This Week: Governors' Giddy Good Sign

By The Greek - Economy & Markets:

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Financial markets received a desperately needed injection of hopeful news this past weekend, one bit of which originated from here at home and another born abroad. In the U.S., governors of the nation's states met, and many were outright giddy over their allocation of the new fiscal stimulus package. That reaction should be welcomed by the markets as a good sign that government action might drive real positive economic results. Recent state struggles and budget cuts have been well noted, and have contributed to this month's share retreat.

Some Republican governors are reportedly considering rejecting federal stimulus funds, which is just plain stupid in this writer's opinion. Citizens of states in question should let their governors know they'll not be reelected if they make this bonehead decision. The money has been agreed to, and other states are now requesting to receive the money rejected by their peers. There seems to be no sense in rejecting this money, and I would go so far as to call it irresponsible and negligent for the governors in question. How would you like your state's portion to find its way to another state because of the decision of your governor?

The second bit of positive news originated from across the Atlantic Ocean. In Europe, where doubt grew last week about the willingness of the EU to act meaningfully toward the salvation of its region, leaders gathered and worked together over the weekend to develop useful plans. The EU decided to inject more money into the IMF to help troubled nations, and to increase the regulation of troubled sectors.

Many a guru has pointed to U.S. banking sector concerns as the key driver for last Friday's decline, but the market was already lower in Europe to start the day. Granted, the scandalous scare that drove the unveiling of Swiss banking certainly played a role as well. The Greek thinks we will see the Swiss backtrack on the UBS move, or perhaps quarantine the problem to UBS due to specific money trails that seem to lead there. After the broad decline of its banking sector on Friday, we think the Swiss have now realized the potential catastrophic loss to their unique economy should the UBS (NYSE: UBS) settlement serve as precedent for other similar moves.

So between the two positives events of the weekend, we have only U.S. banking collapse to lose sleep over. Perhaps Tim Geithner will have something to say on that issue early this week, and the market might have reason for a rebound rally. As for now, there's nothing but stress around this subject of the bank stress test.

The Week Ahead

Monday

Indian markets will be closed on Monday, and appropriately so, as Slumdog Millionaire won the Oscar for Best Picture on Sunday evening; so the nation has time and reason to rejoice.

Several Fed Presidents will give speeches this week, and Atlanta's Dennis Lockhart and Dallas' Richard Fisher get a go on Monday before separate audiences. Meanwhile, the White House is holding a "fiscal responsibility summit." The American Enterprise Institute is hosting a forum on credit-default swaps.

The day's earnings schedule highlights news from H&R Block (NYSE: HRB), Sears Holdings (Nasdaq: SHLD), Campbell Soup (NYSE: CPB), DTE Energy (NYSE: DTE), Advanced Energy Industries (Nasdaq: AEIS), American Reprographics (NYSE: ARP), AmeriSafe (Nasdaq: AMSF), ATS Medical (Nasdaq: ATSI), Bidz.com (Nasdaq: BIDZ), Developers Diversified Realty (NYSE: DDR), Ducommun (NYSE: DCO), Entertainment Properties Trust (NYSE: EPR), Euroseas (Nasdaq: ESEA), Forest Oil (NYSE: FST), General Growth Properties (NYSE: GGP), Greenlight Property Re (Nasdaq: GLRE), Grupo Radio Centro (NYSE: RC), GulfMark Offshore (NYSE: GLF), Health Management Associates (NYSE: HMA), Healthcare Realty Trust (NYSE: HR), Hecla Mining (NYSE: HL), Hertz Global (NYSE: HTZ), ICON plc (Nasdaq: ICLR), International Royalty (AMEX: ROY), iPass (Nasdaq: IPAS), Ituran Location & Control (Nasdaq: ITRN), Kaydon (NYSE: KDN), Liberty Global (Nasdaq: LBTYA), Lincoln Electric (Nasdaq: LECO), Nordstrom (NYSE: JWN), ONEOK Partners (NYSE: OKS), Onyx Pharmaceuticals (Nasdaq: ONXX), Orbotech (Nasdaq: ORBK), Partner Communications (Nasdaq: PTNR), PC Mall (Nasdaq: MALL), Ramco-Gershenson Properties Trust (NYSE: RPT), Saul Centers (NYSE: BFS), SenoRx (Nasdaq: SENO), Solta Medical (Nasdaq: SLTM), St. Mary Land and Exploration (NYSE: SM), TeleTech Holdings (Nasdaq: TTEC), Texas Roadhouse (Nasdaq: TXRH), The9 (Nasdaq: NCTY), TranS1 (Nasdaq: TSON), TTI Telecom (Nasdaq: TTIL), USANA Health Sciences (Nasdaq: USNA), Valspar (NYSE: VAL), Verenium (Nasdaq: VRNM), Waste Services (Nasdaq: WSII), Weingarten Realty (NYSE: WRI), Weyco (Nasdaq: WEYS) and Whiting Petroleum (NYSE: WLL).

