Week Ahead - Better Safe Than Sorry
This week's theme, "better safe than sorry," clearly refers to the evacuations in Louisiana ahead of Hurricane Gustav, but we see two reports this week where investors might play the same cautious card.
Article interests (AMEX: DIA, DOG, SDS, SPY, QLD), (Nasdaq: QQQQ, NYSE: NYX)
Well, Gustav blew through, and we're sure some of you were inwardly harboring sarcasm because of just how well-handled things were this time around. There was a definite exaggerated emphasis on precaution, especially in the public statements of FEMA and other government representatives. Go ahead and chuckle, but the fact is, those people were better off safe than they would have been sorry if a major levee was breached again. By the way, how come these things aren't ten feet wide and twenty feet high at this point? Anyway, we were glad to see the situation didn't get anywhere near as bad as three years ago. Though, the power is still out for thousands.
What's This Have to do with Wall Street?
This week's economic schedule has two standout reports, ahead of which investors might also consider leaving town for their own safety. Like the Mayor of New Orleans said, "you need to be scared."
Last week's parade of data might have massaged the pain of economic reality, perhaps even putting Wall Street at ease. But, we say, now is not the time to relax! This week's data is likely to paint a completely different picture. There are two events upcoming where we see little opportunity for positive result, and I'm speaking of the ECB Policy Statement and follow up press conference, and the Employment Situation Report. Both these bits of data are due toward the end of the week, so consider taking your money to the beach with ya, and enjoy the Indian summer.
Article interests (AMEX: DIA, DOG, SDS, SPY, QLD), (Nasdaq: QQQQ, NYSE: NYX)
Well, Gustav blew through, and we're sure some of you were inwardly harboring sarcasm because of just how well-handled things were this time around. There was a definite exaggerated emphasis on precaution, especially in the public statements of FEMA and other government representatives. Go ahead and chuckle, but the fact is, those people were better off safe than they would have been sorry if a major levee was breached again. By the way, how come these things aren't ten feet wide and twenty feet high at this point? Anyway, we were glad to see the situation didn't get anywhere near as bad as three years ago. Though, the power is still out for thousands.
What's This Have to do with Wall Street?
This week's economic schedule has two standout reports, ahead of which investors might also consider leaving town for their own safety. Like the Mayor of New Orleans said, "you need to be scared."
Last week's parade of data might have massaged the pain of economic reality, perhaps even putting Wall Street at ease. But, we say, now is not the time to relax! This week's data is likely to paint a completely different picture. There are two events upcoming where we see little opportunity for positive result, and I'm speaking of the ECB Policy Statement and follow up press conference, and the Employment Situation Report. Both these bits of data are due toward the end of the week, so consider taking your money to the beach with ya, and enjoy the Indian summer.
Week Ahead
Markets were closed on Monday due to the Labor Day holiday. As a result of the shortened week, several regular reports will be reported at different than usual points in the week ahead, so take note.
Tuesday
Two data points that have already been well-noted for regular dire depictions are set for morning release on Tuesday. Fortunately, the market is well-adapted to these data points, and would thus be set up for positive surprise at some point. However, the market has been so badly beaten down, that it does not react to positive news either at this point. It'll take a stronger indicator, and likely trend of change and some positive feedback from Fed officials to finally get this market set forward for real.
At time of publishing this week, the reports had reached the wire. The ISM Manufacturing Report, released at 10:00 AM, was noted at 49.9, which was in line with consensus. A reading below 50 signifies economic contraction, but the news was really a non-starter for markets. The Construction Spending Report showed a decline of 0.6% in July. This compared with expectations for a 0.3% drop.
Overseas, the aged Prime Minister of Japan resigned as his popularity reached low levels, mind you not near as low as the US President. Meanwhile, BOJ Governor Masaaki Shirakawa addressed an audience, as the Japanese economy tanks. On Tuesday, the OECD gave its interim assessment on OECD economies. Also, the Australian Central Bank cut rates by a quarter point on Tuesday.
In corporate news, Merck (NYSE: MRK) and Schering Plough (NYSE: SGP) published reports on their cholesterol drugs. The day's short earnings schedule is noted below, and highlights Donaldson (NYSE: DCI) and DHT Maritime (NYSE: DHT):
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Wednesday
We'll get the ICSC-UBS Weekly Same-Store Sales Report on Wednesday this week, instead of the usual Tuesday reporting. Sales rose 2.3% year-to-year last week, as population growth and the still employed nation persevere over consumer stresses... but for how much longer. Like Christmas, there's a demand driver in August and early September that insures spending (for the most part no matter what), but as "back to school" passes, we see spending dropping sharply. However, the emergency release valve seems to be working, as gasoline prices and other commodities, back off significantly, giving consumers a little relief. I noted very few cars on the road on Labor Day, at least on my route through Eastern Pennsylvania.
