This Week Is So Stacked With Mega Economic Events We Might Just Feel The Axis Of The Earth Tilt

"Risk events are set to pick up dramatically, threatening the summer lull," says Société Générale head of rates and forex strategy Vincent Chaigneau.

First of all, it's jobs week in America. The July U.S. jobs report comes out on Friday, and the numbers will be considered carefully as the Federal Reserve decides the course of its currently ultra-easy monetary policy.

Furthermore, new U.S. housing data may begin to give us a sense of whether rising mortgage rates are affecting homebuyer behavior. Similar insights will be revealed through the July auto sales figures.

Speaking of monetary policy, three of the world's most important central banks will hold interest rate meetings this week.

All of this comes as every major economy around the world will publish its crucial manufacturing PMI reports. Is Europe still getting better? Is China still getting worse?

Meanwhile, we're still in the middle of Q2 earnings season. Pfizer, ExxonMobil, Proctor & Gamble, and Berkshire Hathaway are just a few of the companies announcing this week.

Also, the U.S. will be publishing revisions to every GDP report since 1929.

Top Stories

• Three Central Bank Meetings: The U.S. Federal Reserve, the Bank of England, and the European Central Bank will all be holding their monetary policy meeting this week. No change is expected from the ECB. On July 4, the BoE's Mark Carney hinted that he was considering adopting forward guidance; we may hear more about that on Thursday.
  
  One thing's for sure, there won't be any tapering of it's monthly $85 billion bond-buying program. "Even uber-hawk Charles Plosser has called a first move in September, and if he doesn't advocate a July move, it's hard to see anyone in the leadership doing so," said JP Morgan's Michael Feroli.
  
• GDP Mega-Revisions : This week, the Commerce Department will release revised GDP data to include R&D as a category of investment. This will affect every report since 1929. "The net effect could be a 3% upward revision to the level of output," said Deutsche Bank's Joe LaVorgna. "However, of greater significance to us (as well as the Fed and financial markets) will be the change in growth, rather than the outright level. This is what makes Q2 GDP estimates so difficult to forecast. Based on the recent and substantial upward revisions to nonfarm payrolls, we believe the growth rate of GDP will be revised modestly higher over the past several years. This is a separate issue from the overall level being revised higher."

