Wall Street Greek: Week Ahead - Paranormal Activity

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Paranormal Activity

Paranormal activity (not the film whose trailer can be found here) drove the dollar down last week, and lifted gold to great heights. A rumor surfaced that a group of conspicuous Uncle Sam haters were conspiring to shift away from the dollar, for the valuing of petroleum for starters, to a new currency whose value would be based on a pool of securities including the yen, yuan, euro and gold. We suspect there's some truth to the rumor, given the constant mumbling from the Far East on the need for another option beyond the dollar. Our old buddy Iran has been suggesting such a change for years now, and Russia might not mind dealing with a destabilized America instead of the domiNATION it currently finds across the table. Still, an abrupt shift would hurt China, our codependent country companion. Thus, the rumors were denied and quelled quickly, the dollar recovered some lost ground and the paranormal activity was explained as just the blowing of the wind.

Week Ahead

Monday

Barring any significant foreign breaking news, the only apparent market-moving factor on the day's schedule is an appearance by the Treasury Secretary. Messenger Geithner will key a meeting of the National Association for Business Economics (NABE) in St. Louis. He may have something interesting to say too, given last week's dollar doldrums.

Just like the vikings would have liked it, the stock markets are open in the U.S. on Columbus Day, while government offices and fixed income markets stay shut. Markets will be closed in the Canada, Brazil, Chile and Japan Monday.

Keeping the almost-a-holiday in mind, no economic data is set for release and very few companies are scheduled to report earnings. The EPS slate includes Charles Schwab (Nasdaq: SCHW), Fastenal (Nasdaq: FAST) and a few others.

Tuesday

Expect the Tuesday discovery of a larger than planned Treasury Budget deficit in September, and for the full fiscal year of 2009, which ended in September. While the month usually produces a surplus, economists forecast this September will show a monthly deficit of $67 billion. That would take the full year deficit to over $1.4 trillion, and would surely be the talk of the town when reported at 2:00 p.m. Tuesday.

The Senate Finance Committee is supposed to vote on a health care bill Tuesday. Council of Economic Advisers Chair Christina Romer addresses the NABE conference at 7:30 a.m. (we assume that's Central Time). At noon, Federal Reserve Vice Chairman Donald Kohn takes over the podium at the NABE confab. Also, New York Fed President Bill Dudley addresses bankers at a separate conference at 1:15 p.m.

Weekly Same-Store Sales are due at the usual reporting time of 7:45 a.m. The International Council of Shopping Centers (ICSC) - Goldman Sachs (NYSE: GS) reported last week that September's Same-Store Sales increased by 0.1%. Weekly sales were reported up 0.3% sequentially and 1.0% over the prior year tally.

The National Federation of Independent Business' sentiment index for September is due, but we do not have any forecast to share. Also, Integrated Asset Services will produce its August house-price index.

Proctor & Gamble (NYSE: PG) is due to update investors, and Intel (Nasdaq: INTC) keys the earnings slate. The full EPS schedule includes news from Audiovox (Nasdaq: VOXX), Bank of the Ozarks (Nasdaq: OZRK), CSX Corp. (NYSE: CSX), Domino's (NYSE: DPZ), Exfo Electro-Optical Engineering (Nasdaq: EXFO), Johnson & Johnson (NYSE: JNJ), KMG Chemicals (Nasdaq: KMGB), Linear Technology (Nasdaq: LLTC), NovaGold Resources (AMEX: NG) and a few others.

Wednesday

A week after Australia's central bank raised its key rate by a quarter point, the Bank of Japan is expected to decide to keep its rate steady.

If the market was ecstatic to hear September Chain Store Sales improved, how will it handle a Retail Sales Report (8:30 AM) for the same month that is expected to show a 2.1% decline? Before you answer, if we remove the clunker-driven auto sector impact from the monthly change from August, September sales are seen rising by 0.3%. The big reason for the difference of course is the result of the conclusion of "cash for clunkers." Generally speaking, sales should have benefited from the same late Labor Day factor we attributed to the Retail Chain Store Sales gain reported last week.

In the premarket, look for the Mortgage Bankers Association to produce its Weekly Application Survey. Last week's publishing showed activity improved sharply, with the Market Composite Index up 16.4% on a seasonally adjusted basis. The MBA attributed the big gain to a sustained low fixed mortgage rate, with the average contracted 30-year fixed rate mortgage locked in at 4.89%, versus 4.94% the week before. We, however, suspect another culprit behind the activity, which we hope to share with you in a separate article soon. The Purchase Index improved 13.2% last week, while the Refinance Index improved by 18.2%.