Tuesday

The first news of the day will emanate from Japan. The Bank of Japan is scheduled to publish its January meeting minutes. In the early morning, the International Council of Shopping Centers (ICSC) makes its regular reporting of weekly same-store sales. Last week's report showed a surprising gain on a week-to-week basis (+0.9%). On a year-to-year view, sales fell 0.9%, as consumer spending is drastically lower now than it was a year ago. The week's sales may have benefited from relatively warmer weather, according to the ICSC, but the measured period extended through Saturday of President's Day weekend this year. President's Day sales may have attracted shoppers waiting for best possible price opportunities to buy things of interest. Since President's Day fell on the 18th of February last year, versus the 16th this year, this year's holiday weekend day compared against a regular Saturday last year. This week's comps, therefore, will be tougher, as two days of the holiday weekend this year, compare against three from the prior year.

February's Consumer Confidence Index, reported by the Conference Board, is due at 10:00 a.m. Bloomberg's consensus sees the measure declining in February, to 35.5, versus 37.7 in January. Considering that job losses have continued to mount, and stock losses in turn, confidence should not be improved from January's worst reading in 40 years.

The two most powerful men in America are scheduled to address groups on Tuesday. President Obama will speak to a joint session of Congress, perhaps to talk about teamwork. The second most powerful man in America, Fed Chairman Ben Bernanke will testify before the Senate Banking Committee at 10 AM. The S&P Case Shiller Home Price Index should show ongoing price decline generally. The reading is a bit behind on a two-month lag, which proves limiting in terms of its value add.

