Week Ahead: Time to Reset the Economy

By The Greek - Economy & Markets:

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Perhaps like Madam Clinton meant to say to her Russian counterpart, maybe America might also "reset" its economy with a dummy button. Nothing else seems to be working, so why not! Perhaps the illusory scheme might prove an effective tool to fool American consumers and investors into buying and investing again. Gee, I can almost remember when buying and investing were America's two favorite past times.

But don't fret! "The Greek" was out and about this past weekend, and I took note at how intoxicating 20 degrees of unseasonable warmth can be in early March. It seemed to me like an entire city of cabin kept couples were set free to roam the streets all at once this weekend. The chubby hubbies were loaded up with bags from all the stores that managed to survive up until now. Also, bars and restaurants were full and the supermarket empty. You know, if you look at the glass half full, a great majority of you are still working full-time and are up to date on your mortgage payments.

Even "Bad News Obama" has changed his tune. If you watched his recent video address and took note of other appearances, he seems to be expanding from the monotone tragic song he's sung in minor key up until now. Maybe the new puppy will help also, as soon as he's house trained, dewormed and we're sure he's hypoallergenic... Womp womp...Bad News....

The Week Ahead

Monday

While there are no economic reports scheduled, the U.S. Senate will hold a hearing on the appointment of Ron Kirk as U.S. Trade Representative. The focus of the week will probably be on the Stimulus Bill and the wheeling and dealing between the parties, as this one is not going through without some Republican votes. Overseas, Australian markets are closed on Monday.

The day's earnings schedule includes Acadia Pharmaceuticals (Nasdaq: ACAD), Acorn Int'l (NYSE: ATV), AeroVironment (Nasdaq: AVAV), Airspan Networks (Nasdaq: AIRN), American Oriental Bioengineering (NYSE: AOB), American Vanguard (NYSE: AVD), Bitstream (Nasdaq: BITS), Cantel Medical (NYSE: CMN), Casey's General Stores (Nasdaq: CASY), China TechFaith Wireless (Nasdaq: CNTF), Comtech Telecommunications (Nasdaq: CMTL), Digital Ally (Nasdaq: DGLY), Gafisa S.A. (NYSE: GFA), HFF Inc. (NYSE: HF), Hill Int'l (NYSE: HIL), Interleukin Genetics (AMEX: ILI), Kratos Defense & Security (Nasdaq: KTOS), Limco-Piedmont (Nasdaq: LIMC), Morton's Restaurant Group (NYSE: MRT), Oncothyreon (Nasdaq: ONTY), Orbit Int'l (Nasdaq: ORBT), Pegasystems (Nasdaq: PEGA), Relm Wireless (AMEX: RWC), ResCare (Nasdaq: RSCR), Rodman & Renshaw (Nasdaq: RODM), Safety Insurance Group (Nasdaq: SAFT), Sasol Ltd. (NYSE: SSL), SMTC Corp. (Nasdaq: SMTX), Track Data (Nasdaq: TRAC) and Vivus Inc. (Nasdaq: VVUS).

Tuesday

The Senate may vote on the Stimulus Bill on Tuesday if things progress well enough. At 8:30 EDT, Federal Reserve Chairman Bernanke addresses the Council on Foreign Relations. Protectionism is the hot topic of the day, so you can expect it to be discussed here.

The weekly same-store sales data out of the ICSC has been deteriorating at a slower rate of late. I don't know if you noticed, but shoppers threw caution to the wind when temperatures rose twenty degrees over the weekend. Here in New York, the bars were full (not that I ventured into any) and the shopping married couples returned home with hubby's hands loaded. Look for an uptick in next week's data as a result. Last week saw year-to-year sales fall 0.8%.

At 10:00 a.m., the Wholesale Trade Report is due. Barron's indicates expectations for an inventory decline of 1.0% for January. Inventories declined by 1.4% in December. In an undeniably horrible environment, seeing inventory decline is a welcomed occurrence. What matters more to the market is if inventory decline is keeping pace with sales decline, so the inventory-to-sales ratio is noteworthy.


