The Week Ahead: Rites of Spring, Baseball & Hope

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Welcomed rites of spring, baseball and hope seem to sprout simultaneously this week. The cherry blossoms are blooming here in New York City, bringing a special kind of beauty to the metropolitan streets. The lovely flowers last for just a week or so, and are a cherished treasure among neighborhood regulars.

The start of baseball season also warms the hearts of many an American male, "The Greek" included. And this year, with my Philadelphia Phillies set to receive their World Series rings, and fielding a young and talented team, hope is alive and well again in Philly town.

The Christian holiday of Easter also offers the faithful a special opportunity for spiritual renewal, with the holiday this Sunday for Western Christians. So with all these new beginnings, we cannot help but be hopeful for the economy and financial markets as well. Last week's G-20 meeting, and even the NATO summit, offered hope that global goodwill had returned in earnest, led in the door by one President Barack Obama.

It seems this will be perhaps the most appreciated spring renewal season in decades. We are sure that after the great loss of wealth (and jobs for many), the important things in life have risen into focus. Finally maybe, we have good reason to really take a moment and smell the roses of life.

(Relative Tickers: DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, MOS, AA, BBBY, AZN, STZ, FDO, CVX, CBK, JOSB, CBY, WDFC, PBY)

The Week Ahead

The market week ahead is a quiet one on the economic front, but launches the first quarter earnings season. Still, it will offer a refreshingly tranquil schedule of market-moving events. That's not to say something might not come up to shake the slate and drive the investor herd in one direction or another.

The schedule highlights the reporting of chain store sales data from individual retailers. This data precedes the monthly reporting of retail sales in aggregate, scheduled for next week. The Federal Reserve will release the minutes of its March policy meeting this week and the SEC will review the "uptick rule" for shorting securities. Finally on Western Christianity's Good Friday, the reporting of the Treasury Budget will very likely garner great attention, especially with the President's budget likely being passed into law shortly.

Monday

Markets in China, the Philippines, Thailand and Vietnam are closed on Monday, and American markets might as well be. The economic slate is blank and the earnings schedule is light. Federal Reserve Governor Kevin Warsh will address the topics of the markets and economy. Also, SEC Chairperson Mary Schapiro will speak at the two-day spring meeting of the Council of Institutional Investors.

The earnings schedule includes reports from Apogee Enterprises (Nasdaq: APOG), Brightpoint (Nasdaq: CELL), C&D Technologies (NYSE: CHP), Immucor (Nasdaq: BLUD), Jos. A. Bank Clothiers (Nasdaq: JOSB), Kayne Anderson Energy Development (NYSE: KED), NATCO Group (NYSE: NTG) and a few more.

Tuesday

The market will be greeted by news from overseas Tuesday morning. The Bank of Japan meets to set monetary policy, but with its target rate at just 0.1%, not much can come of it. That is, unless Japan is prepared to take the same kind of "unconventional measures" the ECB hinted at last week. Other central banks are actively considering the types of steps our trend setting Federal Reserve has instituted, though some would call them violations of constitutional law. The Reserve Bank of Australia is also scheduled to set monetary policy, and a rate cut is expected from the ROB.

Last week's same-store sales data offered a promise of springtime growth. We suspect inspired by the warmth of the sun, sales rose 1.1% on a weekly basis at last check. What's better is that the year-to-year comparison, which faces a greater challenge, showed only a 0.2% decline. As the flowers bloom, we suspect a sort of false euphoria might steady sales for a short span, at least through Easter. At the same time, the government has changed its tune to a positive inspirational note, versus a previously perhaps overly dramatic melody. The private sector is also responding with creative marketing aimed at bringing the frightened, but still employed, into stores. See our article from last week for more on this "American Ingenuity."

At 3:00 p.m., look for the reporting of the February change in Consumer Credit. In the wake of easy credit, consumer credit levels had contracted three months in a row through December. Still, last month offered renewed expansion, and hopes are pinned on the banking industry's return to normalized lending. We may be years away from that, but an improvement would be expected as the months pass and memories wear thin... that's not to mention all the government efforts to free up the banks to lend.

Earnings season formally begins, or at least traditionally begins with the report from Alcoa (NYSE: AA), which is due Tuesday. The rest of the schedule includes Bed Bath & Beyond (Nasdaq: BBBY), Chattem (Nasdaq: CHTT), International Speedway (Nasdaq: ISCA), Landec (Nasdaq: LNDC), Mitcham Industries (Nasdaq: MIND), Pier 1 Imports (NYSE: PIR), Resources Global Professionals (Nasdaq: RECN), Ruby Tuesday (NYSE: RT), The Mosaic Company (NYSE: MOS) and a few others.

Wednesday

This is the day the SEC will consider re-instituting the "uptick rule." It prevents short sellers from piling on a short trade and swiftly driving a security into oblivion. If instituted, short sellers would only be able to short a stock after it trades higher. Keeping with regulation and regulators, the Federal Reserve will release its March meeting minutes at 2:00 p.m. This should be interesting because the March meeting was the one where the Fed introduced "quantitative easing" to the economic game plan.

The Mortgage Bankers Association reporting of mortgage activity should be the first scheduled market driver Wednesday with its release on the premarket wire. Last week showed only modest improvement over the week just prior, which was the one that included the market-moving quantitative easing announcement. This data is rate sensitive and driven by refinancing activity these days, since housing is still down in the dumps. 30-year fixed rate mortgages are higher today then they were last week, so reading into that, expect deterioration in the weekly change.

At 10:00 a.m., the Wholesale Trade Report is expected to show inventories contracted by 0.6%. As always, what matters more is how inventories compare to sales. The inventory-to-sales ratio at both the wholesale and business level has deteriorated over recent months, which runs counter to the long-term trend reflecting technological efficiencies. We expect further deterioration for the ratio in the reporting February period.

At 10:30, the weekly Petroleum Status Report is up again. Oil prices have been volatile of late, as bulls bet on global demand renewal and inflation effects, and bears bet on more demand deterioration and OPEC quota skimming. Neither side of the trade has conviction just yet, but the bulls have had more sway over the past couple months.

Overseas, the Bank of Thailand is expected to cut rates by a quarter point or more. The FDA considers expanding uses for AstraZeneca's (NYSE: AZN) Seroquel. The earnings slate includes news from Constellation Brands (NYSE: STZ), Mosaic (NYSE: MOS), Excel Maritime Carriers (NYSE: EXM), Family Dollar (NYSE: FDO), Global Crossing (Nasdaq: GLBC), Merix (Nasdaq: MERX), Richardson Electronics (Nasdaq: RELL), RPM Int'l (NYSE: RPM), Shaw Communications (NYSE: SJR), Shaw Group (NYSE: SGR), Standard Microsystems (Nasdaq: SMSC), Greenbrier Cos. (NYSE: GBX), Tortoise Capital Resources (NYSE: TTO) and WD-40 (Nasdaq: WDFC).

Thursday

With Good Friday pending, Thursday gets packed full of reports to close out the week. Individual retailers will report chain store sales for March mostly on Thursday, with a few early reporters on Wednesday and late posters Friday and next week. This data is closely watched, and the International Council of Shopping Centers and others post aggregate data around this time for the month as well. The Retail Sales Report, published by the government, will be available next week.

Overseas, the Bank of England and Bank of Korea are both expected to hold rates steady this time around. Markets will be closed in Mexico and the Philippines for Holy Thursday, and the U.S. bond market closes at 2 p.m.

Look for the regular Weekly Jobless Claims data at 8:30 to garner much attention. Market watchers will want to see claims change direction, offering hope the pace of unemployment rise might start to steady. However, we do not see this likely just yet. With earnings reports, companies are more likely to report plant closings and employee cuts, so April could prove important in announced layoffs (and dare I say provide the peak job loss rate, though not peak unemployment). Last week's report showed claims rose by 12,000, to 669K.

We couldn't read into a slight decrease, should it occur this week, as the most recent rate of loss was simply harsh. In fact, a slight weekly improvement in new claims filers might still produce an increase in the four-week moving average.

Look for the International Trade Report and Import/Export Price data at 8:30. The Trade Deficit is expected to have expanded by a half-billion in February, to $36.5 billion. The importance of the American consumption economy has been clearly apparent in the narrowing deficit. Exports have declined, but imports have fallen at a faster rate, which clearly illustrates the manufacturing/consumption aspects of the U.S. economy. Clearly, we export less than developing nations (on a proportional basis), and as a wealthy nation, we also consume more than the rest as well. Therefore, in a contracting global economic marketplace, our deficit narrows due to the greater importance of consumption. This time around though, imports should find benefit from higher February petroleum prices. Import prices are seen having risen by 09.% in March (report also at 8:30), after a 0.2% drop in February. Petroleum prices rose 3.9% in February though, and represent an important trade driver. Again, this is why the deficit may expand for February.

The RBC Cash Index is due at 9:00 a.m. The index recovered from a dramatic rock bottom low of 1.6 in February, to reach a still dire 8.2 level last month. The index reflects consumer attitudes and spending by households. We expect it will show further improvement on Thursday, and at the same time reflect historically low confidence. The EIA produces its Natural Gas Report each Thursday at 10:30. The Fed's Gary Stern and Thomas Hoenig are scheduled to speak, along with National Economic Council Director Lawrence Summers. We note these public speaking engagements because of the potential for market-moving commentary.

The day's earnings schedule includes reports from Chevron (NYSE: CVX), Christopher & Banks (NYSE: CBK), Jos. A. Banks Clothiers (Nasdaq: JOSB), A-Power Energy Generation (Nasdaq: APWR), Adams Express (NYSE: ADX), CardioDynamics (Nasdaq: CDIC), FCStone Group (Nasdaq: FCSX), Franklin Covey (NYSE: FC), Matrix Service (Nasdaq: MTRX), Movado (NYSE: MOV), Northfield Labs (Nasdaq: NFLD), Penford (Nasdaq: PENX), Pep Boys (NYSE: PBY), Sinovac Biotech (AMEX: SVA), Streamline Health Solutions (Nasdaq: STRM) and Zep, Inc. (NYSE: ZEP).

Friday

Western Christianity's Good Friday will close major markets from the United States to Australia, Canada, Hong Kong, India, Singapore and more. Eastern Orthodox Christians will remember this defining period for Christianity one week later this year.

Despite the widely held holiday, the American federal government expects to post Treasury Budget data for March at 2:00 p.m. In past years, March has offered deficit expansion, and we expect this year will be no different. With tons of bailout dough being dished out, economists expect the deficit will expand by $150.0 in March. That will compare against the 10-year average of $57.1 billion for the month.

The International Energy Agency will publish its Monthly Oil Market Report Friday. The earnings schedule looks to include a handful of foreign firms. Enjoy your Easter weekend, and please take a moment to smell the sprouting flowers and remember what's really important in this life.


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