Economic Calendar

• Pending Home Sales (Monday): Economists estimate that the pace of pending home sales fell 1.0% in June month-over-month. "Pending home sales should have decreased by 2.0% mom in June," warned Bank of America Merrill Lynch's Michelle Meyer. "We expect some of the decline in signed contracts for existing homes to be a give-back following a 6.7% surge in May. We could also start to see the impact of rising mortgage rates, which may have deterred some homebuyers, particularly investors and second home buyers."
• Dallas Fed Manufacturing (Monday): Economists estimate this index climbed to 7.3 in July, up from 6.5 a month ago.
• S&P/Case-Shiller Home Prices (Tuesday): Economists estimate the 20-city index climbed 1.4% month-over-month in May and 12.4% year-over-year. "Figures released by data provider CoreLogic suggest that home selling prices remained on an uptrend during May in the twenty cities covered by the S&P/Case- Shiller survey," said Societe Generale's Brian Jones. "We will be paying particular attention to the breadth of price gains in next week’s report. Since last December, all of the metropolitan areas surveyed have posted sequential increases in home selling prices."
• Consumer Confidence (Tuesday): Economists estimate that this confidence index fell to 81.0 in July from 81.4 a month ago. "Boosting confidence should be good news on employment. The June employment report, released during the survey period, surprised to the upside," said Credit Suisse's Neal Soss. "Also, “News Heard on Employment” from the University of Michigan’s consumer survey improved in July."
• ADP Employment Change (Wednesday): Economists estimate the ADP survey will show a 180,000 increase in private payrolls in July. "ADP private payrolls are expected to increase by 160,000 in July, a partial give- back from the pop up to 188,000 in June," said BAML's Ethan Harris who is a bit more cautious than the consensus. "This would bring private payrolls roughly in line with the 6-month moving average of 163,000."
• GDP Q2 (Wednesday): Having said that, economists estimate that GDP grew at a meager 1.0% rate in Q2. Personal consumption is estimated to have climbed by 1.6%. "2Q13 GDP is expected to be a very low +0.3%, leaving first half growth at only slightly better than 1% annualized, as the economy absorbed the heaviest impact of an estimated 1.7%% of GDP fiscal tightening this year," warned Morgan Stanley's Ted Wieseman who is much more bearish than the consensus.
• Chicago PMI (Wednesday): Economists are looking for a reading of 54.0 in July, up from 51.6 in June. "Regarding the July Chicago PMI, we expect the manufacturing sector to regain some momentum in the back half of the year after suffering from a combination of sequester-related weakness, slowing exports and inventory rebalancing in H1," said Deutsche Bank's Brett Ryan.
• The FOMC Rate Decision (Wednesday): "[This] week's FOMC meeting should prove to be relatively uneventful, with potentially the most interesting aspect being the degree to which they signal the imminence of the first tapering," said JP Morgan's Feroli. "We think that this first tapering comes at the September meeting, and see very low odds of a surprise reduction in asset purchases next week. Even uber-hawk Charles Plosser has called a first move in September, and if he doesn't advocate a July move, it's hard to see anyone in the leadership doing so."
• Initial Jobless Claims (Thursday): Economists estimate that claims ticked up to 344,000 from 343,000 a week ago.
• Markit PMI (Thursday): Economists are looking for a reading of 53.2 in July.
• ISM Manufacturing (Thursday): Economists estimate that this key measure climbed to 52.0 in July, up from 50.9 in June. "For July, we expect the ISM Manufacturing Index to increase slightly to 52.6," said Wells Fargo's John Silvia. "The regional indices released for July so far have indicated that manufacturing improved this month. Although this is an improvement over last month’s figure, our forecast remains consistent with this recovery’s theme of modest, subpar growth and little evidence of the acceleration experienced in previous recoveries."
• Construction Spending (Thursday): Economists estimate that spending climbed by 0.4% in June. "We look for a slowdown in the rate of increase of residential construction spending, reflecting the softening in housing starts of the past few months," said BAML's Meyer. "This should be offset by a gain in renovation spending. "
• Vehicle Sales (Thursday): Analysts estimate that vehicle sales slipped to a still robust 15.8 million in July. "[V]ehicle sales have meaningful upside potential, thereby providing another pillar of support to the manufacturing sector in H2 and into 2014," said Deutsche Bank's Ryan.
• Nonfarm Payrolls (Friday): Economists estimate that the U.S. added 185,000 payrolls in July, up from 195,000 in June. They also expect the unemployment rate to slip to 7.5% from 7.6% in June. "The public sector is likely to continue to gradually shed jobs; we forecast a decline of 5,000 public sector workers," said BAML's Harris. "In contrast, the private sector should add 185,000 jobs. Job growth recently has been driven by leisure and hospitality as well as retail trade — two of the sectors with the lowest paying jobs and fewest working hours. This has sparked concern about a poor composition of job growth. "
• Personal Income and Spending (Friday): Economists estimate that income climbed by 0.4% in June, while spending grew by 0.5%. "Personal Income is expected to see a solid +0.5% gain in June given strong growth in aggregate private sector wages and salaries reported in the June employment situation," said Morgan Stanley's Wieseman. "Personal Consumption is also expected to gain a solid +0.5%, supported by a surge in motor vehicle sales to a six-year high, upside in gasoline consumption reflecting both higher prices and volume, and a slight uptick in ex auto retail sales."
• Factory Orders (Friday): Economists estimate that orders climbed by 2.3% in June.

Market Commentary

Despite the sea of uncertainty on the horizon, J.P. Morgan's Tom Lee is bullish.

"With both U.S. and Europe expected to see better growth in [the second half of 2013], we believe the Street will be in a position to raise 2014E EPS," said Lee about stock market profits. "We are raising 2014E EPS to $120 (vs $117) and also raising our YE 2013E S&P 500 Target to 1775 (up 3.5% vs prior 1715)."

Among other things, Lee is encouraged by the pent-up demand he sees in the U.S.

"As for the U.S. and to a lesser extent for Europe, this is more than “easing financial conditions” but a story of pent-up demand," he said. "[I]nvestment/durables spending in the U.S. remains at 60-year lows. And at a time when the age of capital- stock is near record highs. This is a formula, in our view, for obsolescence asserting itself in the form of an eventual sharp rise in spending."

We asked Matthew Cheslock, Equity Trader at Virtu Financial, what we should think about when it comes to China, Europe, and the U.S. Watch the video here: