Here's your complete preview of this week's big economic events

This week will come with new readings on retail sales, inflation, manufacturing, housing, and consumer sentiment.

Some of the numbers may be economists' expectations and some will miss.

But if you step back from the monthly numbers and take a big picture look at the state of the US economy, you'll see that things are actually pretty good.

"I think people are not considering the fact that the US economy is in very good shape," BlackRock's Rick Rieder said on Thursday, adding that, "this economy today is about as good as it can get.

Being a bond market strategist, Rieder tied his view of the economy with his expectation that the Federal Reserve will begin to tighten monetary policy this year through interest rate hikes. "I think the Fed has an epic, historic window to move," he said.

Rieder's baseline expectation is for the Fed to begin hiking rates in September. But for now, the focus shifts to corporate America as it release its Q1 earnings announcements.

Here's your Monday Scouting Report:

Top Stories

• About that earnings recession... When all of the companies are done announcing their Q1 financial results in the coming weeks, analysts expect to learn that corporate earnings fell year-over year. From FactSet's John Butters: "For Q115, year-over-year earnings for the S&P 500 are projected to decline by 4.8%. If the index reports a year-over-year decline for the quarter, it will be the first time since Q3 2012."
  
  But don't declare the end of the bull market just yet.
  
  BMO's Brian Belski thinks we should freak out about this "malaise." Here's Belski: "Many are worried that an earnings recession (e.g., two or more consecutive quarters of negative year-over-year growth) automatically translates into an economic recession and by association a stock bear market. Unfortunately, like many other things in life, the reality is more complicated. Most important, none of the ordinary recession indicators signal trouble (i.e., yield curve, confidence, jobless claims, etc.). In fact, most continue to exhibit favorable trends. In addition, we have found that weakness in quarterly growth needs to be "confirmed" by weakness in LTM growth in order for a recession to follow. Stated differently, a recession has not happened until LTM EPS growth similarly plummets (Exhibit 1). Case in point - during 2012 there two consecutive quarters of negative quarterly growth but LTM growth stayed positive and obviously stocks and the economy did just fine."
  

