Week Ahead: Central Bank Chaos Theory
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By The Greek - Economy & Markets:
The Week Ahead
The week ahead offers several opportunities for global financial markets to lose confidence in the potency of the world's central banks. Besides the European Central Bank (ECB) monetary policy decision scheduled for Thursday, several U.S. bankers are slated to speak publicly this week. Also, President-Elect Obama's newest Fed nominee will face Congressional questions this week. Meanwhile, the Fed's Beige Book of regional economic conditions might also expose internal confusion and hidden concerns. The number of events scheduled offer too much opportunity for central bankers to appear lost in chaos, which in turn would raise global concern that world economies might be effectively be lost at sea without a sail.
Monday
The Detroit Auto Show sets the stage this week, as needy auto makers attempt to balance the importance of putting on of an impressive show against the risk of creating impression of wasteful spending of government and taxpayer funds.
Monday formally kicks off earnings season with the traditional report from Alcoa (NYSE: AA), but the week's earnings schedule is still light. This quarter's earnings are the most spread out, as companies take longer to produce their full year reports. Also, companies reporting intermediate fiscal quarters tend to report earlier. Finally, retailers generally report their year-end data post closing on the last day January, taking their reports out even longer in the season than is typical.
China should publish several economic reports this week. While common sense says to expect the worst for December's data, there seems to exist a sense of hope that China might magically find a powerful domestic driver to keep it on the growth road. This topic and more will likely be covered at a meeting of the world's central bank heads in Switzerland. Someone had better keep an eye on these folks and insure they're not loading discrete accounts up with bailout dough, as the recently revised minutes of the FOMC noted a higher level of concern (read terror) than has been otherwise conveyed... not to mention a sense of helplessness.
United Nations Secretary General Ban Ki-moon will visit Israel and the Palestinian territories to let the leadership know in person about the new resolution his group just passed. He has to travel to the region since not a silent minute ensued the UN's call to ceasefire. Ban would be wise to watch his back while inspecting the scene, since bombs have already destroyed a UN school. We suspect that not even Papa Smurf is safe there.
JP Morgan Chase (NYSE: JPM) is holding its annual health care conference this week. Markets are closed in Japan, but the day's U.S. earnings report schedule includes A. Schulman (Nasdaq: SHLM), Bank Mutual (Nasdaq: BKMU), Brookline Bancorp (Nasdaq: BRKL), Commerce Bancshares (Nasdaq: CBSH), Dynatronics (Nasdaq: DYNT), Frontier Financial (Nasdaq: FTBK), Labranche & Co. (NYSE: LAB), M&T Bank (NYSE: MTB), Peoples Educational Holdings (Nasdaq: PEDH), Schwab (Nasdaq: SCHW), Wegener (Nasdaq: WGNR) and Zep (NYSE: ZEP).
Tuesday
While the famed meeting in Davos starts on January 28th, the World Economic Forum issues its Global Risk report on Tuesday. Keeping with overseas news, Federal Reserve Chairman Bernanke will visit the London School of Economics (LSE), where he will discuss "The Crisis and Policy Response." Japanese markets open Tuesday to new data on Japan's bank lending for the month of December.
In the wake of last week's report from the International Council of Shopping Centers (ICSC), showing the holiday shopping season was the worst such period in 40 years, the ICSC's weekly sales news should be of interest to traders on Tuesday. Last week's report showed sales fell 0.8% year-to-year, an improvement from the prior week's 1.8% slide.
A couple important economic reports are slated for release Tuesday. At 8:30 a.m., November's trade deficit is expected to have narrowed to $51.5 billion, from $57.2 billion in October. This reflects lower prices paid for oil more than anything else. Less overall demand for goods and services in the United States is matching up against also decreased demand for U.S. goods overseas as global recession takes hold. Since we're a net importer and a consumption economy, as demand declines the trade gap logically narrows. Did you know that America's third most important exported good is scrap metal? What's that say about job and manufacturing migration...
The Treasury Budget is due at 2:00 p.m. Bloomberg's consensus of economists forecasts a December budget deficit of $83 billion, versus a prior year surplus of $48 billion. December typically produces a surplus because of tax payments received by the federal government. The deficit expected this time around has a lot to do with TARP and government spending programs created to treat the economy.