The Mortgage Bankers Association Report will offer its weekly applications data on time this week, despite the holiday, but the EIA will produce its regular Petroleum Status Report on Thursday, instead of Wednesday.
The Mortgage Bankers Association Report will offer its weekly applications data on time this week, despite the holiday, but the EIA will produce its regular Petroleum Status Report on Thursday, instead of Wednesday.
Two key employment reports will capture media attention in the morning, with the reporting of the Challenger Job-Cut data and the ADP Private Employment Report. Challenger noted 103K planned layoffs last month, while ADP reported a 9,000 increase in employment that proved completely useless in predicting the Employment Situation data last month.
Factory Orders are due for July, with Bloomberg's consensus expecting a 0.8% increase, month to month. Orders increased 1.7% in June, but with foreign demand decreasing and domestic demand making for tough going, we're not enthused.
The Federal Reserve will release its Beige Book, regional take on economic activity. Boston's Fed President, Eric Rosengren, will address the economy as well. In a busy week for foreign central banks, The Bank of Canada is set to make its decision on interest rates Wednesday.
Monthly Motor Vehicle Sales news is due on Wednesday, but with production cuts and forecast reductions the tune of the day across companies, there should be little to get revved up about here. As the deadline is reached, Boeing's (NYSE: BA) machinists' union has urged members to reject the company's "final offer." See the day's earnings schedule below, with important news from Casey's General Stores (Nasdaq: CASY), Global Crossing (Nasdaq: GLBC), H&R Block (NYSE: HRB), Hovnanian (NYSE: HOV), Joy Global (Nasdaq: JOYG) and Staples (Nasdaq: SPLS):
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Thursday
What a day! Get your sleep on Wednesday night, because Thursday is jam packed with important news to work through. Due to time difference, the ECB Policy Statement seems certain to be a rough one. It would most surely have been even rougher if not for the bank's recent move to cut interest rates. Mr. Trichet will now have to condition sentiment back toward economic concern and away from inflation. Otherwise, with Europe clearly slipping into recession, we would anticipate the ECB to communicate some scary language. Heck, with the double risk of inflation/economic deceleration, it might still prove darn ugly.
The employment picture (read unemployment) will grow more clear with the Monster Employment Index noted in the morning. Recall, Monster (Nasdaq: MNST) tracks online job availability. Weekly Initial Jobless Claims is seen measuring at 422K, which compares to last week's reading at 425K. The four-week moving average has been creeping higher, though it back-tracked last week.
Individual retailer Chain Store Sales (for August) will flood the news wires as well on Thursday, and all eyes will be judging the "back to school" period performance. Two economic reports are due for release as well. The Q2 Productivity and Costs data is set for revision and release. Productivity is seen 3.3% higher, and costs are expected to have declined 0.3%. The ISM Nonmanufacturing Survey is forecast at limbo, at 50.0, right on the fence between economic contraction and expansion.
Look for the EIA Natural Gas Report on Friday this week, due to the holiday. Surprisingly, and despite the shut down of production facilities and refineries, oil and gas prices started the week lower on Tuesday. We think the market was happy to hear there would be no major long-term disruptions due to storm damage, but that is actually still being figured out as we write... so don't hold us to that. Several home builders are scheduled to report earnings this week, including Hovnanian (NYSE: HOV) on Wednesday and Toll Brothers (NYSE: TOL) on Thursday. The remainder of the day's earnings follow below, highlighting ABM Industries (NYSE: ABM), America's Car-Mart (Nasdaq: CRMT), Blyth (NYSE: BTH), Ciena (Nasdaq: CIEN), Jos A. Banks (Nasdaq: JOSB), Movado (NYSE: MOV), Quicksilver (NYSE: ZQK), Take-Two Interactive (Nasdaq: TTWO) and Toll Brothers (NYSE: TOL):
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Friday
Friday is all about the Employment Situation. Nonfarm Payrolls are seen falling 75,000 in August, while unemployment likely deteriorates a tenth of a percentage point, to 5.8%. The average workweek is actually seen increasing slightly, to 33.7 hours, but we have our doubts. San Francisco Fed President Yellen is scheduled to discuss the economic outlook. Keep your eye out for three named storms already formed in the Atlantic, Hanna, Ike and Josephine.
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Labels: Week Ahead
posted by The Greek | 2:30 PM
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