The day's earnings schedule includes news from Acorda Therapeutics (Nasdaq: ACOR), Alnylam Pharmaceuticals (Nasdaq: ALNY), Applied Signal (Nasdaq: APSG), Assisted Living (NYSE: ALC), Astec Industries (Nasdaq: ASTE), Atlas Air (Nasdaq: AAWW), Balchem (Nasdaq: BCPC), BankFinancial (Nasdaq: BFIN), Bill Barrett (NYSE: BBG), Birks and Mayors (NYSE: BMJ), Boise (NYSE: BZ), Broadpoint Securities (Nasdaq: BPSG), BTU Int'l (Nasdaq: BTUI), Cardtronics (Nasdaq: CATM), Carter's Inc. (NYSE: CRI), Catalyst Health Solutions (Nasdaq: CHSI), CBRL Group (Nasdaq: CBRL), Ceradyne (Nasdaq: CRDN), Chicago Bridge & Iron (NYSE: CBI), China Mass Media (NYSE: CMM), CIBER (NYSE: CBR), Computer Task Group (Nasdaq: CTGX), Concho Resources (NYSE: CXO), Crown Castle (NYSE: CCI), Daktronics (Nasdaq: DAKT), Home Development (NYSE: HXM), Dolan Media (NYSE: DM), Domino's (NYSE: DPZ), DreamWorks (NYSE: DWA), Dresser-Rand (NYSE: DRC), Dycom (NYSE: DY), Eclipsys (Nasdaq: ECLP), Entercom (NYSE: ETM), EPIQ Systems (Nasdaq: EPIQ), Euronet Services (Nasdaq: EEFT), ev3 (Nasdaq: EVVV), EXCO (NYSE: XCO), Federal-Mogul (Nasdaq: FDML), First Advantage (Nasdaq: FADV), First Solar (Nasdaq: FSLR), FirstEnergy (NYSE: FE), Foster Wheeler (Nasdaq: FWLT), Franklin Street (NYSE: FSP), Fresh Del Monte (NYSE: FDP), Gmarket (Nasdaq: GMKT), GrafTech Int'l (Nasdaq: GTI), H.J. Heinze (NYSE: HNZ), HCC Insurance (NYSE: HCC), Healthsouth (NYSE: HLS), Heartland Payment (NYSE: HPY), HEICO (NYSE: HEI), Heidrick and Struggles (Nasdaq: HSII), Helix Energy (NYSE: HLX), Henry Schein (Nasdaq: HSIC), Herbalife (NYSE: HLF), Home Depot (NYSE: HD), Huron Consulting (Nasdaq: HURN), Iam Gold (NYSE: IAG), Iconix Brand (Nasdaq: ICON), Internet Brands (Nasdaq: INET), IPG Photonics (Nasdaq: IPGP), Kendle (Nasdaq: KNDL), Macy's (NYSE: M), Magna Int'l (NYSE: MGA), Marvel Entertainment (NYSE: MVL), Medco Health (NYSE: MHS), Mohawk (NYSE: MHK), Nabors (NYSE: NBR), Office Depot (NYSE: ODP), Orbitz Worldwide (NYSE: OWW), Papa John's (Nasdaq: PZZA), PG&E (NYSE: PCG), Quanta Services (NYSE: PWR), Radian (NYSE: RDN), RadioShack (NYSE: RSH), SeaBright Insurance (NYSE: SBX), Sempra Energy (NYSE: SRE), Steve Madden (Nasdaq: SHOO), Target (NYSE: TGT), Taser (Nasdaq: TASR), Tenet Healthcare (NYSE: THC), The St. Joe Co. (NYSE: JOE), Thomson Reuters (NYSE: TRI), Vornado Realty Trust (NYSE: VNO), Winmark (Nasdaq: WINA), World Wrestling (NYSE: WWE), Wynn Resorts (Nasdaq: WYNN) and more.

Wednesday

Fed Chairman Bernanke closes out his time on the Hill Wednesday, as he testifies before a House committee. Existing Home Sales will be reported for the month of January at 10:00 AM. Bloomberg's consensus of economists forecasts the annual pace of sales at 4.8 million, which compares against December's pace of 4.74 million. Housing analysts will have interest in the day's Purchase Applications report from the Mortgage Bankers Association as well. This report offered news of a surge in activity last week, and has generally benefited from falling mortgage rates. However, housing recovery remains on hold.

The European Commission will review a report on financial architecture reform, while an economic advisory group publishes a report on the state of the European economy. The regular EIA Petroleum Status Report is due at its usual 10:30 publishing. Oil inventories decreased by 0.2 million barrels last week, a welcomed change for oil bulls.

The day marks Ash Wednesday and the start of lent for Western Christians. Companies are also living in a state of lent these days, enjoying less of everything, net income and bonus payments alike; and shareholders are giving up capital gains and dividends as well.

