The titans of finance are bracing themselves for another round of intense scrutiny from US lawmakers. In a week where money and politics collide, the CEOs of the nation’s largest banks will appear before Congress to address their roles in the ongoing economic recovery from the COVID-19 pandemic.
Bank CEOs Summoned for Congressional Hearings
The Senate Banking Committee and the House Financial Services Committee are set to hold hearings on Wednesday and Thursday, respectively. These hearings will see the CEOs of major financial institutions, including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley, and Goldman Sachs, answering questions about their banks’ performance and contributions to the economic rebound.
This event marks a significant moment as Citigroup’s Jane Fraser becomes the first female CEO to join the ranks of bank leaders testifying before Congress.
Lawmakers to Focus on Economic Recovery and Consumer Finances
Lawmakers are expected to direct their inquiries towards the banks’ efforts in supporting businesses and consumers during the pandemic-induced recession. Key areas of interest include:
- Loan Programs: The effectiveness of government-backed loan programs, such as the Paycheck Protection Program (PPP), in reaching small businesses.
- Consumer Relief Measures: The implementation of mortgage and loan forbearance programs and their impact on individual borrowers.
- Financial Stability: The banks’ resilience in the face of economic turmoil and their ability to withstand potential future shocks.
Economic Data Takes Center Stage
Beyond the Congressional hearings, the week ahead is packed with crucial economic data releases that will provide further insight into the state of the US economy.
Personal Income and Spending in Focus
On Friday, the Bureau of Economic Analysis will release personal income and consumption data for April. Economists predict a 14% decline in personal income as the effects of the latest round of government stimulus checks wane.
The core Personal Consumption Expenditures (PCE) index, a key measure of inflation closely watched by the Federal Reserve, will also be closely scrutinized. Expectations point to a 3% year-over-year increase, potentially fueling concerns about rising inflation.
Inflation Concerns Linger
The Federal Reserve has consistently maintained that the current inflationary pressures are transitory and primarily driven by supply chain bottlenecks and pent-up demand. However, some analysts believe that these factors could contribute to a more sustained period of inflation.
Housing Market Remains Red Hot
The housing market, a key driver of the US economy, will also be under the microscope this week.
Case-Shiller Index: Tracking Home Prices
On Tuesday, the S&P CoreLogic Case-Shiller Home Price Index for March will be released, providing a glimpse into the trajectory of home prices. The index is anticipated to reveal continued robust price gains, fueled by historically low mortgage rates and limited housing inventory.
New Home Sales Data
Also on Tuesday, the Census Bureau will release data on new home sales for April. Economists surveyed by Reuters project sales to dip below 1 million units, following a surge beyond 1 million in March.
Toll Brothers Earnings Report
Investors will be keeping a close eye on luxury homebuilder Toll Brothers, which is scheduled to report its quarterly earnings on Tuesday. Analysts anticipate the company to post earnings of 80 cents per share and revenue growth to $1.77 billion, reflecting the sustained strength in the high-end housing market.
Consumer Spending and Retail Earnings in Focus
As pandemic-related restrictions ease and vaccination rates rise, consumer spending patterns are shifting. The upcoming week features earnings releases from several major retailers, offering insights into evolving consumer behavior.
Beauty Sector: ELF Beauty and Ulta Beauty
ELF Beauty and Ulta Beauty, reporting on Wednesday and Thursday respectively, are expected to shed light on the rebound in cosmetics and personal care products. With consumers venturing out more, demand for makeup and skincare items is expected to rise.
Apparel Retail: Gap Inc.
Gap Inc., reporting on Thursday, will provide insights into the apparel sector’s performance. Analysts anticipate a year-over-year sales increase to $3.4 billion, reflecting a resurgence in clothing purchases as people return to social gatherings and events.
Memorial Day Weekend: A Test for Hollywood
The Memorial Day weekend, traditionally a blockbuster period for the film industry, will serve as a crucial test for Hollywood as it navigates the evolving landscape of theatrical releases and streaming services.
Disney’s “Cruella” Debuts on Multiple Platforms
Walt Disney Co.’s “Cruella,” starring Emma Stone, will debut simultaneously in theaters and on Disney+ Premier Access on Friday. The film’s performance will offer valuable insights into consumer preferences for theatrical releases versus streaming options, particularly as studios experiment with hybrid distribution models.