Genentech (NYSE: DNA) and Abbott Laboratories (NYSE: ABT) present at the JPM Conference. Tuesday's earnings schedule highlights news from CalAmp Corp (Nasdaq: CAMP), Infosys Technologies (Nasdaq: INFY), Insteel Industries (Nasdaq: IIIN), Life Partners Holdings (Nasdaq: LPHI), Linear Technology (Nasdaq: LLTC) and Majesco Entertainment (Nasdaq: COOL).
Wednesday
Economic reports lead the day's news flow on Wednesday. In the pre-market, look for the regular mortgage activity data from the Mortgage Bankers Association. Despite rate decline, mortgage activity let up some last week. We'll find out if that was purely seasonal or a sign that Fed actions could prove near useless for housing, the result of a rocketing jobless rate, dire sentiment and a rising savings rate. That would be terrifying, and would play into the argument that the Fed may be near impotent, at least temporarily and with regard to housing. I hate to say it, but Ron Paul is starting to sound less insane to me. I'm increasingly concerned with the Treasury deficit, which I view a dangerous concoction when mixed with geopolitical instability.
A week after chain store sales release, overall Retail Sales for the month of December are due at 8:30. Bloomberg's consensus forecasts a 1.2% decrease from November, and excluding auto sales, a 1.3% decline. This compares against 1.8% and 1.6% drops, respectively, in November. Since the bad news is already widely known, we can't see this report doing much damage this week.
At 8:30, Import and Export Prices are set for release. December's Import Prices are seen declining by 5.3% month-to-month, versus a 6.7% drop in November. This figure is finding significant impact from energy price decline. Speaking of energy, the EIA's regular Petroleum Status Report is due at 10:30. OPEC cuts and cold weather should be set to drive net inventory draws, stabilizing oil prices eventually.
November Business Inventories are set for release at 10:00 a.m. Inventories are seen falling 0.5% in November, compared to 0.6% in October. The problem is that sales have been dropping at a faster rate, leading the inventory-to-sales ratio's rise. Look for the Fed's Beige Book of regional economic conditions at 2:00 p.m. Here's another chance to expose a panicked group of bankers. The Bank of Thailand might cut rates big on Wednesday; Barron's forecasts the possibility of a 100 basis point slashing.
Tiffany (NYSE: TIF) reports on December sales a week later than most of its peers. The day's earnings include CLARCOR (NYSE: CLC), Courier Corp. (Nasdaq: CRRC), HDFC Bank (NYSE: HDB), LeCroy Corp. (Nasdaq: LCRY), Mercantile Bank (Nasdaq: MBWM), Volt Information Sciences (NYSE: VOL) and Xilinx (Nasdaq: XLNX).
Thursday
There's yet another opportunity for a central bank to be exposed on Thursday, when the European Central Bank (ECB) makes its monetary policy decision. Jean-Claude Trichet had been signaling a pause might be in store, but speculation has increased that another rate cut is likely, and for good reason!
Several Fed Presidents are slated to address groups on Thursday, with Janet Yellen, Charles Evans and Dennis Lockhart scheduled. Fed Board nominee Dan Tarullo testifies before Congressional committee, as part of his confirmation hearing. The New York and Philly Fed districts publish their monthly business conditions data on Thursday. The Empire State Manufacturing Survey is seen sitting at -25, versus -25.8 in December, signaling ongoing weak regional conditions. The Philly Fed is seen reporting its General Business Conditions Index at a level of -35, versus -32.9 last month. While Philadelphia area conditions seem worse, Philly can still boast current sports dominance over New York, as the Eagles defeated the Giants over the weekend. That combined with a Phillies World Series victory has the so-called second city sitting pretty.
The regular weekly Initial Jobless Claims data is due at 8:30 ET, and economists forecast the weekly job loss count at 500K even this time around. Last week, the figure stood at 467K, but we believe it benefited from holiday warm-heartedness. December's Producer Price Index (PPI) is due in the pre-market as well. The inflation gauge is seen falling 2.0%, but after taking energy and food prices out, it's expected to rise by 0.1%. Inflation is of little concern to most currently, but also widely expected to become a problem soon enough, thanks to all the federal government efforts and related money creation.
The RBC Cash Index, a sentiment measure, is due out at 10:00 a.m. RBC measures household spending and sentiment, and it doesn't take a brain surgeon to figure out this is going to be especially weak now. The EIA reports on Natural Gas Inventory at 10:30. As cold weather hits the nation, traders may already begin anticipating next week's data, making this week's release meaningless. The FCC is voting Thursday on rules to ease the transition to all-digital broadcasting.
