All eyes this week will turn to the Federal Open Market Committee (FOMC) and Slack.
The FOMC will kick off its two-day meeting Tuesday, which will be followed by a press conference at its conclusion on Wednesday. Given the recent escalation of the U.S.-China trade war and slew of worrisome economic data, this month’s FOMC meeting will be even more closely watched.
While consensus among economists remains that there will be no rate cut following this month’s meeting, how Federal Reserve Chairman Jerome Powell illustrates the Fed’s views on the state of the economy and outlines the Fed’s future monetary path will remain a critical focal points among market watchers.
“We think the FOMC will guide markets towards the possibility of a cut, if conditions warrant. We expect the Fed to remove the "patience" guidance in the statement and underscore that it stands ready to offer accommodation to sustain the recovery,” Bank of America wrote in a note Friday. “Chair Powell will have to thread the needle in sounding sanguine on the outlook, but also discuss that the Fed is ready to ease in order to make sure the recovery continues.”
Another focal point will be the Fed’s dot plot. “we do not think the Committee will see a need to include a rate cut in their dot plot for this year. The current setting of the funds rate is at or below the longer-run dot for all participants, implying that they see policy as either neutral or slightly accommodative. Even with a reduction in the longer-run dot, that would still leave policy as neutral for the majority of the Committee,” UBS wrote in a note Wednesday.
Morgan Stanley economists point out that while the Fed will be ready to act if necessary, it is unlikely that policymakers will “rock the boat” ahead of the highly-anticipated G20 summit at the end of this month.
Meanwhile, another unicorn is expected to make its public debut on Thursday. Workplace messaging company Slack is looking to follow in Spotify’s (SPOT) footsteps by opting to direct list on the New York Stock Exchange.
A direct listing means that the company could avoid paying hefty underwriting fees to the big banks. Spotify’s successful direct listing has opened the door for others to follow, like Slack.
Because many companies do not typically choose to take the path of direct listing their public offering, Slack’s debut this week will be closely monitored. On Monday, the San Francisco, California-based company warned that it expects year-over-year revenue growth to have decelerated as operating losses have widened over the current quarter.
Slack anticipates revenue during its fiscal second quarter to total between $139 million to $141 million, which represents about a 51% to 53% jump from last year. During its fiscal first quarter, revenue grew 67% year-over-year.
Operating losses during the second quarter is projected to range between $77 million to $75 million, including approximately $32 million of one-time direct listing-related expenses, according to the company.
Slack is expected to begin trading June 20 on the New York Stock Exchange under the ticker “WORK.”
Monday: Empire Manufacturing, June (12.0 expected, 17.8 prior); Net Long-term TIC Flows, April (-$28.4 billion prior)
Tuesday: Housing Starts, May (1.239 million expected, 1.235 million prior); Building Permits, May (1.3 million expected, 1.29 million prior revised)
Wednesday: MBA Mortgage Applications, week ended June 14 (26.8% prior)
Thursday: Initial Jobless Claims, week ended June 15 (222,000 prior); Philadelphia Fed Business Outlook, June (10.5 expected, 16.6 prior); Continuing Claims, week ended June 8 (1.695 million prior); Bloomberg Consumer Comfort, week ended June 16 (61.6 prior); Leading Index, May (0.1% expected, 0.2% prior)
Friday: Markit U.S. Manufacturing PMI, June (50.6 expected, 50.5 prior); Markit U.S. Services PMI, June (51.0 expected, 50.9 prior); Markit U.S. Composite PMI, June (50.9 prior); Existing Home Sales, May (5.30 million expected, 5.19 million prior)
Wednesday: Oracle (ORCL) after market close
Friday: CarMax (KMX) before market open
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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