Key Events This Week: Nvidia Earnings, PCE, Consumer Confidence, And Fed Speakers Galore

As DB’s Jim Reid writes in his expansive Daily Reid note this morning, five years ago today, global markets first began to panic after a weekend that saw 11 Italian towns emerge from it in Covid lockdown. Five years later we had a mini panic on Friday as attention focused on a report earlier in the week about a new coronavirus discovery in bats, from the infamous Wuhan lab, with similar properties to Covid-19. And speaking of five years, will the German election be seen as a pivotal moment when we look back on it in 2030? For financial markets the make-up of the Bundestag was probably as important as the overall results and the one line summary is that the centre-right and centre-left should have sufficient seats to form a grand coalition but overall the centrist parties are short of a two-thirds majority. This latter means that any future reforms of the debt break will be challenging and may require compromise and horse trading.

In terms of the details, the provisional results confirm a victory for the centre-right CDU/CSU (28.6%), followed by the far-right AfD (20.8%), centre-left SPD (16.4%) and Greens (11.6%). Of the smaller partis, the leftist Linke (8.8%) comfortably exceeded the 5% threshold, but the far-left BSW (4.97%) and liberal FDP (4.3%) fell short. BSW’s narrow failure to enter the Bundestag, which may take a few days to be definitively confirmed, has the important consequence of leaving the CDU/CSU and SPD combined with a projected 52% of the seats. 

That leaves the grand coalition as the most likely outcome, being the only option to avoid the need for three-party coalition given that mainstream parties have ruled out partnering with the AfD. DB’s Germany economists see the prospect of a two-party coalition led by a strong CDU/CSU as a positive for Germany’s corporate sector, promising less policy gridlock and uncertainty than under the outgoing government. Earlier in the night, CDU leader Merz said he wanted to form a coalition within the next two months.

While the outcome may reduce the risks of particularly fractious coalition talks, it still confirms an ongoing anti-establishment trend that has been visible both in Germany and Europe as a whole. The result marks the lowest ever vote share for the two major parties, even as the turnout (82.5%) was the highest since at least 1990. And it leaves the centrist parties short of a 2/3rds constitutional majority, with the CDU/CSU, SPD and Greens jointly at just under 66% of seats. That means any debt brake reform, including for defense spending, would require support from one of the fringe parties. This may not be impossible, but it would require significant political compromises.

In terms of other events this week, Nvidia’s earnings on Wednesday could be the biggest mover of markets. Interestingly of the 62 analysts who cover the stock on Bloomberg, 56 have a buy rating with only one sell. DB are currently one of only 5 with a hold rating. Outside of that, inflation takes centre stage with US core PCE, German, French and Italian flash CPI, as well as Tokyo CPI all out on Friday with Spain’s equivalent coming out on Thursday. In terms of the rest of the main global releases, the German Ifo survey today will be less relevant given the election but later we have the Dallas and Chicago Fed manufacturing surveys. Tomorrow sees the US Conference Board consumer confidence release which will be interesting after Friday’s weak UoM equivalent. Wednesday sees US new home sales and Australian inflation. Thursday sees US durable goods and the ECB account of their January meeting and Friday sees US personal income and spending data and the ECB consumer expectations survey. There are also lots of central bank speakers through the week, including at the G20 central bankers and finance minister meeting in Cape Town on Wednesday and Thursday. You can see the main ones detailed in the day-by-day calendar at the end as usual, along with key earnings releases and all the other data.

Digging into the main US data this week now. According to DB economists, Friday’s personal income (+0.3% forecast vs +0.4% previously) and consumption (+0.2% vs. +0.7%) will likely be softer due to the LA wildfires and poor weather with the all-important core PCE deflator (+0.27% vs. +0.16%) higher but not as extreme as CPI due to softer subcomponents in the subsequent PPI. This would lower the YoY core PCE two tenths to 2.6%. 

In the US consumer confidence tomorrow, the jobs-plentiful / jobs hard-to-get series is important as a good proxy for the unemployment rate. For claims on Thursday our economists are looking to the DC area in particular given press reports of substantial federal government layoffs. Around 20% of the ~2.3mn federal government employees live in Washington DC, Maryland and Virginia. The German bank estimates that there have been roughly 14k potential federal layoffs since the Trump Administration took office with another 12k pending the resolution of court cases. Clearly this is just within the first month.