Thursday's earnings schedule includes Amphenol (NYSE: APH), AEP Industries (Nasdaq: AEPI), ASML Holdings (Nasdaq: ASML), Bank of the Ozarks (Nasdaq: OZRK), Briggs & Stratton (NYSE: BGG), Capital Product Partners (Nasdaq: CPLP), CRA Int'l (Nasdaq: CRAI), Genentech (NYSE: DNA), Home Bancshares (Nasdaq: HOMB), Intel (Nasdaq: INTC), Marshall & Isley (NYSE: MI), POSCO (NYSE: PKX), Sealy Corp. (NYSE: ZZ), Shaw Communications (NYSE: SJR), Shuffle Master (Nasdaq: SHFL), Simmons First National (Nasdaq: SFNC) and Westamerica Bancorporation (Nasdaq: WABC).
Friday
The last day of the week closes heavy on data this time around. At 8:30, the Consumer Price Index (CPI) is seen falling 0.2% on a year-to-year basis and 0.9% on a month-to-month check. The data driver is clearly drastic energy price decline. Excluding food and energy, the Core CPI is expected to increase 0.1% month-to-month, and increase 1.9% on an annual basis. Prices are proving a bit stubborn, as we predicted in previous copies of this report. It's easier for corporate America to take prices higher than it is to cut, for obvious reasons. However, eventually, sticky lower component prices and competition should force consumer prices down a bit.
December's Industrial Production is seen falling 1.0% and Capacity Utilization is expected to decline to 74.6%, versus 75.4% in November. Soon plant closings will start offsetting the effects of work stoppages and work shift reduction.
The Treasury International Capital (TIC) data is due at 9:00 a.m. TIC measures the flow of funds into or out of long-term financial assets in the U.S. versus international. The global nature of this recession makes this data less important than it otherwise might be. The Reuters/University of Michigan Consumer Sentiment Index is expected to soften to 59.0 this month, versus 60.1 at last check.
The IEA is set to publish its monthly oil-market report on the same day Middle Eastern leaders meet in Qatar to discuss Palestine and the current conflict.
The U.S. bond market will close early on Friday, ahead of Martin Luther King Jr. Day on Monday. In equities, look for earnings news from First Horizon National (NYSE: FHN), Johnson Controls (NYSE: JCI) and PPG Industries (NYSE: PPG) to close out the week.
Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)
By The Greek - Economy & Markets:The Week Ahead
The week ahead offers several opportunities for global financial markets to lose confidence in the potency of the world's central banks. Besides the European Central Bank (ECB) monetary policy decision scheduled for Thursday, several U.S. bankers are slated to speak publicly this week. Also, President-Elect Obama's newest Fed nominee will face Congressional questions this week. Meanwhile, the Fed's Beige Book of regional economic conditions might also expose internal confusion and hidden concerns. The number of events scheduled offer too much opportunity for central bankers to appear lost in chaos, which in turn would raise global concern that world economies might be effectively be lost at sea without a sail.
Monday
The Detroit Auto Show sets the stage this week, as needy auto makers attempt to balance the importance of putting on of an impressive show against the risk of creating impression of wasteful spending of government and taxpayer funds.
Monday formally kicks off earnings season with the traditional report from Alcoa (NYSE: AA), but the week's earnings schedule is still light. This quarter's earnings are the most spread out, as companies take longer to produce their full year reports. Also, companies reporting intermediate fiscal quarters tend to report earlier. Finally, retailers generally report their year-end data post closing on the last day January, taking their reports out even longer in the season than is typical.
China should publish several economic reports this week. While common sense says to expect the worst for December's data, there seems to exist a sense of hope that China might magically find a powerful domestic driver to keep it on the growth road. This topic and more will likely be covered at a meeting of the world's central bank heads in Switzerland. Someone had better keep an eye on these folks and insure they're not loading discrete accounts up with bailout dough, as the recently revised minutes of the FOMC noted a higher level of concern (read terror) than has been otherwise conveyed... not to mention a sense of helplessness.
United Nations Secretary General Ban Ki-moon will visit Israel and the Palestinian territories to let the leadership know in person about the new resolution his group just passed. He has to travel to the region since not a silent minute ensued the UN's call to ceasefire. Ban would be wise to watch his back while inspecting the scene, since bombs have already destroyed a UN school. We suspect that not even Papa Smurf is safe there.
