The Greek's Week Ahead - Dec 25

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 Baht bounce, when Thailand announced and then withdrew (for equities) a new restrictive investment policy, the market seemed poised for a relatively quiet holiday trading week. However, on Friday, the United Nations Security Council agreed upon sanctions on Iran, to penalize the Persian nation for its nuclear enrichment efforts. The sanctions were a watered down version of what the United States had hoped for, but they received votes from Russia and China. Iran seemed betrayed by that result, based on commentary from its President, Mahmoud Ahmadinejad.

Iran's Parliament is now considering altering its relationship with the IAEA, and we suspect it will deport inspectors and possibly retreat from the NPT or Nuclear Nonproliferation Treaty. Markets are currently reacting as if Iran is all bark and no bite, with oil turning lower in midday trading Tuesday, but we suspect the market will soon be surprised by the degree of Iranian ire.

As far as economic data release goes, the week, though quiet, will not be uneventful. A bit of data will find its way to the market Tuesday, as the Federal Reserve Bank of Richmond releases its manufacturing index for November and the Dallas Federal Reserve releases its manufacturing-production index. The market will be hopeful for regional data that offsets the weak results from last week's Philly Fed Index, which indicated a regional decline of manufacturing output versus an expectation for an increase.

On Wednesday, we will get a better look into how the holiday shopping season went for American retailers. The International Council of Shopping Centers will post its survey of chain-store sales for the week before Christmas. The prior week's data showed sales behind schedule, and due to the extra shopping weekend just before the holiday, it's possible that retailers made up the lost ground.

Regional data continues to reach the market Wednesday, with the Chicago Federal Reserve's release of its Midwest manufacturing index. Also, Moody's Economy.com will publish its survey of global business confidence. At its last reading in mid-December, global business sentiment was at its lowest level since October 2003.

Wednesday is a busy day for the housing sector, with two key releases set for the day. November new home sales data will be reported at 10:00 AM, with the consensus view for 1.02 million sales, compared to 1.0 million in the last period, according to a Bloomberg News survey. Also, the Mortgage Banker's Association will report weekly mortgage applications and its weekly refinance index.

Thursday continues this week's housing market review, with the federal government report on November existing home sales. We expect existing homes sales to trend worse than new homes, as we believe home builders have been able to keep new home sales slightly more lively with incentive offers. Bloomberg News' survey shows consensus expectations for 6.19 million sales, versus 6.24 in the last period. For the whole of the year, the National Association of Realtors forecast sales 8.6% lower than in 2005, and the organization is currently forecasting a sales decline of 1% for 2007. My experience on Wall Street has taught me that analysts typically underestimate rate of change, due to fear to go out on a limb. However, much depends on economic growth, interest rates and action of the Federal Reserve. Still, we would bet on a greater degree of decline than forecast in this case, as pricing remains too high in our view.

The most widely anticipated bit of news Thursday will be the Labor Department's report on initial weekly jobless claims. Last week showed 315,000 new claims, which continued a trend below last year's average. However, the consensus for this week is 320,000.

The Conference Board will release its consumer-confidence index, perhaps an indirect measure of how well holiday season sales may have gone this year. The consensus sees December consumer confidence measuring 102.0, versus 102.9 in November. Finally, the National Association of Purchasing Managers - Chicago Index for December will be reported, with a consensus view for a reading of 50.0, compared to 49.9 in November. A reading above 50 signals an expanding regional business sector, so this particular reading carries significant weight due to the level of consensus expectations seemingly riding the fence.

Ahead of the holiday weekend, the bond market will close at 2:00 PM EST Friday. The only data set to be released Friday is the Conference Board's Help-Wanted Index for November. This index measures the amount of help-wanted advertising across 51 of the nation's newspapers, and is viewed as an indicator of labor market strength. Clearly, with the growing popularity of web-based ad postings, this metric is losing its value. We hope you found value in our weekly market-moving event planner, and look forward to providing your next issue in 2007. (disclosure)