Slowing US growth could be beneficial for investors

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Investors will closely follow concerns over the global and US economic slowdown that worried them earlier this year.

The Federal Reserve Bank of Atlanta expects real GDP growth of 2.8% from January to March, while analysts surveyed by Refinitiv expect an average of 1.9%. A lower than expected GDP reading could lead to a decline in equities and other assets.

Government stimulus, along with tax reform, boosted the economy last year, but the trend is downward. According to forecasts, the US economy is expected to grow more slowly in 2019 compared to 2.6% last year.
Growth in the first quarter tends to be lower due to seasonal factors. This year, the data will also reflect the partial closure of the government, the longest in the history of the United States, which began in December but continued for much of January.

But Friday's GDP figure is only the first of the three, and since revisions are common, any initial reaction could be short-lived.

"Slowing down, that's fine, as long as there is no recession," said Brent Schutte, chief investment strategist at Northwestern Mutual.

The annualized growth rate of more than 4% announced by the United States for the second quarter of 2018 was certainly out of trend. GDP slowing down According to many economists, a more sustainable level will keep inflation at around 2%, the Federal Reserve's goal, and extend the cycle of economic growth, Schutte said. As a result, fears of an impending recession fade, he added.

There are other positive signs. The US trade deficit fell more than expected to $ 49.4 billion in February, its best performance in more than 18 months, data revealed last Wednesday. And that bodes well for Friday's GDP figure.

As market expectations for economic growth pick up, values ​​in cyclical sectors such as construction and manufacturing should outperform those in defensive sectors such as health.

The next factor that will drive up stocks will be global growth, Schutte said.

Only a few months ago, analysts had promised a catastrophic situation for the global economy. But if the Chinese GDP data better than expected last week are an indication, these concerns may have been exaggerated. China The economic recovery seems to be working, easing global concerns for the time being, even though the health of the European economy remains worrying.
2. Tech and Tesla: The winning season is in full bloom and this week's results will include: Twitter (tWTR), Facebook (FB) and Amazon (AMZN).
You're here (TSLA) will also report results, and the company is once again focusing on supply constraints and sales collapse.
Earlier this month, Tesla announced a massive drop in sales for the first quarter. The revenue report will show how the annual target of deliveries will be affected. Until now, the company has not changed its forecast of 360,000 to 400,000 vehicles for the year.
For Amazon, the focus could be more on Amazon Prime, given Disney (DIS)the adventure in the field of streaming with the announcement of Disney +, as well as Apple (AAPL)The new streaming service.

3. Boeing and turbulence of the 737 Max: Boeing will release its quarterly results on Wednesday. His profits are expected to suffer a shock after the grounding of his 737 Max aircraft after two fatal collisions. What Wall Street is waiting for more or less, and how long will the problem last.

Analysts surveyed by Refinitiv estimate that earnings per share declined 11% in the quarter, compared to the previous year. Before the crisis, Boeing (BA) the gains were expected to be higher. Boeing discontinued jet deliveries on March 14 due to stranding; so it was only about two weeks of lost sales revenue. Forecasts for the second quarter have already been even more successful.

Investors will be particularly alert to the announcement of the lifting of the grounding. They will also want to know about Boeing's prospects for deliveries and orders for the aircraft. Boeing is working to find an acceptable software patch for the safety system, which is now being investigated for accidents.

4. European banking profit: A number of European banks will follow their US counterparts and share the first quarter results this week.

Investors who are worried that the Federal Reserve's decision to suspend the rate hike will curb credit growth in the United States are unlikely to find a solution abroad.

European banks are under the pressure of weak economic growth, as well as the decision of the European Central Bank to keep interest rates in negative territory at least until the end of 2019 Unlike the Fed, the ECB has not yet raised its low interest rates in the aftermath of the European sovereign debt crisis.

Particular attention will be given to the results of German Bank (DB) Friday, while the merger talks with Germany Commerzbank (CRZBF) drag.

5. Coming this week:

On Monday – European markets are closed, Tesla is holding its day of investor

Tuesday -Twitter, Break (BREAK) and Procter & Gamble (PG) earnings

Wednesday – Benefits of Facebook, Boeing and Tesla

Thursday – Amazon and Starbucks (SBUX) earnings

Friday – US first quarter GDP due at 8:30 am ET; April: consumer sentiment expected at 10 am ET

– Julia Horowitz and Chris Isidore of CNN Business contributed to this report.

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