Key Events In The “OPEC Is Optimistic About A Deal” Week

The key economic releases this week are consumer confidence on Tuesday, ISM manufacturing on Thursday, and the employment report on Friday. There are a few scheduled speaking engagements from Fed officials this week. The Beige Book for the December FOMC period will be released on Wednesday.

Perhaps the most important geopolitical event with material consequences for global markets, will be the OPEC meeting on Wednesday, when the cartel is expected to announce production cuts.

While doubts have crept up that OPEC can swing a deal, Bank of America and others, is confident that OPEC will go with a 500 thousand b/d or 1 million b/d supply cut announcement. Should OPEC just deliver a half a million barrel deal, the banks sees prices staying around the current levels. For prices to firmly break over $50/bbl, OPEC would have to deliver a 1 mn b/d cut announcement. If the cut comes with firm quotas and a tight control mechanism, WTI prices could average $59/bbl. A looser agreement that does not incorporate detailed country quotas would probably shave $5 off this number.

The most consequential event for the US economy will be this Friday’s payrolls report, the last one before the Fed’s December decision which the market is now certain will be a rate hike.

In the Eurozone, we get inflation data and final prints of consumer confidence index and PMI (manufacturing). In the UK, data releases include mortgage approvals, M4 money supply and PMIs. In Australia, building approvals, private sector credit, private capital expenditure and retail sales are in focus. In Japan, we get labor data, retail sales, industrial production and capital spending. In Canada, GDP and labor data are the only releases of note.

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Main global events broken down by day, courtesy of DB:

In Europe we’ll get the latest M3 money supply data for the Euro along with the latest OECD economic outlook while in the US the sole release is the Dallas Fed’s manufacturing survey. Tuesday kicks off early in Japan with the latest jobless rate, retail sales and household spending data. Closer to home we’ll get Q3 GDP in France, Germany CPI for November, UK money and credit aggregates data and also the latest confidence indicators for the Euro area.

In the US tomorrow all eyes are on the second revision to Q3 GDP while the November consumer confidence print is also due out, along with the latest S&P/Case-Shiller house price index.

We start in Japan again on Wednesday where the latest industrial production data is due, along with housing starts data. China will also release the MNI consumer sentiment reading while the UK will release its latest consumer confidence print. During the European session we’ll get the latest CPI print out of France and also the Euro area, along with unemployment data in Germany. There’s important data in the US on Wednesday too with the ADP employment change print, personal income and spending reports for October and also the PCE core and deflator readings for last month too. Pending home sales data and the Chicago PMI will also be released followed by the Fed’s Beige Book in the evening.

Turning to Thursday, China will get things going with the November PMI data, while during the European session we’ll also get the manufacturing PMI’s including a first look at the data for the UK and the periphery. In the US it’s another busy session with initial jobless claims, manufacturing PMI, construction spending, ISM manufacturing and vehicles sales data all due out.

It’s a quiet end to the week in Asia and Europe on Friday with PPI data for the Euro area the sole release. In the US it’s all eyes on the November employment report including the latest payrolls print.

Away from the data, in terms of Fedspeak this week we’ve got Dudley and Powell due to speak tomorrow, Kaplan and Powell on Wednesday, Kaplan again on Thursday and Brainard on Friday. In Europe today we’ll hear from ECB President Draghi this afternoon at European Parliament, while Coeure will also speak before him. Draghi will then speak again on Wednesday. The BoE will also publish its Financial Stability Report on Wednesday with BoE Governor Carney due to speak after. The other big event this week and which may end up being the focus for the week is the aforementioned OPEC meeting in Vienna on Wednesday where ministers are due to discuss finalizing the September accord to curb oil production.

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Focusing just on the US, here is the full breakdown of main events by day – together with consensus estiamtes – from Goldman:

Monday, November 28

• 10:30 AM Dallas Fed manufacturing index, November (consensus +1.0, last -1.5)

Tuesday, November 29

• 07:45 AM Federal Reserve Vice Chair Fischer (FOMC voter) speaks: Federal Reserve Vice Chair Stanley Fischer will give a speech to The Clearing House annual conference, in New York.
• 08:30 AM GDP (second), Q3 (GS +3.0%, consensus +3.0%, last +2.9%); Personal consumption, Q3 (GS +2.3%, consensus +2.3%, last +2.1%); Consensus expects GDP and personal consumption to be revised up to 3.0% and 2.3% in Q3, respectively.
• 09:00 AM S&P/Case-Shiller home price index, September (consensus +0.4%, last +0.2%): The Case-Shiller home price index appears to have been influenced by seasonal adjustment challenges recently. Consensus expects a 0.4% increase after the index rose 0.2% in August. Over the past year, the 20-city index has increased by 5.1%.
• 09:15 AM New York Fed President Dudley (FOMC voter) speaks: New York Federal Reserve Bank President William Dudley will give a speech on opportunities for economic growth in Puerto Rico. Audience Q&A is expected.
• 10:00 AM Conference Board consumer confidence, November (GS 101.5, consensus 101.3, last 98.6): We expect consumer confidence to rise in November after the index declined by more than expected in October, reversing recent gains in prior months. US equity prices moved higher and the University of Michigan’s index of consumer sentiment improved notably in November.
• 12:40 PM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Jerome Powell will give a speech on the economic outlook at the Economic Club of Indiana’s luncheon in Indianapolis.

