We might not be able to predict who will win Super Bowl XLIX this Sunday but we do have some sure bets on what will move markets next week -- it won't be deflate-gate. Yahoo Finance’s Michael Santoli, Rick Newman and Jeff Macke joined Editor-in-Chief Aaron Task to preview what you should be watching during the first week of February.
Manufacturing and auto sales
Going into 2015 there was a lot of talk of economic momentum. This week’s 4Q GDP and durable goods numbers were disappointing and made some question the thrust of the economy. Next week we’ll see PMI Manufacturing data, motor vehicle sales and jobs numbers—all of which will give us a better grasp on where we’re headed in 2015.
“It’s looking a little bit like last January, almost down to a deep freeze and all of the other weather effects,” says Mike Santoli. “I do think the manufacturing numbers are going to matter next week because you want to see if we had some exhilaration or at least flattening out of growth there and also the dollar effect. The strong dollar has been a story for a while and now we want to see if it’s going to filter through to the data.”
Auto sales are coming out on Tuesday. Personal spending was a bright spot in the latest GDP report but can Americans keep buying cars at the same pace that they did in 2015?
“They can,” says Rick Newman. Financing for buying cars is still strong and incomes may start to finally go up in 2015. Still, don’t expect too much this month. “January is a weird month for auto sales, it’s in the middle of the winter and we’re coming off a great year.” Still the comparison to last January will make sales look great because of the polar vortex in 2014.
The American consumer
There have been big layoff announcements from the likes of American Express (AXP) and John Deere (DE) raising speculation more companies will follow suit. Plus, capex numbers are coming down. Aaron Task asks if we’re relying too much on the American consumer to boost the economy and not industry.
“There’s no evidence of consumers tapping out. If anything they’re being more aggressive and you’re seeing evidence of that in the stock market as well,” says Jeff Macke. “You’ve got so many weird exogenous examples. Going up against the polar vortex last year and you’ve got to mix that into your currency exchange this year that the numbers almost don’t count no matter what you come up with,” he says.
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Rick Newman points out that overall, growth is slow but strong. “We keep getting disappointed when we get pulled back from 5% GDP growth but it’s averaging out to be the slow-growing economy that we’ve been expecting.”
Exxon, Twitter, and more
Earnings continue into next week with Exxon reporting on Monday; Chipotle, Disney and Wynn on Tuesday; Yum on Wednesday and Twitter, Dunkin Donuts and Michael Kors on Thursday.
“Dunkin has to get their business together in a huge kind of way,” says Macke. “They’ve become serial missers and their franchise quality is spotty.”
Santoli would flag Exxon because with “Chevron curtailing its stock buyback, these guys are obviously now playing defense on their credit ratings and on their dividends. I do think you’ll want to hear what they say.”
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