Wall Street Greek: Week Ahead: EPS Season & Chain Store Sales Ahead

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The week ahead offers the formal beginning to the third quarter corporate earnings season. That said, very few reports will accompany Alcoa to the market stage. America's retailers will report chain store sales for the month of September as well. While August offered the first positive data since February, rising unemployment and tightening credit threaten to dampen spending in the months ahead.

Week Ahead: EPS Season & Chain Store Sales

Monday

There is only one economic report scheduled for Monday. ISM's Nonmanufacturing Index is due at 10:00 AM. Economists are looking for improvement in September's index to 50.0, from 48.4 reported in August. Still, a reading below 50 signifies economic contraction in the economy’s most important segment. Last week, ISM's Manufacturing Index showed improvement in the significantly smaller manufacturing segment of the US economy. Much of the expansion in manufacturing has been due to inventory restoration though, and that should dissipate in the months ahead.

New York Federal Reserve President Bill Dudley is set to speak Monday. The day also marks the European Commission deadline for the opposition to comment against Oracle’s (Nasdaq: ORCL) proposed acquisition of Sun Microsystems (Nasdaq: JAVA). Shareholders of Varian (Nasdaq: VARI) and Agilent (NYSE: A) are due to vote on the merger of the two, and the FDA reviews cancer drugs from Schering-Plough (NYSE: SGP) and GlaxoSmithKline (NYSE: GSK).

While the week marks the formal start to corporate earnings season, Monday's EPS schedule is relatively light. Look for reports from Peoples Educational Holdings, Inc. (Nasdaq: PEDH), Robbins & Myers (NYSE: RBN), RPM International (NYSE: RPM), Team Inc. (Nasdaq: TISI) and The Mosaic Company (NYSE: MOS). Chinese markets are closed through Thursday this week.

Tuesday

The annual meetings of the World Bank and International Monetary Fund (IMF) kick off in Constantinople on Tuesday. The IMF just raised its global growth forecast for 2010 to 3.1%, from 2.5% previously.

The House Financial Services Committee will discuss investor protection on Tuesday. Kansas City Fed President Thomas Hoenig is scheduled to speak to an economic forum in the early AM. Also look for the regular ICSC Weekly Same-Store Sales Report in the pre-market. Last week's data showed a 0.9% year-to-year gain and a 0.1% increase over the prior week's data.

SNL Financial and Sullivan & Cromwell will hold a bank M&A symposium Tuesday. Red Hat (NYSE: RHT) hosts a meeting with analysts, and the day's earnings schedule includes reports from AngioDynamics (Nasdaq: ANGO), Chattem (Nasdaq: CHTT), Pepsi Bottling Group (NYSE: PBG), Rocky Mountain Chocolate Factory (Nasdaq: RMCF) and Yum! Brands (NYSE: YUM).

Wednesday

The Mortgage Bankers Association's Weekly Applications Survey is due in the pre-market. Last week's release, measuring the week ending on September 25, offered somewhat troubling information. Despite a drop in contracted 30-year fixed rate mortgages to a rate of 4.94%, from 4.97%, the Market Composite Index slipped 2.8% on a seasonally adjusted basis. While the Refinance Index eased by 0.8%, Purchase Activity declined 6.2% from the prior week. We expect that the recent drop in confidence on the investor and consumer level (not to mention the usual economic troubles) played the key role in the fall.

The House Financial Services Committee takes up the topic of reforming the OTC derivatives market on Wednesday. Meanwhile, the European Commission will review Germany's plan to provide aid to automaker Opel. A hearing will be held in Manhattan regarding an agreement between Google (Nasdaq: GOOG) and US authors and publishers to digitize books.

According to Bloomberg's survey of economists, Consumer Credit is seen contracting another $8.5 billion in August, after declining by $21.6 billion in July, the worst ever recorded. Credit continues to contract, further restraining economic recovery. However natural this consequence is to the economic cycle, this time is a bit different considering the impact loose lending had in getting us here. For this reason, it may take quite a while before credit lending has opened back up to fluid levels.

The EIA's weekly oil inventory data is due at the usual 10:30 reporting time. Last week's report covering the period ending September 25, showed oil inventory levels had increased by 2.8 million barrels. Gasoline inventory decreased by 1.6 million barrels.

Wednesday's earnings news includes Acuity Brands (NYSE: AYI), Alcoa (NYSE: AA), Costco Wholesale (Nasdaq: COST), Family Dollar (NYSE: FDO), Helen of Troy (Nasdaq: HELE), Kayne Energy Consulting (NYSE: KED), Merix (Nasdaq: MERX), Monsanto (NYSE: MON), Premier Exhibitions (Nasdaq: PRXI), Richardson Electronics (Nasdaq: RELL), Ruby Tuesday (NYSE: RT) and Wolverine World Wide (NYSE: WWW).

