The Greek's Week Ahead - The Earnings Rally Takes Off
Last week's market rally likely started a short-term sustainable run we think can last for a couple weeks. We anticipate large-cap multinationals, which led the market last quarter, will fuel the engine this time around as well.
Last week, the market began trading under uncertainty related to subprime secured debt securities, with Moody's and Standard & Poor's sudden enlightenment that there might be some trouble there. However, by the end of the week, our expectations came to fruition. A market dull on drivers since last earnings season, began to anticipate the coming season. Heavy short interest had to unwind or risk being caught on the short end of the stick.
This week has some interesting data points in store, including significant information from the Fed. However, we expect earnings season momentum will lead the headlines all week. There are big reports coming from the likes of Yahoo!, Google, Intel, AMD, Caterpillar, Honeywell, Abbott Labs, Intuitive Surgical, Merrill Lynch, J.P. Morgan, Coca-Cola and others.
Let's look at the week ahead...
Monday began with the 8:30 report from the New York Fed. The Empire State Manufacturing Survey was reported at 26.5, versus expectations for a measure of 17.5, continuing the recent string of relative manufacturing strength. We continue to anticipate manufacturing softness will follow softness in consumer spending and increased unemployment. Current strength does not make for a more valid case against our argument in our view.
Japanese and Chilean markets were closed Monday. In other global news, Tony Blair begins perhaps a tougher task than his managing of the United Kingdom, as he enters the Middle East to broker discussions between Mahmud Abbas and Elhud Olmert.
Semicon West begins Monday, featuring suppliers to the semiconductor industry. Earnings season gets into full swing this week, and reporting Monday expect Eaton (NYSE: ETN), Equity Lifestyle Properties (NYSE: ELS), Mattel (NYSE: MAT), Novellus (Nasdaq: NVLS), Stanley Furniture (Nasdaq: STLY), W.W. Granger (NYSE: GWW) and others.
Tuesday morning, significant attention will be attuned to the 8:30 a.m. EDT Producer's Price Index report. Bloomberg's consensus anticipates an increase of 0.1% in the June period, and a rise of 0.2% if you exclude food and energy. For once, the Core PPI expectation is actually more inflationary than the headline figure, as energy prices backed off a bit in June. As we all know, they have more than compensated for this in July thus far.
June industrial production is seen increasing 0.4%, versus no change in May. Capacity utilization is expected to have improved to 81.5%, from 81.3% in May. This continues to make sense in the short-term, as exports benefit from a weakening dollar, but we expect more geographical shifts of production to outside the States to continue as cost of labor benefits persist.
The Treasury is scheduled to report on international capital flows for May, and Kansas City Fed President Thomas Hoenig is to address the topic of monetary policy and the economic outlook. The Housing Market Index will provide a view of how housing market participants are feeling these days. Last month the index continued a downward trend that has persisted for most of the year, and the reading weakened to its lowest level of 28.
Don't miss the weekly same-store sales reports from the ICSC and Redbook, which have recently shown sales growth off of last year's pace. Last week's retail sales report confirmed the weakness in consumer spending that we have forewarned of here far too often.
Reporting earnings on Tuesday, see ADTRAN, Inc. (Nasdaq: ADTN), AMB Property Corp. (NYSE: AMB), AmeriServ Financial (Nasdaq: ASRV), BOK Financial (Nasdaq: BOKF), CSX Corp. (NYSE: CSX), Forest Labs (NYSE: FRX), Intel Corp. (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Merrill Lynch (NYSE: MER), Novartis (NYSE: NVS), Polaris Industries (NYSE: PII), State Street Corp. (NYSE: STT), The Coca-Cola Co. (NYSE: KO), Wells Fargo (NYSE: WFC), Yahoo, Inc. (Nasdaq: YHOO) and others.
The Mortgage Bankers Association gets Wednesday started with its early report of Purchase Applications. Last week showed an uptick in activity, but there's been no tangible sign of housing recovery to note. The Consumer Price Index will follow up on the prior day's PPI report. Bloomberg's consensus is looking for a 0.1% rise on the headline and a 0.2% increase on the Core CPI. Again, the "core" is higher than the "headline", thanks to a decrease of gasoline prices in June relative to May. We do not view these figures as drivers of concern for the Fed or the market, but if a higher reading on the core were to surface, the market might have trouble digesting that.
