y rate seen last month.

Canada’s unemployment rate should be 7.3%, the same as before.

The Fed’s George speaks in Nebraska.
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