The inauguration stole the headlines last week, and I expect it will be no different in the week ahead. With the anticipated repeal of The Affordable Care Act, cabinet appointments and the planned meetings with world leaders, including U.K., Canada and Mexico, the activities in Washington will continue to keep the media’s attention. Amid this, I believe market participants will start to turn their attention back to the economy and earnings, both of which will be prominent in the week ahead.
This week we get several key U.S. economic indicators. On Tuesday and Thursday, the Markit Manufacturing and Services Purchasing Managers Indexes will be released. Both indicators are expected to increase slightly from the month before. On Friday, fourth quarter Gross Domestic Product (GDP) will be released and is expected to decline to 2.2% from 3.5% in the third quarter.
Corporate earnings will be plentiful this week. I continue to expect earnings to come in line with expectations but don't believe there will be significant upward revisions to future earnings expectations.
The ability for both the data and earnings to disappoint market expectations continues to be elevated.
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