Before Bell: China becomes the theme of quarterly earnings season
There is some debate about Apple's problems in the country being company-specific, or whether they point to broader issues. But concerns about China extend past Cupertino, and will probably be a hot topic under corporate earnings this winter.
After decades of expansion, China's economic engine loses momentum. Growth in 2018 is expected to be the weakest since 1990. And the prospect of the world's second-largest economy in the coming year is even worse, as the US-government and government attempts to curb demolition debt, charge a fee. [1[ads1]9659004] For the long list of global brands that have come to rely on China's massive growth market – from General Motors (GM) to Volkswagen to Starbucks (SBUX) – it spells trouble.
It's bad news for GM and Volkswagen, which are now taking in more revenue from China than from the US or Europe.
Then it is Starbucks, which has ambitious plans to expand in China, the company's second largest market after the United States. The weak economy can damage the coffee chain just as it is needed to meet local players, and CEO Kevin Johnson will almost certainly be asked to explain the company's strategy.
But in some cases, fluttering demand in China may be a practical scapegoat for struggling with companies, according to Ed Yardeni, president of investment advisory firm Yardeni Research. For example, some analysts believe that Apple overestimates how many Chinese consumers will pay for the iPhone when cheaper options dominate the market.
"Apple seemed to try to blame its disappointing results on weakness in China and [President Donald] Trump started a trade war," said Yardeni. "But it may have something to do with the smartphone market that is saturated."
On Tuesday, the National Federation of Independent Business will report on Small Business Optimism, and the Bureau of Labor Statistics will report o m inflation Friday
3. Fed minutes: The Federal Reserve will release minutes from its meeting in December Wednesday.
4. CES begins: The Consumer Electronics Show begins this week in Las Vegas. The annual event attracts almost 200,000 people, extending beyond the city's congress center with booths, press valves, demos, and gadgets.
Participants can watch the future of TVs, mobile phones, the ongoing war between the Amazon Alexa and Google's voice assistant and tons of robots. Emerging 5G technology and artificial intelligence are expected to be the most talked about on-screen trends.
5. Coming this week:
Monday – US officials in China for trade conversations
Tuesday – The floor opens at the Consumer Electronics Show [19659006] Wednesday – Constellation Brands (STZ), KB Home (KBH) and Bed Bath & Beyond (BBBY) earnings; Fed minutes
Thursday – Federal Reserve Chairman Jerome Powell speaks at the Economic Club in Washington, DC; Sears returns to bankruptcy law to potentially get a decision that can determine his future
Friday – KPI Reports
