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

It's Q2 earnings season, and for the most part, companies are doing better than expected.

"Of the 187 companies that have reported earnings to date for Q2 2015, 76% have reported earnings above the mean estimate and 54% have reported sales above the mean estimate," FactSet's John Butters said.

"Similar to last quarter, companies have been discussing the impact of slower global economic growth, the stronger dollar, and lower oil prices during their earnings conference calls," he added.

This week, the spotlight shifts to the Federal Reserve, which holds its two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday.

Here's your Monday Scouting Report:

Top Stories

• At the Fed, it's the calm before the storm. "The July 28-29 FOMC meeting is shaping up to be the calm before the storm," Goldman Sachs' Zach Pandl writes. "Short-term interest rate markets imply a zero probability that the committee will raise policy rates next week, but show a high likelihood of at least one hike before the end of the year."
  
  But as we anticipate the Fed to begin tightening monetary policy with rate hikes, everyone will be watching carefully for any shifts in the language to the Fed's FOMC statement. Here's Pandl looking back that the last cycle: "A broader question for the committee will be: is the statement ready for possible rate hikes later this year, or does it require more lead-in language in order to prepare markets? Before the start of the last tightening cycle in 2004, this was the justification used for introducing the phrase, policy accommodation can be removed at a pace that is likely to be measured", at the May meeting. Although the committee ultimately decided to hike at the following meeting in June, the transcripts make clear that the language change was only intended to leave that option open.
  
  

  REUTERS/Shaun Heasley

  Former Fed Chairman Alan Greenspan

  
  
  "Making the case for the new language, then-Chairman Greenspan told the committee: This language enables us to move the next time. But the wording is very interesting. The word 'measured' is referring solely to the rate of increase, not to when the increase will begin. We have no way of knowing what the data are going to show over the next several weeks." Vice Chairman Ferguson added: I believe that this proposed language is helpful in saying to the markets that we wouldn't want to work hard to disabuse them of the expectations that have been built in at this stage for a modest tightening probably starting sometime in August ... But I would definitely say that the word 'measured' will help us to avoid triggering any real snapback in expectations in the context of what I continue to view as an economy that is still working hard to get rid of slack.
  
  "One could see similar arguments for adding this type of language to the statement today. However, there are a few reasons why we do not expect such a change next week. Most importantly, Chair Yellen downplayed the need for a revision at the June press conference. Asked directly whether gradual, for example, was on its way to becoming official guidance form the Fed", she responded: in a sense, we already have a statement ... [the last sentence of the statement before the vote count] is consistent with my use of the word 'gradual,' and it is consistent with what you see in the Summary of Economic Projections." To this we would add the fact that the committee already dropped the patient" characterization in March, whereas in 2004 patient" was dropped and measured" added simultaneously. In addition, the committee might worry that changing current guidance could be misinterpreted as a commitment to act in September. We therefore do not expect a change along these lines, but acknowledge that it is a risk for next week."
  
  
  
  
  
  
  

Economic Calendar

• Durable Goods Orders (Mon): Economists estimate orders jumped 3.2% in June. Nondefense capital goods orders excluding aircraft, or core capex, is estimated to have increased by 0.5%. Here's Wells Fargo's John Silvia: "New orders for durable goods have been tepid over the first half of the year as a strong dollar has weighed on exports and low oil prices have sapped demand for products related to energy investment. Part of the softness has also been due to weakness in aircraft orders, but orders for nondefense capital goods ex-aircraft also have fallen in four out of the past five months and are 2.1 percent lower than a year earlier. We expect to see some modest bounce-back in durable goods orders for June. Boeing has already reported a jump in aircraft orders for the month, but orders outside of the transportation sector are also likely to have improved. Purchasing managers' indices generally moved up in June, while the new orders' component of the ISM manufacturing index rose to its highest level of the year in June."
  
• Dallas Fed Manufacturing Activity (Mon): Economists estimate this regional manufacturing index improved to -3.0 in July from -7.0 in June. "Early indicators of manufacturing in July have been weak," UBS's Sam Coffin said.
• S&P/Case-Shiller Home Price Index (Tues): Economists estimate home prices climbed 0.3% month-over-month in May, or 5.6% year-over-year. Here's Bank of America Merrill Lynch: "We are forecasting a 0.2% mom SA increase in the national S&P Case Shiller index, leaving the yoy rate to inch up to 4.5%. This would imply a continued modest slowing in the monthly rates from the strong run at the end of last year. The Core Logic index, which is released earlier than Case Shiller, has been running a bit stronger than the Case Shiller index. Taking a step back, the data shows moderate home price appreciation, exceeding the rate of inflation."
• Markit US Services PMI (Tues): Economists estimate this services index improved to 55.0 in July from 54.8 in June.
• Consumer Confidence Index (Tues): Economists estimate the Conference Board's index of sentiment slipped to 100.0 in July from 101.4 in June. Here's BNP Paribas: "The pace of labor market improvement is solid. In the first half of July, we saw a dip in equities' prices and gasoline prices were little changed. Since then, equities have rebounded and gasoline prices have fallen a bit. In all, we expect confidence to be relatively steady in July."
• Richmond Fed Manufacturing Index (Tues): Economists estimate this regional manufacturing index improved to 8 in July from 6 in June.
• Pending Home Sales (Wed): Economists estimate sales climbed 1.0% month-over-month in June, or 12.0% year-over-year. Here's Bank of America Merrill Lynch: "We expect pending home sales will increase 1.0% in June, which would mark the sixth consecutive gain. A broad range of indicators have shown continued gains in homebuyer activity, with mortgage purchase applications higher and NAHB homebuilder sentiment improving."
• FOMC Rate Decision (Wed): The Fed concludes its two-day Federal Open Market Committee meeting and publishes its FOMC statement at 2:00 p.m. ET.
• Initial Jobless Claims (Thurs): Economists estimate initial claims climbed to 270,000 from 255,000 a week ago. Here's Nomura: "Initial jobless claims have been volatile recently possibly due to difficulties of seasonally adjusting the data with shutdowns for retooling in the auto and textile industries. Thus, it may take a couple of weeks to determine the true underlying trend in labor markets."
• GDP (Thurs): Economists estimate GDP jumped 2.5% in Q2 driven by a 2.7% gain in personal consumption. This is up from the -0.2% Q1 GDP move. Here's BNP Paribas: "We expect GDP to have grown 3.0% q/q, saar, in Q2 2015 - a rebound following Q1 weakness, which was due to a number of shocks, including harsh weather, west coast port disruptions, and a strong dollar. Consumption will likely be the largest contributor to growth in the quarter, while non-residential investment continued to feel headwinds from the oil price decline and the strong dollar."
  
  

  REUTERS/Romeo Ranoco

  Workers hang on ropes as they assist heavy machinery in arranging cargo containers at a shipping yard in Cavite city, south of Manila.

  
  
  Here's Wells Fargo's Sam Bullard on the scheduled release of benchmark revisions: "The advance look at Q2 GDP will also include annual benchmark revisions that go back three years. Acknowledging the inadequate seasonal adjustments that resulted in perennial depressed first quarter performances, there is additional uncertainty associated with this report. Note, any upward revision to prior first quarter GDP performances should be offset by downward revisions to growth later in the year and therefore not impact annual growth rates. In addition, the BEA will introduce two new measures of growth: 1) a measure that averages GDP and GDI (gross domestic income) and may help account for known measurement inconsistencies between the two series (which should theoretically match) and 2) a measure called final sales to private domestic purchasers" that analyzes private demand in the domestic economy, derived from consumer spending and private fixed investment."
  
  
  
• Employment Cost Index (Fri): Economists estimate the ECI increased by 0.6% in Q2. Here's Credit Suisse: "The Employment Cost Index often is considered the best overall measure of labor costs because it includes other forms of compensation besides hourly pay (such as commissions) as well as benefit costs (which account for a little more than 30% of the total). Also, the ECI is not distorted by shifts in the industry mix of employment, unlike average hourly earnings. We estimate headline ECI (total compensation) rose by 0.7% in Q2, after a similar 0.7% increase in Q1. A quarterly gain in line with our forecast would leave the year-over-year rate unchanged at 2.6%. This would still be a touch below the ECI's pre-recession YoY growth range of 3%-4%, but it would show a brighter picture of wage growth than recently lackluster readings on total average hourly earnings (2.2% YoY)."
• Chicago Purchasing Manager (Fri): Economists estimate this regional activity index climbed to 50.9 in July from 49.4 in June. Here's Nomura: "The Chicago PMI headline index has been below 50 in four out of the first six months in 2015 as businesses have been slow to adjust to the lower energy prices, the stronger dollar, and disruptions from the bad weather and West Coast port labor disputes earlier in the year. We expect to see some improvement in the index in July as oil and drilling activity stabilizes and the effects from the stronger dollar gradually wane. However, it will likely take some time before we see a full rebound in the index."
• U. of Michigan Sentiment (Fri): Economists estimate this measure of sentiment improved to 94.0 in from a preliminary print of 93.3. From Barclays: "Gasoline prices have eased a bit since the preliminary survey period, which should support a slightly stronger reading on current conditions. On net, we believe the index is likely to advance at month-end."

Market Commentary

"In recent months, the U.S. stock market has been dealing with several potential risks including Russian aggressions, Iranian negotiations, Puerto Rican bad debts, a Chinese stock market collapse, and a never-ending Greek drama," Wells Capital Management's Jim Paulsen writes. "However, these have only been sideshows or warm-up acts for the main event of year-Fed tightening!"

"Several aspects surrounding today's stock market make it appear abnormally vulnerable as the Fed begins the process of finally raising interest rates," Paulsen warned. "First, the current price/earnings (P/E) multiple is among the highest of any Fed initiation cycle. Second, investor sentiment is probably a bit too calm since the stock market has not experienced a correction for more than 900 trading days, the third longest in post-war history. Third, the Fed begins this tightening cycle from the lowest unemployment rate of any post-war recovery. Finally, tightening begins when corporate profit margins are near historic highs and while earnings growth is already well past its best growth rates of the recovery."

"Perhaps, the stock market will surprise and continue to zoom ahead even as the Fed finally begins to normalize policy," he said. "However, the stock market has trended mainly sideways ever since the Fed stopped adding to quantitative easing last year. And, it does not seem unreasonable for the stock market to struggle even more, at least for a time, with the first rise in short-term interest rates in almost a decade."