Top 3 things you need to know this week

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China in the spotlight

Please remember that China’s lockdown in Shanghai continues. The lockdown began on March 28 in half of the city, but has since spread to its entire population of around 26 million. A shortage of truckers and warehouse closures in Shanghai are also affecting neighboring provinces of Zhejiang and Jiangsu, according to a recent note from Citigroup analysts.

Both provinces are major manufacturing hubs, producing about one-third of China’s total exports. Shipping experts warn that the fallout will start to be felt in the coming months, as severe dislocations will again drive up transport costs and exacerbate shortages of raw materials and other essential supplies. There are also lingering worries about energy prices as Europe continues to debate the possibility of banning Russian oil and gas supplies. Such a move could cause prices to rise dramatically again as available global supplies become even more dispersed.

Data to monitor

The Atlanta Fed now forecasts US GDP growth of just +1.1% in Q1, when three of its last four quarterly readings were all above +6.1%. At the same time, more and more investors and economists are also starting to backtrack on their estimates of global economic growth. Several sources believe that Ukraine’s economic output will likely contract by -40% to -50%.

A growing number of economists are also predicting a double-digit reduction in Russia’s GDP, as well as much larger cuts in countries like Belarus and Moldova. Growth estimates in the Central European region, i.e. Bulgaria, Croatia, Hungary, Poland and Romania, are also starting to decline.

There was also more talk over the weekend that Russia could possibly start defaulting on some of its “external debt” for the first time since 1917.

As for this week, all eyes will be on the Consumer Price Index, which is due out Tuesday morning, and the Producer Price Index, which is due out Wednesday morning. Both will help add a bit more color to our current debate on inflation.

Also on Wednesday, we get the first batch of Q1 earnings from a few big names like JPMorgan, Black Rock, Bed, Bath & Beyond and Delta. Then on Thursday, the trade will digest the latest retail sales data and another round of earnings from names like Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanely and United Health Group.

Keep in mind that several of the largest U.S. banks could report their biggest downturn in investment banking revenue in years as more “deals” have been put on the back burner. Who knows how long this slowdown will last?

For an overview of all of today’s economic events, check out our economic calendar.

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