What you see in the chart here is a long-term trend of efficiency gain, as companies the world over used technology and analysis to improve operations processes. However, you can see that over the past few months, sales drops have proven sharper than the system could digest. The inventory-to-sales ratio measured 1.27 in December.

On Tuesday evening, don't miss Dr. Charles Calomiris at the Harvard Club in Manhattan, where he discusses "Hope, Prayer and the Economic Crisis." Click on the image here for details.

Tuesday's EPS reports include news from A.M. Castle & Co. (NYSE: CAS), Advocat (Nasdaq: AVCA), Air Methods (Nasdaq: AIRM), Alexza Pharmaceuticals (Nasdaq: ALXA), Alpha Pro Tech (AMEX: APT), American Public Education (Nasdaq: APEI), Approach Resources (Nasdaq: AREX), AVI BioPharma (Nasdaq: AVII), Baytex EnergyTrust (NYSE: BTE), Blackrock Kelso Capital (Nasdaq: BKCC), Boots & Coots Int'l Well Control (AMEX: WEL), Boston Beer (NYSE: SAM), CAI Int'l (NYSE: CAP), Capital Senior Living (NYSE: CSU), Capital Trust (NYSE: CT), China Digital TV (NYSE: STV), Clayton Williams Energy (Nasdaq: CWEI), Collective Brands (NYSE: PSS), Comverge (Nasdaq: COMV), Dick's Sporting Goods (NYSE: DKS), DXP Enterprises (Nasdaq: DXPE), Eagle Rock Energy (Nasdaq: EROC), Emisphere Tech (Nasdaq: EMIS), Evans and Sutherland (Nasdaq: ESCC), Evolving Systems (Nasdaq: EVOL), Ferrellgas Partners (NYSE: FGP), FuelCell Energy (Nasdaq: FCEL), Gaiam (Nasdaq: GAIA), General Steel Holdings (NYSE: GSI), Global Options (Nasdaq: GLOI), Gulfport Energy (Nasdaq: GPOR), Hawk (AMEX: HWK), Hovnanian (NYSE: HOV), Hypercom (NYSE: HYC), Information Services (Nasdaq: III), IRIDEX (Nasdaq: IRIX), J. Crew (NYSE: JCG), JA Solar (Nasdaq: JASO), KMG Chemicals (Nasdaq: KMGB), LHC Group (Nasdaq: LHCG), Lime Energy (Nasdaq: LIME), MAKO Surgical (Nasdaq: MAKO), Marlin Business Services (Nasdaq: MRLN), MEMSIC (Nasdaq: MEMS), ModusLink Global (Nasdaq: MLNK), Nautilus (NYSE: NLS), NCI Building (NYSE: NCS), NN Inc. (Nasdaq: NNBR), Oil-Dri Corp. (NYSE: ODC), Quadramed (Nasdaq: QDHC), Reddy Ice (NYSE: FRZ), Salix Pharmaceuticals (Nasdaq: SLXP), Silver Standard Resources (Nasdaq: SSRI), Stage Stores (NYSE: SSI), Take-Two Interactive (Nasdaq: TTWO), The Exploration Co. (Nasdaq: TXCO), The Kroger Co. (NYSE: KR), Thermadyne Holdings (Nasdaq: THMD), Thomson (NYSE: TMS), Transact Technologies (Nasdaq: TACT), TriMas Corp. (NYSE: TRS), Trinity Biotech (Nasdaq: TRIB), Uranium Resources (Nasdaq: URRE), Vicor (Nasdaq: VICR) and Western Gas Partners (NYSE: WES).

Wednesday

As is often the case, the data schedule picks up from Wednesday forward. In recent weeks, mortgage activity has backed up on a correlated rise in 30-year fixed rate mortgages. This week's data is due Wednesday morning in the premarket as always.

