Wall Street Greek: This Week: Banks Stress Test & Jobs Data

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This Week - Banks Stress Test & Jobs Data

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Wednesday

Wednesday begins the monthly parade of labor market data. First thing in the morning, look for Challenger, Gray & Christmas' report on announced corporate layoffs. The pace of attrition has eased some over the past two months. A series of economic data points offering not as bad as recent information have allowed the market to look ahead with better clarity, toward at least stabilization and possibly economic recovery. Challenger's corporate layoff tally summed to 150,411 in March.

ADP's Private Employment Report is also due in the premarket. ADP's data is relevant because it precedes the Labor Department's market-moving jobs report by two days. Otherwise, it also holds informational value for economists to incorporate in their forecasting efforts. Last month's report showed a nonfarm payroll decrease of 742K jobs. Last month's Labor Department tally, however, reached 663K. This is yet another occasion of imperfect approximation. You cannot rely on the ADP data to perfectly forecast the overall data from the government (includes public jobs and other factors), however, both reports can prove equally market-moving on either day.

The Mortgage Bankers Association's weekly reporting of mortgage activity rounds out the premarket chatter. Last week's mortgage activity report showed a dramatic 18.1% decrease in the market composite index; the decrease came despite an 11 basis point drop in the average contracted rate on 30-year fixed rate mortgages. The Refinance Index curiously led the decline, falling 21.9%.

President Obama has a duo of very interesting meetings planned for the day. He'll receive the presidents of Afghanistan and Pakistan at what is a very noteworthy point in each nation's history. The Swat Valley in Pakistan is witnessing the exodus of some 500K refugees thanks to a battle between Pakistani troops and extremists (or a pending battle). Currently, Pakistani troops have only engaged fringe forces, while the Swat Valley proper is under a "live and let live" rule. The President is expected to express concern about the safety of Pakistan's nuclear missile stockpile and the security of its government given this insurgency.

At 9:00, Minneapolis Fed President Gary Stern testifies before the Senate Banking Committee. The House Financial Services Committee hears debate on the authority to close troubled institutions. Senator John Kerry chairs a hearing on a bill that would allow newspapers to restructure as non-profits.

The EIA Petroleum Status report is due at 10:30. Last week's report showed crude inventory increased by 4.1 million barrels. Finally, Norway's central bank is expected to cut rates by 50 BPS. After the market's close, around 5:30 EDT, San Francisco Fed President Janet Yellen addresses an Australian Business Economists meeting in Sidney.

The day's earnings reports include Agrium (NYSE: AGU), Anadarko Petroleum (NYSE: APC), Aqua America (NYSE: WTR), Avis Budget (NYSE: CAR), Biovail (NYSE: BVF), BNP Paribas (PNB.PA), Boston Beer (NYSE: SAM), Boyd Gaming (NYSE: BYD), Brink's Home Security (NYSE: CFL), Brookdale Senior Living (NYSE: BKD), Career Education (Nasdaq: CECO), Churchill Downs (Nasdaq: CHDN), Cisco Systems (Nasdaq: CSCO), Cooper Tire (NYSE: CTB), Devon Energy (NYSE: DVN), Diana Shipping (NYSE: DSX), Eagle Bulk Shipping (Nasdaq: EGLE), Fortress Investment Group (NYSE: FIG), Foster Wheeler (Nasdaq: FWLT), Garmin (Nasdaq: GRMN), Global Cash Access (NYSE: GCA), Golden Star Resources (AMEX: GSS), Goodrich Petroleum (NYSE: GDP), Marsh & McLennan (NYSE: MMC), Morton's Restaurant (NYSE: MRT), News Corp. (NYSE: NWS), Petrobras (NYSE: PZE), PG&E (NYSE: PCG), Pioneer Natural Resources (NYSE: PXD), Quality Distribution (Nasdaq: QLTY), Sunoco (NYSE: SUN), Symantec (Nasdaq: SYMC), TBS Int'l (Nasdaq: TBSI), Tesoro (NYSE: TSO), TETRA Tech (NYSE: TTI), The Blackstone Group (NYSE: BX), THQ (Nasdaq: THQI), Total (NYSE: TOT), Transocean (NYSE: RIG), TRW Auto (NYSE: TRW), U.S. Cellular (NYSE: USM), XTO Energy and more.

Thursday

After much ado, the Federal Reserve will release the results of its bank stress test on Thursday. The nation's 19 largest banks will likely not react in concert on this particular day. Also, the Fed Chairman and FDIC Chair Sheila Bair will be in Chicago speaking about bank structure. You get the picture... there will be a lot of discussion about banks and related topics this week. It's in the news and on the tip of everyone's tongue.

The European Central Bank (ECB) is expected to cut rates in the euro zone by a quarter point on Thursday and offer more information on "nonstandard measures." The Bank of England (BOE) will also report its monetary policy, with no rate change expected.

The job data party continues on Thursday morning with the weekly claims and Monster Worldwide (NYSE: MWW) reports. Weekly jobless claims seem to have topped and started moderating over recent weeks. At 631K last week, the flow rate of job loss is still high, and it's hard to determine whether we've actually topped out yet. However, the market has grown enthused with the change in pace. The market is a perception mechanism sensitive to change, and it finally has reason to perceive at least an end to economic deterioration. Economists are reportedly forecasting weekly claims of 635K this time around, according to Bloomberg's survey. The Monster Employment Index dropped to 118 for March, indicating online job opportunities were scarcer than recent months. The index read 167 one year prior.