Wednesday marks the beginning of Federal Reserve Chairman Ben Bernanke's semi-annual testimony to Congress on the state of the economy. Here's where you might get some market-moving news. Judging by recent efforts by the Fed to emphasize their view that moderate growth in the economy could be expected this year, along with moderate inflation, you wouldn't expect much concern to be raised. However, our representatives in the House and Senate have a way of mixing in a tricky question or two with the bunch of just plain ridiculous ones that make you wonder who the heck voted for these guys.
Housing starts for June is due Wednesday as well, and the consensus is looking for an annual pace of 1.45 million, compared to 1.47 million in May. There's evidence that homebuilders are finally realizing they need to consolidate operations or risk slipping into insolvency. This means layoffs should be increasing and new inventory coming to market should slow. This is a good thing for the housing sector, as it will allow the fat inventory already flooding the marketplace to work off a bit. Finally, the pieces are falling into place to allow for a housing recovery. Whether that occurs or not in 2008 will depend on a few other factors that are out of the homebuilders' control though, including a messy and complicated war. Housing's next significant rise could be anywhere from a year to three years off, depending on how well the consumer holds up and other issues discussed already. The credit crunch we expect is only just beginning, so we suspect a housing recovery in earnest would start no earlier than a year from now.
The usual Petroleum Status Report is more likely to weaken oil prices than to strengthen them at these levels, in our opinion. Expect earnings news from Abbott Labs (NYSE: ABT), Altria Group (NYSE: MO), Citrix Systems (Nasdaq: CTXS), Ebay (Nasdaq: EBAY), First Cash (Nasdaq: FCFS), Gannett (NYSE: GCI), J.P. Morgan Chase (NYSE: JPM), Labor Ready (NYSE: LRW), Northern Trust (Nasdaq: NTRS), Pfizer (NYSE: PFE), Piper Jaffray (NYSE: PJC), Southwest Airlines (NYSE: LUV), United Technologies (NYSE: UTX), Washington Mutual (NYSE: WM) and others.
On Thursday, Fed Chief Bernanke begins his discussion with the Senate Banking Committee. Weekly Initial Jobless Claims will be reported in the early morning as usual, with an expectation for 310,000 new claims. June Leading Indicators are set for release at 10:00 a.m., and are expected to decrease 0.1%, versus a rise of 0.3% in May. The Philly Fed Survey is due out at noon, with a consensus expectation for a reading of 14 for July, versus last month's very strong reading of 18.
We suspect that the most important news of the day will come with the release of the June Fed meeting minutes. We think it could show a vote or two for rate increase. We believe this would be a premature move, but not out of the realm of possibility. If there is more than one vote for a hike, the market would likely raise its ire and stocks would begin retrenchment ahead of our schedule. It's clearly more likely for the continuation of strong consensus at the Fed, so this is not something we would suggest banking on, just something to be wary of. The minutes release comes during the trading day, and will allow for swift reaction if necessary.
Thursday brings the usual natural gas inventory report, and earnings news is due from Advanced Micro Devices (NYSE: AMD), BB&T Corp. (NYSE: BBT), Broadcom (Nasdaq: BRCM), Capital One Financial (NYSE: COF), Continental Airlines (NYSE: CAL), Dow Jones & Co. (NYSE: DJ), First Data (NYSE: FDC), Google (Nasdaq: GOOG), Harley-Davidson (NYSE: HOG), Honeywell (NYSE: HON), Intuitive Surgical (Nasdaq: ISRG), Manpower (NYSE: MAN), Mathews International (Nasdaq: MATW), Microsoft (Nasdaq: MSFT), Nucor (NYSE: NUE), Pool Corp. (Nasdaq: POOL), Provident Bankshares (Nasdaq: PBKS), SanDisk (Nasdaq: SNDK), SAP AG (NYSE: SAP), Scholastic (Nasdaq: SCHL), SunPower Corp. (Nasdaq: SPWR), The Bank of New York (NYSE: BK), UnionBanCal (NYSE: UB), Wyeth (NYSE: WYE), Xilinx (Nasdaq: XLNX) and others.
On Friday, St. Louis Fed President William Poole will address the topic of subprime mortgages. The day is otherwise news light. Reporting earnings, expect news from Caterpillar (NYSE: CAT), Citigroup (NYSE: C), Schlumberger (NYSE: SLB), Sonoco Products (NYSE: SON), Wachovia Corp. (NYSE: WB), Whirlpool (NYSE: WHR), Wilmington Trust (NYSE: WL) and a few others. We hope you found value in this week's issue and look forward to providing more value added work for you this week.