The Quarterly Services Survey for the fourth quarter of 2008 is set for 10:00 a.m. publishing time. The report focuses on IT related service industries, which play a key role in productivity. Much of the workforce that is going away now may not come back where technology can replace feet on the ground.

OPEC has been making news recently as further production hikes are rumored possible. We've already warned here that this is likely lip service intended to keep prices stable. It keeps the thought of possible production cuts at the fore of our mind and serves its purpose as a result. OPEC has acted in this manner in the recent past, and is generally reluctant to cut back on production. When it does, it has great difficulty ensuring its rogue members adhere. The EIA will produce the regular Petroleum Status Report, measuring inventory, at 10:30. This data is an important factor in price determination again now that oil seems to have stabilized.

All this spending combined with lighter tax receipts should drive the Federal Treasury Deficit to expand in February. Bloomberg's consensus sees a deficit of $205.7 billion comparing against $83.8 billion in January.

Wednesday's earnings schedule highlights news from A/S Dampskibsselskabet Torm (Nasdaq: TRMD), AAON, Inc. (Nasdaq: AAON), Aeterna Zentaris (Nasdaq: AEZS), AFC Enterprises (Nasdaq: AFCE), Altair Nanotechnologies (Nasdaq: ALTI), Altus Pharmaceuticals (Nasdaq: ALTU), American Eagle Outfitters (NYSE: AEO), Aurizon Mines (AMEX: AZK), Bon-Ton Stores (Nasdaq: BONT), Brigham Exploration (Nasdaq: BEXP), Bronco Drilling (Nasdaq: BRNC), Clarient (Nasdaq: CLRT), CVR Energy (NYSE: CVI), D&E Communications (Nasdaq: DECC), Danaos (NYSE: DAC), Diamond Foods (Nasdaq: DMND), DUSA Pharmaceuticals (Nasdaq: DUSA), Elbit Systems (Nasdaq: ESLT), ExlService (Nasdaq: EXLS), General Communication (Nasdaq: GNCMA), Granite City Food & Brewery (Nasdaq: GCFB), Hi-Tech Pharmacal (Nasdaq: HITK), Hot Topic (Nasdaq: HOTT), Icagen (Nasdaq: ICGN), ICF Int'l (Nasdaq: ICFI), Innodata Isogen (Nasdaq: INOD), Insmed (Nasdaq: INSM), Inter Parfums (Nasdaq: IPAR), Jo-Ann Stores (NYSE: JAS), Kodiak Oil & Gas (AMEX: KOG), Korn Ferry (NYSE: KFY), LDK Solar (NYSE: LDK), LMI Aerospace (Nasdaq: LMIA), Lumber Liquidators (NYSE: LL), Main Street Capital (Nasdaq: MAIN), Majesco Entertainment (Nasdaq: COOL), Mannatech (Nasdaq: MTEX), Men's Wearhouse (NYSE: MW), Meruello Maddux (Nasdaq: MMPI), Metabolix (Nasdaq: MBLX), Middlesex Water (Nasdaq: MSEX), Mobile Telesystems (NYSE: MBT), Nabi Biopharmaceuticals (Nasdaq: NABI), National Semiconductor (NYSE: NSM), Navistar Int'l (NYSE: NAV), Neenah Paper (NYSE: NP), OceanFreight (Nasdaq: OCNF), OMNI Energy Services (Nasdaq: OMNI), OncoGenex Technologies (Nasdaq: OGXI), Optimer Pharmaceuticals (Nasdaq: OPTR), Pall Corp. (NYSE: PLL), Park-Ohio (Nasdaq: PKOH), PDI, Inc. (Nasdaq: PDII), Pennichuck (Nasdaq: PNNW), Permian Basin (NYSE: PBT), Quiksilver (NYSE: ZQK), Saga Communications (AMEX: SGA), SCOLR Pharma (AMEX: DDD), Speedway Motorsports (NYSE: TRK), Standard Parking (Nasdaq: STAN), Staples (Nasdaq: SPLS), Superconductor Technologies (Nasdaq: SCON), TBS Int'l (Nasdaq: TBSI), The Buckle (NYSE: BKE), The Descartes System (Nasdaq: DSGX), Ultrapar Holdings (NYSE: UGP), Uranerz Energy (AMEX: URZ), Vail Resorts (NYSE: MTN), WCA Waste (Nasdaq: WCAA), WSP Holdings (NYSE: WH), Xerium Technologies (NYSE: XRM) and XOMA Ltd. (Nasdaq: XOMA).

