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Don’t be fooled by the the holiday-shortened trading week in the US. Next week promises to give investors plenty to watch, including the Greek bailout, minutes of the Federal Reserve’s last meeting, Bank of England governor Mark Carney’s testimony, retail earnings and Warren Buffett’s annual letter.
Here’s what to look for in the coming days.
Euro-area finance ministers gather in Brussels on Monday to discuss Greece’s bailout even as investors appear to have given up hope on any meaningful progress in talks between Athens and its creditors. Hopes that Greece could secure the release of its next loan tranche have dissipated after Brussels and the International Monetary Fund sparred over their diverging views on the Greek economy earlier this month, with some expressing uncertainty over the IMF’s commitment to participate in the bailout programme.
The meeting has also gained additional significance, as the last major one slated before European elections begin next month, starting with the Dutch.
“With the two largest eurozone economies facing elections this year, we believe it is in
their policymakers’ interests to contain any potential risks from Greek disruption,” said economists at Nomura. “We therefore expect some transitory agreement to be reached at least at the eurozone level, with the IMF decision on programme participation likely to be delayed even further”.
Following Federal Reserve chair Janet Yellen’s semi-annual testimony to Congress, investors get to hear from her UK counterpart when Mark Carney testifies before the UK parliament’s Treasury Committee on Tuesday. Mr Carney’s testimony comes after the BoE upgraded its economic forecast, while leaving its inflation forecast and interest-rate policy on hold.
“Since the inflation report was published two weeks ago, we’ve seen downside surprises to wage growth, inflation, and retail sales,” said strategists at TD Securities. “So even after the IR was more dovish than markets expected, we may see a further dovish tone with the IR testimony given the soft tone of the recent data releases.”
The Federal Reserve will release the minutes of its last monetary policy meeting on Wednesday, though they may seem dated since investors have just heard from Ms Yellen. In her testimony to Congress this week, she painted an upbeat view of the US economy and warned that it would be “unwise” to wait too long before raising interest rates.
Bank of America economists say they believe the minutes will reflect “a great deal of focus on both upside and downside risks,” even as Fed officials “become increasingly constructive on the outlook for the economy.”
Moreover, any discussion on the Fed’s balance sheet is likely to garner interest. “Yellen reiterated the view that the primary tool remains rates and that the balance sheet will only be addressed once the normalization of the fed funds rate is well under way,” said the folks at Bank of America. “We expect the minutes to reinforce this view, but there might be some discussion among members on the issue.”
The pace of companies unveiling results slows to a trickle, with just 50 companies listed on the S&P 500 slated to report next week. Among them, however, is the world’s largest retailer, Wal-Mart, along with department stores like Macy’s, Kohl’s and TJX Cos.
Finally, investors await the latest insights from the Oracle of Omaha, as Warren Buffett releases his annual letter to Berkshire shareholders on Saturday, February 25. Investors typically parse the letter for details on the company’s operations, which range from insurance to railways, as well as for Mr Buffett’s investment insights.
In last year’s letter, Mr Buffett commented on the downbeat tone of the US political debate. While Mr Buffett campaigned for the Democrat’s candidate, Hillary Clinton, and rebuked US President Donald Trump last year for failing to release his tax returns, he has recently taken the long view. Investors will likely watch for any additional commentary on that front.