Market Perspective for March 13, 2017

The Federal Reserve will most likely raise interest rates 25 basis points on Wednesday to between 0.75 and 1.00 percent. Investors have largely priced in the move. A second hike in June already has better than 50 percent odds.

The consumer price index (CPI) for February will be out on Wednesday. Analysts expect an increase of 0.1 percent. Core CPI is expected to rise 0.2 percent. Economists expect February retail sales increased 0.1 percent. The March Empire State manufacturing index and the March national homebuilders’ surveys are also due. The manufacturing survey is forecast to show a slight drop. Economists expect the homebuilder survey to increase slightly.

Analysts are looking for a jump in housing starts when February data is released on Thursday. Weekly crude oil inventory data will take on renewed importance following last week’s drop in prices. Industry experts predict another significant increase in crude oil inventories. Business inventories for January could impact first quarter GDP estimates if they stray from the expected 0.3 percent increase.

Initial claims for unemployment are forecast to decline slightly from last week. Economists forecast a 0.1 percent increase in the producer price index (PPI) for February. The Philly Fed manufacturing survey is anticipated to show a slight decline. The same day, the Job Openings and Labor Turnover Survey (JOLTS) is expected to remain unchanged from last month. The University of Michigan Consumer Sentiment survey is due out Friday.

On Thursday, the Bank of Japan (BoJ) and the Bank of England (BoE) will meet. Both are expected to keep their rates unchanged, but the BoJ could announce a reduction in quantitative easing. Some analysts believe the BoJ has already begun a stealth taper.

In political news, the U.S. debt ceiling will expire on Thursday. While a temporary reset will begin Friday, Congress will need to approve a new ceiling or an extension. President Trump’s first budget proposal is also expected on Thursday. The United Kingdom may officially begin the road to independence by invoking Article 50 on Tuesday, setting in motion its exit from the European Union.  The Netherlands goes to the polls on Wednesday. The Party for Freedom (PVV) wants to pull Holland out of the EU as well.

As earnings season winds down, only a few well-known names have yet to report. This week, Oracle (ORCL), Adobe Systems (ADBE), Dollar General (DG) and Tiffany & Co. (TIF) are scheduled to report. Oracle is forecast to show 3 percent year-over-year growth as the enterprise database giant captures more cloud computing business. Consensus estimates call for earnings per share (EPS) of $0.62 on revenues of $9.25 billion. Oracle missed its forecasts last quarter.

On Thursday, analysts expect Dollar General to report $1.41 per share in earnings. Aside from earnings, investors will focus on same-store sales figures and rising costs. After the bell, Adobe is expected to post earnings of $0.87 per share and revenues of $1.65 billion. On Friday, analysts anticipate Tiffany & Co. will announce $1.37 per share in earnings as high-end merchants evade the overall downward trend in brick-and-mortar retail.

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