The day's EPS schedule includes Aegean Marine (NYSE: ANW), Ambac (NYSE: ABK), Angeion (Nasdaq: ANGN), Avis Budget (NYSE: CAR), Cadbury plc (NYSE: CBY), Centerpoint Energy (NYSE: CNP), Clean Harbors (NYSE: CLH), Cliff's Natural Resources (NYSE: CLF), CMS Energy (NYSE: CMS), Cogent (Nasdaq: COGT), Dana Holding (NYSE: DAN), Del Monte Foods (NYSE: DLM), Dollar Tree (Nasdaq: DLTR), Donaldson (NYSE: DCI), Eaton Vance (NYSE: EV), El Paso Electric (NYSE: EE), Equity One (NYSE: EQY), Express Scripts (Nasdaq: ESRX), Famous Dave's (Nasdaq: DAVE), FBR Capital (Nasdaq: FBCM), Flowserve (NYSE: FLS), Fluor (NYSE: FLR), General Maritime (NYSE: GMR), Gibraltar Industries (Nasdaq: ROCK), Goodrich Petroleum (NYSE: GDP), Greif Brothers (NYSE: GEF), HealthStream (Nasdaq: HSTM), Hearst-Argyle (NYSE: HTV), Internet Capital Group (Nasdaq: ICGE), Isis Pharma (Nasdaq: ISIS), J.M. Smucker (NYSE: SJM), KBR Inc. (NYSE: KBR), Liberty Media (Nasdaq: LINTA), Limited Brands (NYSE: LTD), Martha Stewart (NYSE: MSO), Medarex (Nasdaq: MEDX), NetEase (Nasdaq: NTES), Nicor (NYSE: GAS), Petrohawk (NYSE: HK), Psychiatric Solutions (Nasdaq: PSYS), Quality Distribution (Nasdaq: QLTY), Saks (NYSE: SKS), Salesforce.com (NYSE: CRM), Service Corp. (NYSE: SCI), The TJX Cos. (NYSE: TJX), The Washington Post (NYSE: WPO), Toronto Dominion Bank (NYSE: TD), True Religion Apparel (Nasdaq: TRLG), Tween Brands (NYSE: TWB), United Rentals (NYSE: URI), Visteon (NYSE: VC), Zale (NYSE: ZLC) and more.

Thursday

President Obama will usher in his first budget proposal on Thursday, and he's already given notice that he hopes to work towards halving the deficit. Given the amount of government aid being handed out, some hard decisions will be made cutting costs. We expect a significant cut to defense spending could surprise many and hurt that sector's stocks on Thursday.

New Home Sales, which are running at the slowest pace in history, are due for 10:00 AM report. Bloomberg's consensus of economists forecasts the pace will remain in the dumps in January, with expectations for an annual pace of 330K, versus 331K last month.

In the pre-market, Durable Goods Orders and Weekly Initial Jobless Claims should offer more market concerning news, though the weakness is commonplace now. Durable Goods Orders are seen falling another 2.5% in January, compared with a similar 2.6% decline in December. New orders, excluding transportation, are seen falling 2.1% in January. Weekly Initial Jobless Claims have been running extra hot this year, now solidly above 600K each week. Economists are expecting the current reading will measure 625K, versus 627K last week.

The Treasury will auction 7-year notes for the first time since 1993. Look for the EIA Natural Gas Report at 10:30 as always. British monetary officials face public scrutiny on Thursday, as they testify before elected representatives.

J.P. Morgan Chase (NYSE: JPM) holds an investor day, while the earnings schedule highlights news from Akeena Solar (Nasdaq: AKNS), Allianz SE (NYSE: AZ), American Dental Partners (Nasdaq: ADPI), Ansys (Nasdaq: ANSS), Autodesk (Nasdaq: ADSK), Bare Escentuals (Nasdaq: BARE), Biovail (NYSE: BVF), Blue Coat Systems (Nasdaq: BCSI), Boyd Gaming (NYSE: BYD), Cablevision (NYSE: CVC), Checkpoint Systems (NYSE: CKP), Churchhill Downs (Nasdaq: CHDN), Cinemark Holdings (NYSE: CNK), CommScope (NYSE: CTV), Cooper Tire & Rubber (NYSE: CTB), Deckers Outdoor (Nasdaq: DECK), Dell (Nasdaq: DELL), DPL, Inc. (NYSE: DPL), Dynegy (NYSE: DYN), El Paso (NYSE: EP), EMCOR (NYSE: EME), Employers Holdings (NYSE: EIG), Ensco Int'l (NYSE: ESV), Easterline Technologies (NYSE: ESL), Federal Signal (NYSE: FSS), Frontier Oil (NYSE: FTO), Frontline (NYSE: FRO), Gap (NYSE: GPS), Genco Shipping (NYSE: GNK), Global Cash (NYSE: GCA), Hansen Natural (Nasdaq: HANS), Hughes Communications (Nasdaq: HUGH), Human Genome Sciences (Nasdaq: HGSI), Huntsman (NYSE: HUN), Internet Gold (Nasdaq: IGLD), Iron Mountain (NYSE: IRM), Key Energy Services (NYSE: KEG), King Pharma (NYSE: KG), Kohl's (NYSE: KSS), Leap Wireless (Nasdaq: LEAP), Macquarie Infrastructure (NYSE: MIC), Mentor Graphics (Nasdaq: MENT), Met-Pro (NYSE: MPR), Mine Safety (NYSE: MSA), Novatel (Nasdaq: NVTL), Omnicare (NYSE: OCR), Pioneer Drilling (NYSE: PDC), Quanex (NYSE: NX), Repsol (NYSE: REP), Rowan Cos. (NYSE: RDC), Royal Bank of Canada (NYSE: RY), Safeway (NYSE: SWY), Sanderson Farms (Nasdaq: SAFM), Scientific Games (Nasdaq: SGMS), Senior Housing (NYSE: SNH), Ship Finance Int'l (NYSE: SFL), Sotheby's (NYSE: BID), First American (NYSE: FAF), Nasdaq OMX (Nasdaq: NDAQ), U.S. Cellular (NYSE: USM), Universal Health (NYSE: UHS), Vonage (NYSE: VG) and more.

