The Greek's Week Ahead - Dec 18

The Greek's Week Ahead provides investors with a stock market-moving event planner for the week. We have designed it to prepare you for important news, information and happenings that are likely to impact your portfolio. After last week's slew of mostly positive economic data, this week will bring focus back to housing. Still, barring geopolitical event risk, we anticipate that the market should begin to rally by early 2007 on the basis of the recent strength of economic data.

Monday, could bring some feedback from the American dream team's (Treasury Secretary Henry Paulson and Fed Chief Ben Bernanke) visit to China. The Federal Reserve will hold an open meeting to discuss rule proposals for broker exceptions for banks. This may give the Fed chairman an opportunity to share his thoughts on the future of trade with China.

The current-account deficit will be reported Monday, and is expected to have widened in the third quarter to approximately $225 billion. With roughly thirteen IPOs scheduled for the Chinese market before year-end, the Milken Institute's release of its Chinese IPO indicator and Renminbi pressure indicator should prove interesting.

In important overseas activity, the European Commission will issue its quarterly economic forecast. Also, the European Parliament is widely expected to pass a law requiring companies to prove substances in common products are safe. A rising regulatory burden on European and other internationally based companies helps to create a more even playing field for American firms already held to higher standards. The cost of regulation is measurable, and raises the bar for firms to create economic value. On the geopolitical scene, important talks will resume in Beijing between the group of six nations regarding North Korea's nuclear weapons program. Within the Bush Administration, former CIA Director Robert Gates will be sworn in as Secretary of Defense.

In company specific news, American Eagle will split its shares on Monday, and Oracle Corporation will report its fiscal second quarter. Also reporting earnings are, Joy Global, Piedmont Natural Gas and Hovnanian Enterprise.

Tuesday should be exciting, with two important economic releases keying the news. November housing starts will be reported, after October's numbers showed a sharp drop in housing and permit data. However, since then, Toll Brothers reported the sighting of a possible flattening of market activity. Tuesday's data, combined with home builder Hovnanian's earnings report Monday, should provide enough information to sway the market's viewpoint either way. November housing starts are expected to rise to an annual rate of $1.54 million, compared to $1.49 million in October, according to a consensus polled by Bloomberg News.

With the closely viewed CPI data already released last week, some of the steam may have been taken from the market-moving potential of the Producer Price Index, due for release on Tuesday. Still, inflation in prices could begin in the PPI before finding its way to CPI, unless wage increases in non-manufacturing markets were to be the driver. In any event, PPI is not likely to be a market-moving factor this week, but we believe it is still well worth watching for verification of the CPI data.

On the Fed tour, Dallas Fed President Richard Fisher will provide his year-end address on the economy Tuesday. Internationally, the Bank of Japan wraps up its two-day policy meeting, which will be capped off by its decision on whether to raise interest rates. It will also release its regular monthly report. Japanese shares were enthused last week by relatively positive data from the Tankan Survey, which showed signs of economic growth and decent capital investment expectations for 2007.

In interesting geopolitical happenings, Syrian President Bashar al-Assad will meet with high level Russian officials in Moscow concerning Middle Eastern issues. There has been a great deal of jostling, or travel of significant officials within the Middle East of late. We believe there is a clear positioning taking place ahead of an inevitable confrontation we see concerning Iran. Due to the rise of potency of the geopolitical factor within the capital market line, we are going to dedicate a weekly article to geopolitical happenings, entitled The Geopolitical Factor.

InterActive Corp. will convene an investor conference call after the market open on Tuesday, through which it is expected to provide an overview of its key business drivers. Reporting earnings on Tuesday, look for Morgan Stanley, Cintas Corp., Darden Restaurants, Circuit City Stores, Factset Research Systems, Chaparral Steel Co., Nordson Corp., Palm Inc., Progress Software, Christopher & Banks and Scholastic Corp.

Wednesday presents a rather light news day. The World Trade Organization's General Council will meet in Geneva. Also, the Federal Communications Commission will meet and might vote on AT&T's merger with BellSouth. The NYSE Group will hold a special meeting of shareholders over its proposed combination with Euronext.

A good deal of companies will report earnings on Wednesday, including Nike Inc., Fedex Corp., Paychex Inc., Bed Bath & Beyond, Jabil Circuit Inc., Carmax Inc., Biomet Inc., Family Dollar Stores, 3Com Corp. and AAR Corp.

After Wednesday's rest, the economic calendar turns it up a notch Thursday with the release of the third quarter revisions to GDP. A significant change to the data could threaten the market, but one is not expected by most experts. GDP growth was 2.2% in the third quarter. November Leading Indicators will be reported Thursday, with the consensus expectation for a 0.1% rise, versus a 0.2% increase in the most recent period. The December Philly Fed Survey is also due for release Thursday, with the consensus seeing a 3.8 measure, versus 5.1 in the most recent period, according to Bloomberg News.

Lone dissenter and Richmond Fed President Jeffrey Lacker, will address an audience in North Carolina with his outlook on the economy. This may allow critics and supporters to see the basis of his view that interest rates should be raised to curb inflation. Overseas, the ECB Governing Council will meet, though no decision on interest rates will result.

Reporting earnings on Thursday, look for General Mills, Carnival Corp., Conagra Foods, Commercial Metals, Solectron, Herman Miller, Worthington Industries, American Greetings and Shuffle Master.

Ahead of the Christmas holiday, the bond market will close at 2 p.m. Friday, and trading volume should be light across markets. However, some significant economic data is set for release. At 8:30 a.m. EST, three significant releases should tell us if the markets will be naughty or nice for the day. November Durable Goods will be reported, with expectations for a 1.5% increase, versus an 8.3% decrease in the most recent period. Durable goods orders should benefit from a stabilization of orders at aircraft manufacturer Boeing. November Personal Income is seen rising 0.4%, as compared to an October rise of the same magnitude. November Consumption is anticipated to show a 0.6% increase, versus a 0.2% rise in October.

Overseas, the Bank of Japan will release the minutes from its two previous monetary-policy meetings, and Toyota Motor is scheduled to announce its vehicle sales targets for 2007. In an improbable meeting, Vladimir Putin is to convene in Kiev with the man he has been accused of attempting to assassinate, Ukrainian President Viktor Yuschenko.

Walgreen's is scheduled to report earnings results for its fiscal first quarter on Friday. We hope you have found value in our weekly market-moving event summary, and wish you a great week trading. (disclosure)