Economic Calendar

• Monthly Budget Statement (Mon): Economists estimate the US ran a deficit of $43.4 billion in March.
• Retail Sales (Tues): Economists estimate sales grew 1.0% in March. Excluding autos and gas, core sales is estimated to have increased by 0.6%. From Credit Suisse: "We expect a strong rebound in retail sales following weak readings in January and February. March unit vehicle sales rose sharply (17.1mn from 16.2mn). Negative effects from severe February weather should reverse. And the price-related impact from falling gasoline prices should be diminished. The recent rise in the personal savings rate also suggests there is a degree of pent-up demand."
• Producer Price Index (Tues): Economists estimate PPI climbed by 0.2% month-over-month, while falling 0.9% year-over-year. Excluding food and energy, core prices are estimated to have increased by 0.1% month-over-month and 0.9% year-over-year.  From BNP Paribas: "Energy prices (flat last month) likely made their first positive contribution to PPI inflation in nine months in March, and food and core goods likely rebounded in the month. We expect services prices to have rebounded as well, after the largest monthly percent decline in the history of the final demand services PPI."
• Empire Manufacturing (Wed): Economists estimate this regional manufacturing index climbed to 7.17 in April from 6.90 in March. Nomura economists are expecting a decline: "The Empire State Index declined for the second consecutive month in March, as factors such as the inclement weather, lower energy prices, the stronger USD and the West Coast port disruptions all seemed to weigh on factory activity in Q1. Declines in the new orders and unfilled orders measures in this report in March provide less support for activity in the NY region in April."
• Industrial Production (Wed): Economists estimate production fell 0.3% in March with capacity utilization declining to 78.6%. From BNP Paribas: "Industrial production is expected to have declined in March, largely reflecting a massive decline in electric utility output. Manufacturing hours worked declined in the month, suggesting manufacturing ex-autos likely did the same. Motor vehicle assemblies likely offset this with a solid increase. We expect mining production to have rebounded slightly in March."
• NAHB Housing Market Index (Wed): Economists estimate this homebuilder sentiment index climbed to 55 in April from 53 in March. From Bank of America Merrill Lynch: "The strong gain in new home sales in February suggests that demand has been rising, which should support homebuilder sentiment. Moreover, mortgage rates have remained low and consumer confidence has improved. This will be an important survey in determining homebuilder sentiment heading into the spring selling season."
• The Beige Book (Wed): The Federal Reserve's will publish its collection of economic anecdotes at 2:00 p.m. ET. From Nomura: "We expect the Fed Beige Book prepared for the 28-29 April FOMC meeting to show that factors such as inclement weather, lower energy prices, the West Coast port dispute and the stronger USD weighed on economic activity in March. However, we expect the Beige Book to show some rebound in economic activity recently, due to the waning effects of some of these transitory factors. We will look for insight for anecdotal evidence on exactly how these factors affected businesses and consumer activity, and the expected duration of their impact. Another key thing to look for is any evidence of increasing wage pressures in the labor market, and clues as to whether the weak employment report in March was just an anomaly."
• Initial Jobless Claims (Thurs): Economists estimate initial claims slipped to 280,000 from 281,000 a week ago. From UBS's Sam Coffin: "Jobless claims have been falling, on balance, since late February. The latest four-week average of 282k compares with 303k a month earlier. The message is ongoing labor market improvement."
• Housing Starts (Thurs): Economists estimate the pace of starts jumped 15.9% in March to an annualized rate of 1.040 million units, reversing a sharp plunge in February. The pace of permits is estimated to have declined 1.5% to 1.085 million units. From BofAML: "The decline in February was concentrated in the Northeast which witnessed a 57% decline in the month. This seems extreme and likely a function of poor weather conditions, which should support a recovery with the start of spring. Moreover, building permits are running at 1.102 million in February, suggesting starts should rebound to be more in line with the pace of permits. Much of the gain in permits has been in multifamily, which will likely show through in the starts figures in March. However, we also expect an improvement in single family starts, consistent with the strong gain in new home sales in February and low inventory levels."
• Philadelphia Fed Business Outlook (Thurs): Economists estimate this regional activity index climbed to 6.3 in April from 5.0 in March. From BofAML: "At the turn of the year we saw significant slowing, consistent with weakness in the broader economic data. However, temporary factors like weather and disrupted supply chains from port strikes on the west coast have had a negative impact. That said, there is a significant oil presence in Pennsylvania, and the sustained drop in oil prices will thus remain a headwind for the index."
• Consumer Price Index (Thurs): Economists estimate CPI climbed by 0.3% month-over-month, while going nowhere year-over-year. Excluding food and energy, core prices are estimated to have increased by 0.2% month-over-month and 1.7% year-over-year. From Credit Suisse: "Gasoline prices rose in March versus February, but the seasonal factor expects an increase. Therefore, we expect energy to be a generally neutral factor for inflation this month. The core CPI could be limited by sluggish goods prices, which are being held back by the stronger dollar and lower oil."
• U. of Mich Sentiment (Fri): Economists estimate this index of sentiment climbed to 94.0 in April from 93.0 in March. From Barclays: "Retail gasoline prices, which are highly correlated with survey measure of consumer sentiment, have dipped lower in early April. In addition, weekly survey measures of confidence suggest a stronger reading in April. Taken together, these suggest a mid-month rebound in the Michigan index."

Market Commentary

On Sunday, Morgan Stanley published its Spring Global Strategy Outlook, a 38-page report laying out with the firm expects for the markets in the near term."We head into the second quarter with a sustained view that US equities will do well despite volatile and near zero S&P 500 appreciation in the first quarter," US equity strategist Adam Parker said. "Our 12-month forward target for end Q1 2016 is 2275, offering about 10% upside from today's price, based on 4% earnings growth in 2015, 6% growth in 2016, and modest further multiple expansion to just over 17x forward earnings.""Besides the signposts for late-cycle behaviour (economic, corporate, and credit), the biggest risk to our view would be a dramatic shift in the growth rate for the US economy. A run of bad data on jobs or ISMs would leave us staring at less liquidity (post tapering) and less growth, likely instilling some incremental fear of an earnings plateau or decline," Parker said.Other risks Parker identified included the pace of the Fed's rate hikes, continued deterioration in Greece, further strengthening in the dollar, and the ongoing slowdown in China.

For more insight about the middle market, visit mid-marketpulse.com.

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