First quarter Productivity and Costs are due for reporting at 8:30 a.m. on Thursday. Fourth quarter results showed Nonfarm Productivity fell 0.4%, while Unit Labor Costs rose 5.7%. As firms cut production faster than employees, unit labor costs can rise. You can bet on one thing, the people holding on to their jobs are working very hard to do so. I wonder if unions will rekindle the interest of employees under such conditions. The economists' consensus sees no change in productivity and a 3.4% increase in unit labor costs this time around.

Chain Store Sales for the month of April will begin trickling out of individual retailers on Thursday (some earlier and a few later). Consumers are a different animal than investors, segregated into two lots. Employed consumers are likely to gain enthusiasm from a clearer economic outlook, while the growing unemployed and under-employed base is likely to spend less. We have a tug of war going on between the two groups, and we'll get an idea about which one is carrying more weight with the April sales data. Another sentiment measure, the RBC Cash Index will help toward that end as well. It's due for release at 9:00 a.m. and stood at 38.3 in April (versus 8.2 in March).

The regular Natural Gas Report is due at 10:30, measuring the supply of Nat Gas. The Consumer Credit Report for the month of March is due at 3:00 p.m. on Thursday. Consumer Credit is expected to fall by $4.0 billion after shedding $7.4 billion in the prior month.

The day's earnings schedule includes Adaptec (Nasdaq: ADPT), Alliant Techsystems (NYSE: ATK), AmBev (NYSE: ABV), American Int'l Group (NYSE: AIG), Ansys (Nasdaq: ANSS), Banco de Chile (NYSE: BCH), Bebe Stores (Nasdaq: BEBE), Blue Nile (Nasdaq: NILE), Brooks Automation (Nasdaq: BRKS), Cablevision (NYSE: CVC), California Pizza Kitchen (Nasdaq: CPKI), CBS Corp. (NYSE: CBS), Checkpoint Systems (NYSE: CKP), Cinemark (NYSE: CNK), Coinstar (Nasdaq: CSTR), Corrections Corp. of America (NYSE: CXW), Crocs (Nasdaq: CROX), Deutsche Telekom (NYSE: DT), Elizabeth Arden (Nasdaq: RDEN), Furniture Brands (NYSE: FBN), General Motors (NYSE: GM), Genworth Fin'l (NYSE: GNW), GNC Corp. (NYSE: GNC), GSI Technology (Nasdaq: GSIT), Hansen Natural (Nasdaq: HANS), Hellenic Telecommuncations (NYSE: OTE), Holly Corp. (NYSE: HOC), Imperial Sugar (Nasdaq: IPSU), Jones Soda (Nasdaq: JSDA), Koppers (NYSE: KOP), Medicis (NYSE: MRX), Midas (NYSE: MDS), Millipore (NYSE: MIL), Novatel (Nasdaq: NVTL), NVIDIA (Nasdaq: NVDA), Oil States Int'l (NYSE: OIS), Public Storage (NYSE: PSA), ResCare (Nasdaq: RSCR), ResMed (NYSE: RMD), Sara Lee (NYSE: SLE), Service Corp. (NYSE: SCI), Societe Generale (GLE.PA), Sotheby's (NYSE: BID), Allstate (NYSE: ALL), DirectTV Group (NYSE: DTV), Hanover Insurance (NYSE: THG), NASDAQ OMX (Nasdaq: NDAQ), Thomson Reuters (NYSE: TRI), U.S. Physical Therapy (Nasdaq: USPH), Unilever (NYSE: UL), Warner Music (NYSE: WMG), Watson Wyatt (NYSE: WW), Wendy's (NYSE: WEN) and more.

Friday

The monthly Employment Situation Report is due on Friday morning at 8:30. Bloomberg's tally sees 630K Nonfarm Payrolls lost in April, versus 663K in March. The expected slide in pace of job losses has been and will be viewed positively, but unemployment is expect to continue higher, to 8.9% (from 8.5%). While less companies may be firing folks, most are not hiring just yet, which pressures the rate.

The Wholesale Trade Report is also due on Friday, and we'll pay closest attention to the inventory-to-sales ratio. It improved to 1.31 in February, and further improvement would indicate that sales have steadied and/or that wholesalers have a grip on inventories now. Richmond Fed President Lacker gives a keynote address on Friday at 1:00 p.m., and we note it here as the last potentially market-moving event of the week.

On Saturday, however, central bankers from around the world meet, so cancel that picnic. Friday's earnings schedule includes Toyota Motor (NYSE: TM), Arbor Reality Trust (NYSE: ABR), Beacon Roofing Supply (Nasdaq: BECN), Beazer Homes (NYSE: BCH), Calpine (NYSE: CPN), Constellation Energy (NYSE: CEP), Edison Int'l (NYSE: EIX), El Paso (NYSE: EP), Gartner (NYSE: IT), Huntsman (NYSE: HUN), Johnson Outdoors (Nasdaq: JOUT), Liberty Media (Nasdaq: LINTA), Nanophase Tech (Nasdaq: NANX), Natural Gas Services (NYSE: NGS), Novavax (Nasdaq: NVAX), Repsol (NYSE: REP), Sunrise Senior Living (NYSE: SRZ), U.S. Global Investors (Nasdaq: GROW), Westar Energy (NYSE: WR) and more.