We hope you will continue to support our advertisers and tell your friends about the Wall Street Greek. (disclosure)
Last week, the market began trading under uncertainty related to subprime secured debt securities, with Moody's and Standard & Poor's sudden enlightenment that there might be some trouble there. However, by the end of the week, our expectations came to fruition. A market dull on drivers since last earnings season, began to anticipate the coming season. Heavy short interest had to unwind or risk being caught on the short end of the stick.
This week has some interesting data points in store, including significant information from the Fed. However, we expect earnings season momentum will lead the headlines all week. There are big reports coming from the likes of Yahoo!, Google, Intel, AMD, Caterpillar, Honeywell, Abbott Labs, Intuitive Surgical, Merrill Lynch, J.P. Morgan, Coca-Cola and others.
Let's look at the week ahead...
Monday began with the 8:30 report from the New York Fed. The Empire State Manufacturing Survey was reported at 26.5, versus expectations for a measure of 17.5, continuing the recent string of relative manufacturing strength. We continue to anticipate manufacturing softness will follow softness in consumer spending and increased unemployment. Current strength does not make for a more valid case against our argument in our view.
Japanese and Chilean markets were closed Monday. In other global news, Tony Blair begins perhaps a tougher task than his managing of the United Kingdom, as he enters the Middle East to broker discussions between Mahmud Abbas and Elhud Olmert.
Semicon West begins Monday, featuring suppliers to the semiconductor industry. Earnings season gets into full swing this week, and reporting Monday expect Eaton (NYSE: ETN), Equity Lifestyle Properties (NYSE: ELS), Mattel (NYSE: MAT), Novellus (Nasdaq: NVLS), Stanley Furniture (Nasdaq: STLY), W.W. Granger (NYSE: GWW) and others.
Tuesday morning, significant attention will be attuned to the 8:30 a.m. EDT Producer's Price Index report. Bloomberg's consensus anticipates an increase of 0.1% in the June period, and a rise of 0.2% if you exclude food and energy. For once, the Core PPI expectation is actually more inflationary than the headline figure, as energy prices backed off a bit in June. As we all know, they have more than compensated for this in July thus far.
June industrial production is seen increasing 0.4%, versus no change in May. Capacity utilization is expected to have improved to 81.5%, from 81.3% in May. This continues to make sense in the short-term, as exports benefit from a weakening dollar, but we expect more geographical shifts of production to outside the States to continue as cost of labor benefits persist.
The Treasury is scheduled to report on international capital flows for May, and Kansas City Fed President Thomas Hoenig is to address the topic of monetary policy and the economic outlook. The Housing Market Index will provide a view of how housing market participants are feeling these days. Last month the index continued a downward trend that has persisted for most of the year, and the reading weakened to its lowest level of 28.
Don't miss the weekly same-store sales reports from the ICSC and Redbook, which have recently shown sales growth off of last year's pace. Last week's retail sales report confirmed the weakness in consumer spending that we have forewarned of here far too often.
Reporting earnings on Tuesday, see ADTRAN, Inc. (Nasdaq: ADTN), AMB Property Corp. (NYSE: AMB), AmeriServ Financial (Nasdaq: ASRV), BOK Financial (Nasdaq: BOKF), CSX Corp. (NYSE: CSX), Forest Labs (NYSE: FRX), Intel Corp. (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Merrill Lynch (NYSE: MER), Novartis (NYSE: NVS), Polaris Industries (NYSE: PII), State Street Corp. (NYSE: STT), The Coca-Cola Co. (NYSE: KO), Wells Fargo (NYSE: WFC), Yahoo, Inc. (Nasdaq: YHOO) and others.
The Mortgage Bankers Association gets Wednesday started with its early report of Purchase Applications. Last week showed an uptick in activity, but there's been no tangible sign of housing recovery to note. The Consumer Price Index will follow up on the prior day's PPI report. Bloomberg's consensus is looking for a 0.1% rise on the headline and a 0.2% increase on the Core CPI. Again, the "core" is higher than the "headline", thanks to a decrease of gasoline prices in June relative to May. We do not view these figures as drivers of concern for the Fed or the market, but if a higher reading on the core were to surface, the market might have trouble digesting that.
Wednesday marks the beginning of Federal Reserve Chairman Ben Bernanke's semi-annual testimony to Congress on the state of the economy. Here's where you might get some market-moving news. Judging by recent efforts by the Fed to emphasize their view that moderate growth in the economy could be expected this year, along with moderate inflation, you wouldn't expect much concern to be raised. However, our representatives in the House and Senate have a way of mixing in a tricky question or two with the bunch of just plain ridiculous ones that make you wonder who the heck voted for these guys.
