Wall Street Greek: Week Ahead: Green Shoots or Shenanigans?

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Our latest copy of "The Week Ahead," carries a notable theme. Our study of the economic data and economists' forecasts offers interesting discovery. Economists seem unsure of the sustainability of recent "green shoots," or signs of economic life. We have taken note of consensus forecasts not far separated from recent economic results. This seems to imply that economists may fear premature green shoot sprouting that could die off at the first frost. In that case, the shoots could prove economic shenanigans.

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Week Ahead

Monday

Markets in the US were closed for Memorial Day, but they stayed open almost everywhere else, except in the UK. North Korea's first nuclear weapon detonation in three years sent most of Asia lower. However, Japan's NIKKEI 225 advanced after the Bank of Japan published its monthly economic report and noted the possibility for growth as early as this quarter. The BOJ said the recession may be almost over. Europe moved modestly higher on the day, likely benefiting from the good news emanating from the world's second largest economy.

Tuesday

Microsoft (Nasdaq: MSFT) will unveil its new Internet search engine at a digital technology conference thrown by the Wall Street Journal. We hear the new engine is going to be called, "bing." Is that as in bada bing? Whatever they call it, we expect it will prove a decent tech match up to Google (Nasdaq: GOOG). The problem is that stealing market share in search is not as easy as it use to be. Google has smartly embedded itself, pun intended. Microsoft is going to make a go of it anyway, reportedly via an expensive marketing campaign priced at $80-$100 million. That's about four times Google's total spend for 2008.

US business gets back to business on Tuesday morning. The S&P Case Shiller Home Price Index leads off the scheduled news flow at 9:00 a.m. The HPI measures the month of March this time around (June 1st is a week away)... In any event, we expect prices fell in March and the dinosaurs ruled the earth. Prices were down nearly 19% year-to-year, as of February. Still, imagine if all the news was three months old... Maybe we're currently engaged in war with North Korea and we don't even know it!

The Conference Board is set to release its latest reading of Consumer Confidence at 10:00 a.m. EDT. Consumers have gained courage as those notorious green shoots have sprouted about and stocks have born fruit. It helps to see your pension plan actually gained in value... Imagine what a gain in housing value might due for spending... When that happens, confidence will return to more normal levels. April's confidence metric jumped to 39.2 (not harrowing heights mind you), from 26.0 in March. Economists are looking for a further climb to 43.0 for May, according to Bloomberg's survey.

State Street's Investor Confidence Index is due for release at 10:00 as well. State Street (NYSE: STT) measures the actual levels of risk investors are carrying in their portfolios. A few months ago, holding stocks at all was akin to playing Russian roulette on the risk barometer. Last month, the measure jumped to 79.6, from 70.0.

The day's earnings schedule highlights news from Borders Group (NYSE: BGP), Canadian Solar (Nasdaq: CSIQ), Take-Two Interactive (Nasdaq: TTWO), Bank of Montreal (NYSE: BMO), Cellcom Israel (NYSE: CEL), China Mass Media (NYSE: CMM), Donaldson (NYSE: DCI), eLong (Nasdaq: LONG), LGL Group (AMEX: LGL), Origin Agritech Ltd (Nasdaq: SEED), Rediff.com (Nasdaq: REDF), Tata Communications (NYSE: TCL), Terremark Worldwide (Nasdaq: TMRK), Versant (Nasdaq: VSNT) and more.

Wednesday

The Bank of Japan will publish the minutes of its April policy meeting, and that news will greet you first thing on Wednesday morning. No matter what is said, Japan's just published economic report trumps this older information.

The International Council of Shopping Centers will push its weekly same-store sales report back a day due to the holiday. Based on last week's report, sales reverted to their old ways in the week ended May 16. It was an unfortunate result, after the data tracker had noted two consecutive weeks of year-over-year growth. Even so, last week's decline was just 0.3% on a year-to-year basis. The bottom seems to be in for weekly sales (based on a thumbnail sketch).

The Mortgage Bankers Association may report its data on Wednesday as usual (not 100% sure on this one). Otherwise, look for the Mortgage Activity Report on Thursday this week. For the last reported week of May 15, the MBA's Market Composite Index increased 2.3% on a seasonally adjusted basis. Higher refi activity was partly offset by lower purchase applications. The contract interest rate on contracted 30-year fixed rate loans fell by 7 basis points. There may be signs of life in real estate, but certainly not much living on the housing front.

April's Existing Home Sales Report is due at 10:00 a.m. The chart for existing sales resembles many others, and the common message seems to point toward stabilization. Bloomberg's survey of economists shows a consensus forecast for an annual pace of 4.67 million sales in April, matching against a rate of 4.57 million in March.

We expect the EIA's Petroleum Status Report will be pushed to Thursday at 10:00 AM. Jim Chanos, of short hedge fund fame, will key the Ira Sohn Research Conference in New York.

Sharp is scheduled to update shareholders on its mobile phone plans, while Sanyo releases its new digital camera lines. The EPS schedule highlights news from American Eagle (NYSE: AEO), AutoZone (NYSE: AZO), Brown Shoe (NYSE: BWS), Charming Shoppes (Nasdaq: CHRS), Chico's FAS (NYSE: CHS), Coldwater Creek (Nasdaq: CWTR), Cracker Barrel (Nasdaq: CBRL), Dollar Tree (Nasdaq: DLTR), DSW, Inc. (NYSE: DSW), Jo-Ann Stores (NYSE: JAS), Polo Ralph Lauren (NYSE: RL), Staples (Nasdaq: SPLS), Star Bulk Carriers (Nasdaq: SBLK), TIVO (Nasdaq: TIVO), Zale Corp. (NYSE: ZLC) and more.