Courtesy of DB, here is a day by day summary of the key events:

Monday February 24

• Data: US January Chicago Fed national activity index, February Dallas Fed manufacturing activity, Japan January PPI services, Germany February Ifo survey
• Central banks: BoE’s Lombardelli, Ramsden and Dhingra speak
• Earnings: Diamondback Energy, Trip.com, Domino’s Pizza, Cleveland-Cliffs
• Auctions: US 2-yr Notes ($69bn)

Tuesday February 25

• Data: US February Conference Board consumer confidence index, Richmond Fed manufacturing index, business conditions, Dallas Fed services activity, Philadelphia Fed non-manufacturing activity, December FHFA house price index, Q4 house price purchase index, Germany Q4 GDP detail, EU27 January new car registrations
• Central banks: Fed’s Logan, Barr and Barkin speak, ECB’s Schnabel and Nagel speak, BoE’s Pill speaks
• Earnings: Home Depot, Intuit, Workday, Coupang, ASM
• Auctions: US 5-yr Notes ($70bn)

Wednesday February 26

• Data: US January new home sales, Germany March GfK consumer confidence, France February consumer confidence, Australia January CPI
• Central banks: Fed’s Barkin and Bostic speak, BoE’s Dhingra speaks
• Earnings: Nvidia, Salesforce, Deutsche Telekom, TJX, AB InBev, Synopsys, CRH, Snowflake, Stellantis, E.ON, Novonesis, TKO, Paramount Global
• Auctions: US 2-yr FRN (reopening, $28bn), 7-yr Notes ($44bn)

Thursday February 27

• Data: US January durable goods orders, pending home sales, February Kansas City Fed manufacturing activity, initial jobless claims, Japan February Tokyo CPI, January retail sales, industrial production, France February PPI, Italy February consumer confidence index, manufacturing confidence, economic sentiment, December industrial sales, Eurozone January M3, February economic confidence, Canada Q4 current account balance, Switzerland Q4 GDP
• Central banks: ECB’s account of the January meeting, Fed’s Schmid, Barr, Bowman, Hammack, Harker and Barkin speak
• Earnings: Iberdrola, AXA, Dell, LSEG, Autodesk, Rolls-Royce, Vistra, Monster Beverage, Eni, Haleon, Engie, Warner Bros Discovery, Telefonica, Endeavor

Friday February 28

• Data: US January PCE, personal income and spending, advance goods trade balance, retail inventories, wholesale inventories, February MNI Chicago PMI, Kansas City Fed services activity, UK February Lloyds Business Barometer, Nationwide house price, Japan January housing starts, Germany February CPI, unemployment claims rate, January retail sales, import price index, France February CPI, January consumer spending, Q4 total payrolls, Italy February CPI, Canada Q4 GDP, Sweden Q4 GDP
• Central banks: ECB consumer expectations survey, BoE’s Ramsden speaks
• Earnings: Allianz, Holcim, BASF, Amadeus IT, Erste

Finally, Goldman notes that the key event this week is this week is core PCE inflation on Friday. There are several speaking engagements by Fed officials this week.

Monday, February 24

• There are no major economic data releases scheduled.

Tuesday, February 25

• 04:20 AM Dallas Fed President Logan (FOMC non-voter) speaks:  Dallas Fed President Lorie Logan will speak at the “2025 BEAR Conference: The Future of the Central Bank Balance Sheet” in London. Speech text and a moderated Q&A are expected. On February 6, Logan said, “I think the possible policy strategies for the FOMC in 2025 boil down to two key alternatives. In some scenarios, it will soon be appropriate to resume reducing the federal funds target range. In other scenarios, we’ll need to hold rates at least at the current level for quite some time.” She also said, “What if inflation comes in close to 2 percent in coming months? While that would be good news, it wouldn’t necessarily allow the FOMC to cut rates soon, in my view.”
• 09:00 AM FHFA house price index, December (last +0.3%)
• 09:00 AM S&P Case-Shiller 20-city home price index, December (GS +0.4%, consensus +0.4%, last +0.4%)
• 10:00 AM Conference Board consumer confidence, February (GS 102.0, consensus 102.7, last 104.1)
• 11:45 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give a speech on financial stability at an event hosted by Yale School of Management. Speech text and Q&A are expected.
• 01:00 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will give a speech called “Inflation Then and Now” at an event hosted by the Rotary Club of Richmond. Speech text and Q&A are expected. On February 5, Barkin was asked if he still expected the FOMC to cut the fed funds rate this year and responded with “That’s certainly the lean, but we’ll have to see what happens.” Barkin also said, “I still think policy is moderately restrictive.”

Wednesday, February 26

• 08:30 AM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Tom Barkin will repeat his speech called “Inflation Then and Now.”
• 10:00 AM New home sales, January (GS flat, consensus -3.3%, last +3.6%)
• 12:00 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Fed President Raphael Bostic will speak on the economic outlook and housing at the Urban Land Institute’s annual Housing Opportunity Conference in Atlanta. Q&A is expected. On February 3, Bostic said, “My general outlook is that we’re going to get to target and get back to neutral. And I think neutral is lower than where we are now, somewhere in the 3-3.5% range. But how long should it take for us to get there depends on how the economy evolves.”