Wednesday, November 30

• 08:00 AM Dallas Fed President Kaplan (FOMC non-voter) speaks: Dallas Federal Reserve President Robert Kaplan will give a speech on the economic conditions and the limitations of monetary policy at a breakfast sponsored by the Economic Club of New York. Media Q&A is expected.
• 08:15 AM ADP employment report, November (GS +160k, consensus +160k, last +147k): The ADP report introduced methodological changes this month, and will now offer more details by sector. We find that while the ADP employment report holds limited value for forecasting the BLS’s nonfarm payrolls report, large ADP payroll deviations from consensus forecasts are directionally correlated with NFP surprises. We expect a 160k gain in ADP payroll employment in November.
• 08:30 AM Personal income, October (GS +0.4%, consensus +0.4%, last +0.3%): Personal spending, October (GS +0.5%, consensus +0.5%, last +0.5%); PCE price index, October (GS +0.28%, consensus +0.30%, last +0.20%); Core PCE price index, October (GS +0.15%, consensus +0.10%, last +0.10%);PCE price index (yoy), October (GS +1.5%, consensus +1.5%, last +1.2%); Core PCE price index (yoy), October (GS +1.8%, consensus +1.7%, last +1.7%): We expect personal income to rise by 0.4% and personal spending to rise by 0.5% in October. We also expect core PCE prices to increase by 0.15% in October, or 1.8% from a year ago. In the October report, core CPI increased by 0.15% month-over-month, or 2.2% from a year ago.
• 09:45 AM Chicago PMI, November (GS 52.5, consensus 52.0, last 50.6): We expect the Chicago PMI to rise by 1.9pt to 52.5 in the November report.
• 10:00 AM Pending home sales, October (consensus +0.1%, last +1.5%): Consensus expects pending home sales to rise by 0.1% in October following a 1.5% gain in September. We have found pending home sales—based on contract signings rather than closings—to be a decent leading indicator of existing home sales with a one- to two-month lag.
• 11:45 AM Fed Governor Powell (FOMC voter) speaks:Federal Reserve Governor Jerome Powell will participate in a discussion titled “The View from the Fed” at an event sponsored by the Brookings Institution on “Understanding Fedspeak” in Washington D.C.
• 12:35 PM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will give a speech on the economic outlook and monetary policy at a lunch sponsored by the African American Chamber of Commerce of Western Pennsylvania. Media Q&A is expected.
• 02:00 PM Beige Book, December FOMC meeting period: The Fed’s Beige Book is a summary of regional economic anecdotes from the 12 Federal Reserve districts. The November Beige Book reported that activity continued to expand across most districts, and the pace of growth improved in the few districts reporting a slowdown in the prior report. The November Beige Book additionally reported continued labor market tightening and an improvement in credit conditions. Wage growth held steady, while consumer spending and manufacturing activity were both mixed. In the December Beige Book, we will look for additional anecdotes related to wage growth, manufacturing activity, and consumer spending.

Thursday, December 1

• 08:30 AM Initial jobless claims, week ended November 26 (GS 245k, consensus 253k, last 251k); Continuing jobless claims, week ended November 19 (consensus 2,040k, last 2,043k); We expect initial jobless claims to decrease to 245k from 251k. Initial claims picked up to 251k last week, most likely reflecting a rebound from the prior week’s decline due to seasonal effects related to the Veterans Day holiday.
• 08:30 AM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will give opening remarks at the “Innovation, Market Structure, and Financial Stability” conference hosted by the Federal Reserve Bank of Cleveland and the Treasury Department Office of Financial Research. No Q&A is expected.
• 09:45 AM Markit manufacturing PMI, November final (consensus 53.9, preliminary 53.9): Consensus expects the Markit services survey to be in line with its flash estimate. Most responses to the survey are received by the time of the preliminary release, and revisions in the final release tend to be fairly minor.
• 10:00 AM ISM manufacturing, November (GS 52.5, consensus 52.2, last 51.9): Regional manufacturing surveys so far have mostly improved in November, and we expect ISM manufacturing to increase to 52.5. The Richmond Fed survey (+8pt to +4) and the Empire State survey (+8.3pt to +1.5) both rose, while the Kansas City Fed survey softened (-5pt to +1). The Philly City Fed survey softened a bit (-2.1pt to +7.6), but continues to suggest a moderate expansion in manufacturing activity. On net, our manufacturing survey tracker—which is scaled to the ISM Index—increased to 52.8 (vs. 51.9 in October).
• 10:00 AM Construction spending, October (GS +0.7%, consensus +0.6%, last -0.4%): We expect construction spending to improve in October. Construction spending softened by 0.4% in the September report, while earlier months were revised up.
• 04:00 PM Total vehicle sales, November (GS 17.4mn, consensus 17.7mn, last 17.9mn): Domestic vehicle sales, November (GS 14.0mn, consensus 14.0mn, last 14.1mn)

Friday, December 2

• 08:30 AM Nonfarm payroll employment, November (GS +180k, consensus +175k, last +161k); Private payroll employment, November (GS +165k, consensus +170k, last +142k); Average hourly earnings (mom), November (GS +0.1%, consensus +0.2%, last +0.4%); Average hourly earnings (yoy), November (GS +2.7%, consensus +2.8%, last +2.8%); Unemployment rate, November (GS 4.8%, consensus 4.9%, last 4.9%): We expect an October nonfarm payrolls gain of 180k, after a 161k increase in October. Measures of consumer confidence improved, while the employment components of regional Fed service sector surveys were mostly better. Initial claims picked up slightly in November, but still remain near post-crisis lows. The unemployment rate is likely to edge down one-tenth to 4.8%. We expect average hourly earnings to increase 0.1% month over month and rise 2.7% year over year.
• 12:30 PM Fed Governor Tarullo (FOMC voter) speaks: Federal Reserve Governor Daniel Tarullo will give the keynote speech at the “Innovation, Market Structure, and Financial Stability” conference hosted by the Federal Reserve Bank of Cleveland and the Treasury Department Office of Financial Research.

Source: DB, BofA, GS

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