JP Morgan Chase (NYSE: JPM) is holding its annual health care conference this week. Markets are closed in Japan, but the day's U.S. earnings report schedule includes A. Schulman (Nasdaq: SHLM), Bank Mutual (Nasdaq: BKMU), Brookline Bancorp (Nasdaq: BRKL), Commerce Bancshares (Nasdaq: CBSH), Dynatronics (Nasdaq: DYNT), Frontier Financial (Nasdaq: FTBK), Labranche & Co. (NYSE: LAB), M&T Bank (NYSE: MTB), Peoples Educational Holdings (Nasdaq: PEDH), Schwab (Nasdaq: SCHW), Wegener (Nasdaq: WGNR) and Zep (NYSE: ZEP).
Tuesday
While the famed meeting in Davos starts on January 28th, the World Economic Forum issues its Global Risk report on Tuesday. Keeping with overseas news, Federal Reserve Chairman Bernanke will visit the London School of Economics (LSE), where he will discuss "The Crisis and Policy Response." Japanese markets open Tuesday to new data on Japan's bank lending for the month of December.
In the wake of last week's report from the International Council of Shopping Centers (ICSC), showing the holiday shopping season was the worst such period in 40 years, the ICSC's weekly sales news should be of interest to traders on Tuesday. Last week's report showed sales fell 0.8% year-to-year, an improvement from the prior week's 1.8% slide.
A couple important economic reports are slated for release Tuesday. At 8:30 a.m., November's trade deficit is expected to have narrowed to $51.5 billion, from $57.2 billion in October. This reflects lower prices paid for oil more than anything else. Less overall demand for goods and services in the United States is matching up against also decreased demand for U.S. goods overseas as global recession takes hold. Since we're a net importer and a consumption economy, as demand declines the trade gap logically narrows. Did you know that America's third most important exported good is scrap metal? What's that say about job and manufacturing migration...
The Treasury Budget is due at 2:00 p.m. Bloomberg's consensus of economists forecasts a December budget deficit of $83 billion, versus a prior year surplus of $48 billion. December typically produces a surplus because of tax payments received by the federal government. The deficit expected this time around has a lot to do with TARP and government spending programs created to treat the economy.
Genentech (NYSE: DNA) and Abbott Laboratories (NYSE: ABT) present at the JPM Conference. Tuesday's earnings schedule highlights news from CalAmp Corp (Nasdaq: CAMP), Infosys Technologies (Nasdaq: INFY), Insteel Industries (Nasdaq: IIIN), Life Partners Holdings (Nasdaq: LPHI), Linear Technology (Nasdaq: LLTC) and Majesco Entertainment (Nasdaq: COOL).
Wednesday
Economic reports lead the day's news flow on Wednesday. In the pre-market, look for the regular mortgage activity data from the Mortgage Bankers Association. Despite rate decline, mortgage activity let up some last week. We'll find out if that was purely seasonal or a sign that Fed actions could prove near useless for housing, the result of a rocketing jobless rate, dire sentiment and a rising savings rate. That would be terrifying, and would play into the argument that the Fed may be near impotent, at least temporarily and with regard to housing. I hate to say it, but Ron Paul is starting to sound less insane to me. I'm increasingly concerned with the Treasury deficit, which I view a dangerous concoction when mixed with geopolitical instability.
A week after chain store sales release, overall Retail Sales for the month of December are due at 8:30. Bloomberg's consensus forecasts a 1.2% decrease from November, and excluding auto sales, a 1.3% decline. This compares against 1.8% and 1.6% drops, respectively, in November. Since the bad news is already widely known, we can't see this report doing much damage this week.
At 8:30, Import and Export Prices are set for release. December's Import Prices are seen declining by 5.3% month-to-month, versus a 6.7% drop in November. This figure is finding significant impact from energy price decline. Speaking of energy, the EIA's regular Petroleum Status Report is due at 10:30. OPEC cuts and cold weather should be set to drive net inventory draws, stabilizing oil prices eventually.
November Business Inventories are set for release at 10:00 a.m. Inventories are seen falling 0.5% in November, compared to 0.6% in October. The problem is that sales have been dropping at a faster rate, leading the inventory-to-sales ratio's rise. Look for the Fed's Beige Book of regional economic conditions at 2:00 p.m. Here's another chance to expose a panicked group of bankers. The Bank of Thailand might cut rates big on Wednesday; Barron's forecasts the possibility of a 100 basis point slashing.
Tiffany (NYSE: TIF) reports on December sales a week later than most of its peers. The day's earnings include CLARCOR (NYSE: CLC), Courier Corp. (Nasdaq: CRRC), HDFC Bank (NYSE: HDB), LeCroy Corp. (Nasdaq: LCRY), Mercantile Bank (Nasdaq: MBWM), Volt Information Sciences (NYSE: VOL) and Xilinx (Nasdaq: XLNX).