Thursday

Thursday is often the busiest day of the financial week, and this one is no exception. The headline story might prove the Retail Sales data for the month of February. Chain store sales painted the picture well enough last week; a shift in spending to "discount," which includes market share leader Wal-Mart (NYSE: WMT), is having a profound impact on aggregate sales. Bloomberg's consensus of economists forecasts a sales decline of 0.5% in February. Excluding autos, sales are expected down 0.2% month-to-month.

The Weekly Initial Jobless Claims loss level improved last time around, but was still concerning at 639K. Last week's data was overshadowed by the ADP Report. This week's claims report sits as the lone labor market barometer this time around, and so it could prove worthy of higher market value. Bloomberg's group forecasts claims of 645K this week.

After getting the Wholesale Inventory data earlier in the week, Thursday offers the Business Inventory data for January. This inventory-to-sales ratio jumped to 1.44 in January, as inventory adjustment could not keep up with the steepness of lost demand. As far as inventories go, economists expect a 1.0% decline in January, versus the 1.3% drop in December.

The Federal Reserve publishes the flow-of-funds data for Q4 on Thursday. A day late and a dollar short, the House Financial Services Committee will hear testimony on mark-to-market accounting rules. Lot of good that does us now; in any event, the cat is already out of the bag, so even if regulators were to change the rules, you can't hide what has already been exposed.

At 10:30, look for the EIA's Natural Gas Report. Overseas, the European Parliament will vote on changes regarding the emissions of coal-fired power plants.

