The first quarter is coming to an end. This will be the start of chatter around earnings in the US and what this might mean for the stock market. There shouldn't be much in the way of surprises, at least ones that will reshape market sentiment, but attention should be paid to signs of the earning story possibly butting up against 'peak earnings to revenue growth'.
The Fed is paring back its balance sheet after a decade of easing, easy credit has allowed investments in growth and innovation that lowered costs, and tax cuts are now going to be factored into stock buybacks and dividends. Going forward there is tightening credit, higher rates on those loans, and higher costs having to eventually be passed on to consumers. This will make the earnings growth stories of the past decade harder to come by. I will be looking to put out an article on this in more detail in the coming days and keeping an eye on the trends that come out of this earnings season.
Italian elections occurred over the weekend with far right parties taking more seats than people were expecting. This will likely lead to long negotiations over building a coalition. The markets initially sold off on the news, with the Euro following suit, but in the past few hours we have seen a recovery in US stock futures and the Italian stock exchange. The news of the elections was not as big of an influence because of the overshadowing trade talk between the US and the world that started last week.
Today in the US there ISM non-Manufacturing numbers are coming out, including PMI. This could have the greatest influence on markets today as last week's Fed talk and inflation concerns are now being closely looked at in the US. The week ahead is full of central banks having interest rate decisions, speeches, and GDP numbers being released. This should help shape the market direction since the current fears reside over how much the trade talk, higher interest rate outlooks, and geopolitical risks are actually affecting the economy.