Housing starts for June is due Wednesday as well, and the consensus is looking for an annual pace of 1.45 million, compared to 1.47 million in May. There's evidence that homebuilders are finally realizing they need to consolidate operations or risk slipping into insolvency. This means layoffs should be increasing and new inventory coming to market should slow. This is a good thing for the housing sector, as it will allow the fat inventory already flooding the marketplace to work off a bit. Finally, the pieces are falling into place to allow for a housing recovery. Whether that occurs or not in 2008 will depend on a few other factors that are out of the homebuilders' control though, including a messy and complicated war. Housing's next significant rise could be anywhere from a year to three years off, depending on how well the consumer holds up and other issues discussed already. The credit crunch we expect is only just beginning, so we suspect a housing recovery in earnest would start no earlier than a year from now.
The usual Petroleum Status Report is more likely to weaken oil prices than to strengthen them at these levels, in our opinion. Expect earnings news from Abbott Labs (NYSE: ABT), Altria Group (NYSE: MO), Citrix Systems (Nasdaq: CTXS), Ebay (Nasdaq: EBAY), First Cash (Nasdaq: FCFS), Gannett (NYSE: GCI), J.P. Morgan Chase (NYSE: JPM), Labor Ready (NYSE: LRW), Northern Trust (Nasdaq: NTRS), Pfizer (NYSE: PFE), Piper Jaffray (NYSE: PJC), Southwest Airlines (NYSE: LUV), United Technologies (NYSE: UTX), Washington Mutual (NYSE: WM) and others.
On Thursday, Fed Chief Bernanke begins his discussion with the Senate Banking Committee. Weekly Initial Jobless Claims will be reported in the early morning as usual, with an expectation for 310,000 new claims. June Leading Indicators are set for release at 10:00 a.m., and are expected to decrease 0.1%, versus a rise of 0.3% in May. The Philly Fed Survey is due out at noon, with a consensus expectation for a reading of 14 for July, versus last month's very strong reading of 18.
We suspect that the most important news of the day will come with the release of the June Fed meeting minutes. We think it could show a vote or two for rate increase. We believe this would be a premature move, but not out of the realm of possibility. If there is more than one vote for a hike, the market would likely raise its ire and stocks would begin retrenchment ahead of our schedule. It's clearly more likely for the continuation of strong consensus at the Fed, so this is not something we would suggest banking on, just something to be wary of. The minutes release comes during the trading day, and will allow for swift reaction if necessary.
Thursday brings the usual natural gas inventory report, and earnings news is due from Advanced Micro Devices (NYSE: AMD), BB&T Corp. (NYSE: BBT), Broadcom (Nasdaq: BRCM), Capital One Financial (NYSE: COF), Continental Airlines (NYSE: CAL), Dow Jones & Co. (NYSE: DJ), First Data (NYSE: FDC), Google (Nasdaq: GOOG), Harley-Davidson (NYSE: HOG), Honeywell (NYSE: HON), Intuitive Surgical (Nasdaq: ISRG), Manpower (NYSE: MAN), Mathews International (Nasdaq: MATW), Microsoft (Nasdaq: MSFT), Nucor (NYSE: NUE), Pool Corp. (Nasdaq: POOL), Provident Bankshares (Nasdaq: PBKS), SanDisk (Nasdaq: SNDK), SAP AG (NYSE: SAP), Scholastic (Nasdaq: SCHL), SunPower Corp. (Nasdaq: SPWR), The Bank of New York (NYSE: BK), UnionBanCal (NYSE: UB), Wyeth (NYSE: WYE), Xilinx (Nasdaq: XLNX) and others.
On Friday, St. Louis Fed President William Poole will address the topic of subprime mortgages. The day is otherwise news light. Reporting earnings, expect news from Caterpillar (NYSE: CAT), Citigroup (NYSE: C), Schlumberger (NYSE: SLB), Sonoco Products (NYSE: SON), Wachovia Corp. (NYSE: WB), Whirlpool (NYSE: WHR), Wilmington Trust (NYSE: WL) and a few others. We hope you found value in this week's issue and look forward to providing more value added work for you this week.
We hope you will continue to support our advertisers and tell your friends about the Wall Street Greek. (disclosure)
Labels: Week Ahead
posted by The Greek | 11:26 PM
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