Thursday, February 27

• 08:30 AM GDP, Q4 second release (GS +2.1%, consensus +2.3%, last +2.3%); Personal consumption, Q4 second release (GS +4.1%, consensus +4.1%, last +4.2%): We estimate that Q4 GDP growth was revised down by 0.2pp to +2.1% (quarter-over-quarter annualized), reflecting a downward revision to consumer spending (-0.1pp to +4.1%) due to softer public transportation and personal home care details in the Quarterly Services Survey (QSS), a downward revision to business fixed investment (-0.8pp to -3.3%), but an upward revision to exports.
• 08:30 AM Durable goods orders, January preliminary (GS +4.0%, consensus +2.0%, last -2.2%); Durable goods orders ex-transportation, January preliminary (GS +0.3%, consensus +0.2%, last +0.3%); Core capital goods orders, January preliminary (GS +0.4%, consensus +0.3%, last +0.4%); Core capital goods shipments, January preliminary (GS +0.4%, consensus +0.3%, last +0.5%): We estimate that durable goods orders increased 4.0% in the preliminary January report (month-over-month, seasonally adjusted), reflecting a rebound in commercial aircraft orders. We forecast 0.4% increases for core capital goods orders and shipments, reflecting further increases in the orders and shipments components of manufacturing surveys in January.
• 08:30 AM Initial jobless claims, week ended February 22 (GS 225k, consensus 221k, last 219k): Continuing jobless claims, week ended February 15 (consensus 1,872k, last 1,869k)
• 09:15 AM Kansas City Fed President Schmid (FOMC voter) speaks: Kansas City Fed President Jeff Schmid will give remarks at the USDA Outlook Forum.
• 10:00 AM Pending home sales, January (GS -5.0%, consensus -0.8%, last -5.5%)
• 10:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will speak on novel activity supervision at an event in Washington. Speech text and Q&A are expected.
• 11:45 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak on community banking at an event in Kansas. Speech text and Q&A are expected. On February 18, Bowman said, “I continue to see greater risks to price stability, especially while the labor market remains strong,” and later added, “I would like to gain greater confidence that progress in lowering inflation will continue as we consider making further adjustments to the target range.”
• 01:15 PM Cleveland Fed President Hammack (FOMC non-voter) speaks: Cleveland Fed President Beth Hammack will give the keynote address on financial stability at the Research Conference on Bank Regulation in New York. Speech text and Q&A are expected. On February 11, Hammack said, “Given current economic conditions, it will likely be appropriate to hold the funds rate steady for some time… We are well positioned to respond to changes in the outlook to achieve our maximum employment and price stability objectives.”
• 03:15 PM Philadelphia Fed President Harker (FOMC non-voter) speaks:  Philadelphia Fed President Patrick Harker will give a speech on the economic outlook at an event in Newark, Delaware. Speech text and Q&A are expected. On February 11, Harker said, “Inflation has remained elevated and somewhat sticky over the past several months, both in the overall and core figures. But that notwithstanding, I do believe that our current positioning will bring inflation back to target, in the next two years if conditions broadly evolve as I expect.”

Friday, February 28

• 08:30 AM Personal income, January (GS +0.4%, consensus +0.4%, last +0.4%); Personal spending, January (GS flat, consensus +0.2%, last +0.7%); Core PCE price index, January (GS +0.25%, consensus +0.3%, last +0.2%); Core PCE price index (YoY), January (GS +2.54%, consensus +2.6%, last +2.8%); PCE price index, January (GS +0.30%, consensus +0.3%, last +0.3%); PCE price index (YoY), January (GS +2.43%, consensus +2.5%, last +2.6%): We estimate that personal income increased by 0.4% in January, while personal spending remained unchanged. We estimate that the core PCE price index rose by 0.25% in January, corresponding to a year-over-year rate of 2.54%. Additionally, we expect that the headline PCE price index increased by 0.3% from the prior month, corresponding to a year-over-year rate of 2.43%. Our forecast is consistent with a 0.16% increase in our trimmed core PCE measure.
• 08:30 AM Advance goods trade balance, January (GS -$118.0bn, consensus -$115.0bn, last -$122.0bn)
• 08:30 AM Wholesale inventories, January preliminary (consensus +0.1%, last -0.5%)
• 09:45 AM Chicago PMI, February (consensus 40.3, last 39.5)
• 10:15 PM Chicago Fed President Goolsbee (FOMC voter) speaks: Chicago Fed President Austan Goolsbee will speak at the 2025 Stanford Institute for Economic Policy Research (SIEPR) Economic Summit. Q&A is expected. On February 20, Goolsbee said, “My view is, before we got to the uncertainties from policy and from geopolitics and from some others, the overall [picture of inflation] looked pretty good to me.”

Source: DB, Goldman, BofA