Thursday
There's yet another opportunity for a central bank to be exposed on Thursday, when the European Central Bank (ECB) makes its monetary policy decision. Jean-Claude Trichet had been signaling a pause might be in store, but speculation has increased that another rate cut is likely, and for good reason!
Several Fed Presidents are slated to address groups on Thursday, with Janet Yellen, Charles Evans and Dennis Lockhart scheduled. Fed Board nominee Dan Tarullo testifies before Congressional committee, as part of his confirmation hearing. The New York and Philly Fed districts publish their monthly business conditions data on Thursday. The Empire State Manufacturing Survey is seen sitting at -25, versus -25.8 in December, signaling ongoing weak regional conditions. The Philly Fed is seen reporting its General Business Conditions Index at a level of -35, versus -32.9 last month. While Philadelphia area conditions seem worse, Philly can still boast current sports dominance over New York, as the Eagles defeated the Giants over the weekend. That combined with a Phillies World Series victory has the so-called second city sitting pretty.
The regular weekly Initial Jobless Claims data is due at 8:30 ET, and economists forecast the weekly job loss count at 500K even this time around. Last week, the figure stood at 467K, but we believe it benefited from holiday warm-heartedness. December's Producer Price Index (PPI) is due in the pre-market as well. The inflation gauge is seen falling 2.0%, but after taking energy and food prices out, it's expected to rise by 0.1%. Inflation is of little concern to most currently, but also widely expected to become a problem soon enough, thanks to all the federal government efforts and related money creation.
The RBC Cash Index, a sentiment measure, is due out at 10:00 a.m. RBC measures household spending and sentiment, and it doesn't take a brain surgeon to figure out this is going to be especially weak now. The EIA reports on Natural Gas Inventory at 10:30. As cold weather hits the nation, traders may already begin anticipating next week's data, making this week's release meaningless. The FCC is voting Thursday on rules to ease the transition to all-digital broadcasting.
Thursday's earnings schedule includes Amphenol (NYSE: APH), AEP Industries (Nasdaq: AEPI), ASML Holdings (Nasdaq: ASML), Bank of the Ozarks (Nasdaq: OZRK), Briggs & Stratton (NYSE: BGG), Capital Product Partners (Nasdaq: CPLP), CRA Int'l (Nasdaq: CRAI), Genentech (NYSE: DNA), Home Bancshares (Nasdaq: HOMB), Intel (Nasdaq: INTC), Marshall & Isley (NYSE: MI), POSCO (NYSE: PKX), Sealy Corp. (NYSE: ZZ), Shaw Communications (NYSE: SJR), Shuffle Master (Nasdaq: SHFL), Simmons First National (Nasdaq: SFNC) and Westamerica Bancorporation (Nasdaq: WABC).
Friday
The last day of the week closes heavy on data this time around. At 8:30, the Consumer Price Index (CPI) is seen falling 0.2% on a year-to-year basis and 0.9% on a month-to-month check. The data driver is clearly drastic energy price decline. Excluding food and energy, the Core CPI is expected to increase 0.1% month-to-month, and increase 1.9% on an annual basis. Prices are proving a bit stubborn, as we predicted in previous copies of this report. It's easier for corporate America to take prices higher than it is to cut, for obvious reasons. However, eventually, sticky lower component prices and competition should force consumer prices down a bit.
December's Industrial Production is seen falling 1.0% and Capacity Utilization is expected to decline to 74.6%, versus 75.4% in November. Soon plant closings will start offsetting the effects of work stoppages and work shift reduction.
The Treasury International Capital (TIC) data is due at 9:00 a.m. TIC measures the flow of funds into or out of long-term financial assets in the U.S. versus international. The global nature of this recession makes this data less important than it otherwise might be. The Reuters/University of Michigan Consumer Sentiment Index is expected to soften to 59.0 this month, versus 60.1 at last check.
The IEA is set to publish its monthly oil-market report on the same day Middle Eastern leaders meet in Qatar to discuss Palestine and the current conflict.
The U.S. bond market will close early on Friday, ahead of Martin Luther King Jr. Day on Monday. In equities, look for earnings news from First Horizon National (NYSE: FHN), Johnson Controls (NYSE: JCI) and PPG Industries (NYSE: PPG) to close out the week.
Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)
Labels: Week Ahead
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