Thursday

Retailers will report Chain Store Sales for September on Thursday. The individual reports from retailers will trickle in throughout the day, but not all retailers report this data the same day. In fact, the nation's most important retailer, Wal-Mart (NYSE: WMT), discontinued monthly data reporting a short time ago. Still, a great number of retailers will offer their monthly sales data on this day.

The European Central Bank (ECB) and Bank of England (BOE) are scheduled to meet and post their latest policy statements near simultaneously. Neither central bank is expected to make any major changes. Nonetheless, commentary from the ECB chief is widely followed and closely inspected, and therefore capable of moving the market even without a change in rates or other actions.

That busy House Financial Services Committee takes on credit card reform on Thursday. The delay in implementation of recent legislation offered banks opportunity to pressure clients into higher annual percentage rates or to close their accounts. And if you miss a payment on a closed account, good luck getting your rate back down from default levels. In other words, people are still getting raped by credit card issuers and managers despite the government's efforts to make things more fair. In the end, it will be harder for folks to get credit, and if they do, they will enter into agreements in unsavory fashion. So thanks for nothing Congress! We are still getting raped, just in a different way.

Weekly Initial Jobless Claims are due as usual at 8:30 AM. The claims count jumped 17K in the week ended September 26, to 551K. Economists are looking for 540K new claims filers this week. The four-week moving average stands at 548K.

The RBC Cash Index, a measure of consumer confidence and spending by households, is due up at 9:00 AM. September's reading showed index improvement to 40.0, from 37.5 in August, but closer inspection revealed a still troubled consumer view of the current situation. RBC noted last month that this coincides with cautious consumer spending, and given that expectations can change, the September gain may prove to offer faulty insight. There is no available forecast for October's reading, so you're on your own.

August Wholesale Trade data is due for release at 10:00 AM on Thursday. Barron's notes expectations for a 1.0% decrease in wholesale inventories, compared to the 1.4% draw in July. July's report showed sales growth of 0.5% contrasted against inventory draw, taking the inventory-to-sales ratio down to 1.23. While the ratio is representative of a much healthier state than its recent peak early this year, it is still far from pre-correction levels. In July 2008, the ratio stood at 1.13. The general view is that business caution will lead to an eventual business need to restock significantly, and that event will push GDP up sharply. However, such a boost is not sustainable, as true economic demand would be needed to keep growth going.

Several Fed speakers are due to address various audiences on Thursday. At 7:00 PM EDT, Chairman Bernanke will discuss the state of the Fed's balance sheet and other topics at the Fed's conference in Washington. Vice President Donald Kohn will address the group in DC as well, speaking to the topics of monetary policy research and the financial crisis. Richmond Fed President Lacker addresses the Council for Economic Education at 1:15 PM. Fed Board Governor Daniel Tarullo speaks to the "wake of the crisis" in a meeting in Phoenix, Arizona at 3:35. Kansas City Fed President Hoenig addresses a group in Oklahoma City at 8:45 PM. You might blow off everyone but Tarullo and Bernanke, and also try to catch Jim Rogers' discussion of commodities, as he addresses an ETF Securities conference on Thursday.

The EIA reports on Natural Gas storage on Thursday at 10:30. Last week's news showed a 64 Bcf increase in natural gas stocks. Storage stood both above the five-year average and above last year's mark, clearly due to slackened domestic demand on economic contraction. Electricity usage is down 5% this year!

Barnes & Noble (NYSE: BKS) will provide operations information to shareholders and the public on Thursday. The day's earnings schedule includes International Speedway (Nasdaq: ISCA), Marriott International (NYSE: MAR), Nu Horizons Electronic (Nasdaq: NUHC), Pacific Continental Corp. (Nasdaq: PCBK) and PepsiCo (NYSE: PEP).

Friday

The bond market closes early today ahead of the Columbus Day holiday (2 PM). Short sellers take note: Atlanta Fed President Dennis Lockhart takes on the topic at a confab. The International Trade Deficit is seen expanding in August, to $33 billion, from the $32 billion shortfall posted in July. Cash for Clunkers may have helped foreign car producers, as imports were led by the auto sector. The gap also expanded in June.

Friday's EPS reports include news from Cantel Medical (NYSE: CMN), Infosys Technologies (Nasdaq: INFY) and Tortoise Capital Resources (NYSE: TTO).