Thursday

Markets will be closed in China, Hong Kong and Taiwan on Thursday - and maybe North Korea too, if the tiny nuissance continues to push the buttons of its massive neighbors. What would people trade in North Korea anyway... Kim Jong-Il trading cards and captive Japanese? The schedule is heavy here in the States. Two economic reports will greet investors before the market opens.

At 8:30, look for the Durable Goods Orders data for April. Bloomberg's consensus of economists forecasts flat order activity, following the -0.8% decline in March. Ex-Transportation, orders declined by 0.6%. No real surprises here, but another green shoot can never hurt. The market is seeking confirmation that early shoots have not been premature bloomers that will die off with the next frost.

Also at 8:30, the regular Weekly Jobless Claims data is due. There's been some moderation in the number, but jobs have continued going away persistently and at a troublesome pace. Bloomberg's consensus of economists is looking for this week's report to show 635K new benefits filers, which would compare against last week's 631K notation. We're working up to another harsh monthly Employment Situation Report next week. 9+% unemployment is a certainty.

At 10:00 a.m., look for the New Home Sales data for April. This data has also signaled stabilization of late, but there's not a scent of recovery yet. At least homebuilder sentiment has improved from suicidal to deep depression. Economists forecast the annual pace of sales could measure 360K in this latest check, compared to the March pace of 356K.

The EIA's Petroleum Status Report will probably be moved to Thursday from its usual Wednesday, and the Natural Gas Storage Report could go to Friday. Last week's Petroleum data showed a crude oil inventory draw of 2.1 million barrels. Oil had been on the rise anyway, but with a rare draw from storage, the black commodity had all the more reason for it. We surpassed the $60 mark on crude, but that's very likely due to its inverse relationship with the dollar and dollar softness.

At 5:45 p.m., Dallas Fed President Richard Fisher will address the Washington Association of Money Managers on the topic of the economic crisis. Keeping with Washington, President Obama will hook up with Palestinian Authority President Mahmoud Abbas on Thursday. "The Greek" sees the greatest risk regarding Obama and foreign policy as the man's honest nature. He does not seem capable of keeping a secret, and this may lead to an unfortunate loss of initiative to Iran.

Target's (NYSE: TGT) annual shareholders' meeting could get ugly with Bill Ackman's Pershing Square Capital seeking board seats. Heinz (NYSE: HNZ) will hold its analyst meeting, where it is expected to provide its outlook for fiscal 2010. The FDA may offer important findings on Johnson & Johnson's (NYSE: JNJ) computer-assisted sedation system that might help limit Anestesiologist error and maybe even malpractice, we speculate.

The earnings schedule highlights news from Costco (Nasdaq: COST), Dell (Nasdaq: DELL), Angeion (Nasdaq: ANGN), Arctic Cat (Nasdaq: ACAT), Bank of Nova Scotia (NYSE: BNS), Big Lots (NYSE: BIG), Canadien Imperial Bank of Commerce (NYSE: CM), Esterline Tech (NYSE: ESL), Fred's (Nasdaq: FRED), FreeSeas (Nasdaq: FREE), Frontline (NYSE: FRO), Genesco (NYSE: GCO), J. Crew (NYSE: JCG), Jackson Hewitt Tax Service (NYSE: JTX), Jamba Juice (Nasdaq: JMBA), Marvell Tech (Nasdaq: MRVL), Mentor Graphics (Nasdaq: MENT), Munro Muffler (Nasdaq: MNRO), Novell (Nasdaq: NOVL), Omnivision (Nasdaq: OVTI), Perry Ellis (Nasdaq: PERY), Sanderson Farms (Nasdaq: SAFM), Shoe Carnival (Nasdaq: SCVL), Sonic Solutions (Nasdaq: SNIC), Wet Seal (Nasdaq: WTSLA), Toronto Dominion (NYSE: TD), Trina Solar (NYSE: TSL) and more.

Friday

The first quarter GDP revision will headline the Friday morning news. Economists are looking for an improvement off the first reporting, to GDP contraction of 5.5% (6.1% first time around). Corporate Profits for Q1 will also be made available with the GDP data as usual.

At 9:45, the Institute for Supply Management-Chicago will report its Business Barometer Index. The Chicago area measure is expected to show modest improvement to 42.0, from 40.1 in April. A reading below 50 still signifies economic contraction, but before we heal, we must stop bleeding.

Look for the Reuters/University of Michigan Consumer Sentiment reading at 9:55. Again, economists seem unsure, forecasting a modest improvement for the confidence measure, to 68.0, from 67.9 at last check. Farm Prices are due for report at 3:00 p.m.

European Central Bank President (ECB) Jean-Claude Trichet will discuss the role of central banks in times of economic crisis. An FDA panel will review GlaxoSmithKline's (NYSE: GSK) leukemia drug Arzerra.

Friday's EPS schedule includes news from Tiffany (NYSE: TIF), Graham (AMEX: GHM), Madeco S.A. (NYSE: MAD), National Bank of Greece (NYSE: NBG), Royal Bank of Canada (NYSE: RY) and a few more.

On Saturday, Treasury Secretary Geithner heads to China, which should be real interesting considering his "currency manipulation" commentary. I just hope he does not take his laptop with...