A quiet week lies ahead for global markets and economies as we approach the end of the month and the southern hemisphere’s summer next Sunday.
For investors the biggest event is next Saturday in the US with the release of the 4th quarter and 2020 results of Berkshire Hathaway and the release of the annual letter to shareholders by chairman and CEO, Warren Buffett.
That letter is one of the major annual events of global investing and what many investors will be looking for is an explanation about why Buffett sees his own company as a better investment than most of the companies on global stockmarkets (see separate story).
Earnings seasons in the US and Australia (see separate story) wind down this week, while the flow of economic data will be moderate, although the December quarter Wage Price Index on Wednesday starts the flow of final data for next week’s GDP and National Accounts for the 4th quarter of 2020.
The Wage Price Index will confirm the extent of the problem we currently have and will have for years – low to non-existent growth in wages that will eventually strangle consumer demand and economic growth.
AMP Chief Economist, Dr Shane Oliver says wages growth “is expected to have remained weak at 0.3% quarter on quarter or 1.1% year on year.”
He says December quarter construction (out Wednesday) is expected to rebound by 5% quarter on quarter (qoq), business investment (Thursday) is expected to have rebounded by 3.5% quarter on quarter and investment plans are expected to be revised up sharply and credit data for January (Friday) is expected to show a further pick in housing credit growth in January.
The December half Australian earnings reporting season will wrap up with around 65 major companies due to report.
Across the Tasman, the Reserve Bank of NZ is expected to leave monetary policy on hold midweek.
In the US, home prices for January and an update on consumer confidence (today), new home sales (tomorrow) and existing home sales (Wednesday) durable goods orders (also Wednesday).
“Personal income data for January (Friday) is expected to show a 10% rise reflecting recent $600 stimulus payments and a 4% rise in personal spending (Friday). Core personal consumption deflator inflation is expected to have fallen back to 1.4%yoy,” Dr Oliver wrote at the weekend.
Japanese industrial production data for January (Friday) is expected to rise solidly.