The day's EPS reports include Aeropostale (NYSE: ARO), American States Water (NYSE: AWR), Arabian American (Nasdaq: ARSD), Arena Pharma (Nasdaq: ARNA), Athersys (Nasdaq: ATHX), Autobytel.com (Nasdaq: ABTL), Beasley Broadcast Group (Nasdaq: BBGI), Bionovo (Nasdaq: BNVI), Cadence Pharma (Nasdaq: CADX), Caliper Life Sciences (Nasdaq: CALP), Cardiac Science (Nasdaq: CSCX), CECO Environmental (Nasdaq: CECE), Central Vermont Public (NYSE: CV), China Fire & Security (Nasdaq: CSFG), Chyron (Nasdaq: CHYR), Citizens (NYSE: CIA), Coleman Cable (Nasdaq: CCIX), Comforce (AMEX: CFS), Consolidated Communications (Nasdaq: CNSL), Digital Angel (Nasdaq: DIGA), Double Eagle Petroleum (Nasdaq: DBLE), E-House Holdings (NYSE: EJ), Elron Electronic (Nasdaq: ELRN), Endeavor Int'l (AMEX: END), Ener1 (Nasdaq: HEV), ENGlobal (NYSE: ENG), EPIX Pharma (Nasdaq: EPIX), FiberNet Telecom (Nasdaq: FTGX), FiberTower (Nasdaq: FTWR), Fisher Communications (Nasdaq: FSCI), Fushi Copperweld (Nasdaq: FSIN), GenVec (Nasdaq: GNVC), Global Partners (NYSE: GLP), Global Sources (Nasdaq: GSOL), Herley Industries (Nasdaq: HRLY), Hibbett Sports (Nasdaq: HIBB), HQ Sustainable Maritime (AMEX: HQS), IMAX (Nasdaq: IMAX), inContact (Nasdaq: SAAS), IncrediMail (Nasdaq: MAIL), Internap (Nasdaq: INAP), Interstate Hotels & Resorts (NYSE: IHR), Javelin Pharma (AMEX: JAV), Jones Soda (Nasdaq: JSDA), LIN TV (NYSE: TVL), LSB Industries (NYSE: LXU), Luxottica (NYSE: LUX), MSD, Inc. (NYSE: MDZ), Medifast (NYSE: MED), Meridian Resources (NYSE: TMR), Metalico (AMEX: MEA), Methode Electronics (NYSE: MEI), MTR Gaming (Nasdaq: MNTG), Nash Finch (Nasdaq: NAFC), Nevada Gold & Casinos (AMEX: UWN), NGAS Resources (Nasdaq: NGAS), NGP Capital Resources (Nasdaq: NGPC), NxStage Medical (Nasdaq: NXTM), Ocean Power Tech (Nasdaq: OPTT), Ocwen Fin'l (NYSE: OCN), Orthovita (Nasdaq: VITA), Pacific Sunwear (Nasdaq: PSUN), PowerSecure (Nasdaq: POWR), Primedia (NYSE: PRM), Princeton Review (Nasdaq: REVU), Provident Energy Trust (NYSE: PVX), QAD, Inc. (Nasdaq: QADI), RAM Energy (Nasdaq: RAME), Raven Industries (Nasdaq: RAVN), RenaSola (NYSE: SOL), Safeguard Scientific (NYSE: SFE), Salem Communications (Nasdaq: SALM), Shuffle Master (Nasdaq: SHFL), Simcere Pharma (NYSE: SCR), Smith & Wesson (Nasdaq: SWHC), Smithfield Foods (NYSE: SFD), STEC Inc. (Nasdaq: STEC), Stewart Enterprises (Nasdaq: STEI), Sunesis Pharma (Nasdaq: SNSS), Synta Pharma (Nasdaq: SNTA), TLC Vision (Nasdaq: TLCV), Transglobe Energy (Nasdaq: TGA), Trubion Pharma (Nasdaq: TRBN), Universal Display (Nasdaq: PANL), Vimpel Communications (NYSE: VIP), Wave Systems (Nasdaq: WAVX), Winland Electronics (AMEX: WEX), ZipRealty (Nasdaq: ZIPR) and Zumiez (Nasdaq: ZUMZ).

Friday

Friday will offer uncharacteristically heavy economic data this week. The Import Prices and International Trade data go hand in hand, and will be reported likewise at 8:30. Economists forecast import prices fell 0.8% on general commodity price decline. Prices fell 1.1% in January.

The Trade Deficit likely narrowed to $38.1 billion in February, compared against January's $39.9 billion mark. Global weakness is playing the key role here, as the world follows the U.S. into deep recession. I apologize for sounding like the Russian government with the wording of that statement. In case you have not noticed, Russia puts the blame for this global mess directly on the U.S. I wonder how things will be now that we have "reset" the relationship, and I wonder if Georgia feels like it's been made whole. "Reset" didn't give it Abkhazia nor North Ossetia back, and it still has Russian troops within its natural borders. We would like to see "reset" apply to Russia as much as it does to the U.S. and its allies. Shall we appease a wolf with a goodwill offering for the sake of a day, knowing full well he will return hungry again the next day?

Just before 10:00 a.m., look for Reuters/University of Michigan's Consumer Sentiment measure to have deteriorated slightly to 55.0, from 56.3 in February. The day's earnings schedule includes AEP Industries (Nasdaq: AEPI), Allianz SE (NYSE: AZ), Compass Diversified Holdings (Nasdaq: CODI), Eni SpA (NYSE: E), GeoMet (Nasdaq: GMET), Halozyme (Nasdaq: HALO), Hooper Holmes (AMEX: HH), Inhibitex (Nasdaq: INHX), Investors Real Estate (Nasdaq: IRET), NACCO Industries (NYSE: NC), NPS Pharmaceuticals (Nasdaq: NPSP), Piedmont Natural Gas (NYSE: PNY), Reis Inc. (Nasdaq: REIS) and Sun Communities (NYSE: SUI).


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).