Friday

The first revision to fourth quarter GDP is due on Friday morning, and economists are not expecting good news. The consensus forecast is that Q4 GDP contraction will worsen, to 5.4%, from the 3.8% back-step initially reported. Despite the poor consensus view, if this actually plays out to plan, we do not expect it will be digested well by the market on Friday.

A couple of Federal Reserve bosses will draw a crowd when the presidents of the St. Louis and San Francisco Feds address a forum on monetary policy and oil prices. The National Association of Purchasing Managers - Chicago issues its Purchasing Managers Index on Friday. The NAPM report is seen still showing deep sector contraction in February, with a measure of 33.0 forecast (33.3 in January).

Reuters/University of Michigan's final Consumer Sentiment reading for February is expected to remain weak. Bloomberg's consensus sees a final reading of 56.0, versus the mid-February reporting of 56.2. The Farm Prices Report is due for February at 3:00 PM. This report shows the prices received by farmers for their produce at the end of the month, versus mid-month.

Overseas, the Association of South East Asian Nations will hold its summit in Thailand this time around. Perhaps this is the reason Secretary of State Clinton visited Asia ahead of Europe, marking the first such ordering of any new American administration. President Obama's good intentions and change theme will likely be discussed by the grouping. On this same day, China and the United States are due to resume senior level military discussions.

On Saturday, European Union representatives meet to quell rising nationalistic protectionism among its member states. The unique individual populations of Europe are putting pressure on their local governments, which in turn are forced to act in their constituents' interests. This makes for the first true test of the union.

Friday's EPS schedule includes news from Aqua America (NYSE: WTR), Calgon Carbon (NYSE: CCC), Calpine (NYSE: CPN), CapitalSource (NYSE: CSE), Caraustar (Nasdaq: CSAR), Cobra Electronics (Nasdaq: COBR), Coeur d'Alene Mines (NYSE: CDE), Deutsche Telekom (NYSE: DT), DiamondRock Hospitality (NYSE: DRH), EMC Insurance (Nasdaq: EMCI), Empresas ICA (NYSE: ICA), Endo Pharmaceuticals (Nasdaq: ENDP), Golar LNG (Nasdaq: GLNG), Gulf Island (Nasdaq: GIFI), Int'l Royalty (NYSE: ROY), Iowa Telecommunications (NYSE: IWA), James River Coal (Nasdaq: JRCC), Lydall (NYSE: LDL), Magellan Health (Nasdaq: MGLN), Mirant (NYSE: MIR), Osiris Therapeutics (Nasdaq: OSIR), Republic Services (NYSE: RSG), Shanda Interactive (Nasdaq: SNDA), Telecom Italia (NYSE: TI), TETRA Tech (NYSE: TTI), The Blackstone Group (NYSE: BX), The Interpublic Group (NYSE: IPG), The Phoenix Cos. (NYSE: PNX), The Progressive (NYSE: PGR), Trex Co. (NYSE: TWP), Triad Guaranty (Nasdaq: TGIC), Trico Marine (Nasdaq: TRMA), Warner Chilcott (Nasdaq: WCRX), Westar Energy (NYSE: WR) and more.

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)