Business Inventories are due up at 10:00 AM, and after draws from Wholesale and Factory level inventories, a similar draw is expected in the August Business Inventory count. Economists are forecasting a draw of 0.9%, versus the 1.0% pull in July. Import and Export Prices are also due to be reported on Wednesday. August export prices rose 0.7%, while imports increased 2.0%. Keep in mind that petroleum prices often play havoc with this data.

In Washington, the Senate Banking Committee convenes to hear testimony on the state of banking. The House Financial Services group will simultaneously meet to discuss derivatives and consumer protection legislation. The Federal Open Market Committee meeting minutes release for the September meeting will be published at 2:00 PM. While no rate change was announced in September, the minutes may offer more insight into the Fed's plans for the months ahead.

An FDA panel reviews Amaya, a multiple-sclerosis drug in development by Acorda Therapeutics (Nasdaq: ACOR). The day's EPS schedule includes reports from J.P. Morgan Chase (NYSE: JPM), Abbott Laboratories (NYSE: ABT), Acergy (Nasdaq: ACGY), Adtran (Nasdaq: ADTN), AptarGroup (NYSE: ATR), ASML Holdings (Nasdaq: ASML), Commerce Bancshares (Nasdaq: CBSH), Crown Holdings (NYSE: CCK), Datalink (Nasdaq: DTLK), HDFC Bank (NYSE: HDB), Host Hotels & Resorts (NYSE: HST), Landstar (Nasdaq: LSTR), Lufkin Industries (Nasdaq: LUFK), MEDTOX Scientific (Nasdaq: MTOX), POSCO (NYSE: PKX), PURE Bioscience (Nasdaq: PURE), Spartan Stores (Nasdaq: SPTN), Stanley Furniture (Nasdaq: STLY), W.W. Grainger (NYSE: GWW), WD-40 (Nasdaq: WDFC), Westamerica Bancorporation (Nasdaq: WABC), Xilinx (Nasdaq: XLNX) and Zep, Inc. (NYSE: ZEP).

Thursday

Look for September's Consumer Price Index (CPI) at 8:30 a.m. Headline CPI jumped 0.4% in August, mostly due to higher petroleum prices. Core CPI, excluding food and energy price change, increased 0.1%. Economists see the Core Index again moving 0.1% higher, with the headline CPI figure also inching just 0.1% in September due to moderated distillate prices.

Weekly Jobless Claims are also due for release at 8:30. Last week's tally produced a 33K drop to a level of job loss not seen since January (though still high enough). Bloomberg's consensus of economists sees this week's report showing 520K new claims filers, versus the 521K reported the week before.

The manufacturing surveys out of the New York and Philadelphia regions are due the same day this month. The Empire State Manufacturing Survey's General Business Conditions Index is seen measuring 17.5, versus the 18.88 level measured in September. The Philadelphia Fed Survey's General Business Conditions Index is expected to mark 12.5 in October, compared against the 14.1 level seen in September.

The EIA Natural Gas Report is due at 10:30. Last week's report showed a net increase of natural gas reserves of 69 Bcf. EIA's Petroleum Status Report is due at 11:00 a.m. Thursday, instead of Wednesday, due to the holiday. Last week's oil inventory report showed a draw of 1.0 million barrels.

Jean-Claude Trichet is scheduled to speak on the lessons of the crisis. The Fed reports on the state of its balance sheet at 4:30. US citizens have until today to report and receive amnesty for any taxes they have evaded via foreign bank tax haven vehicles.

The EPS schedule includes news from Advanced Micro Devices (NYSE: AMD), Amphenol (NYSE: APH), Baxter Int'l (NYSE: BAX), Citigroup (NYSE: C), Cubist Pharmaceuticals (Nasdaq: CBST), Cypress Semiconductor (NYSE: CY), Cytec Industries (NYSE: CYT), Fairchild Semiconductor (NYSE: FCS), Fidelity Southern (Nasdaq: LION), Goldman Sachs (NYSE: GS), Google (Nasdaq: GOOG), Harley-Davidson (NYSE: HOG), Herley Industries (Nasdaq: HRLY), Home Bancshares (Nasdaq: HOMB), International Business Machines (NYSE: IBM), Joe's Jeans (Nasdaq: JOEZ), Knoll Inc. (NYSE: KNL), LG Display Co. (NYSE: LPL), Luby's (NYSE: LUB), Navisite (Nasdaq: NAVI), Nokia (NYSE: NOK), Omniture (Nasdaq: OMTR), People's United Financial (Nasdaq: PBCT), Polaris (NYSE: PII), Polycom (Nasdaq: PLCM), PPG Industries (NYSE: PPG), Safeway (NYSE: SWY), Simmons First National (Nasdaq: SFNC), Southwest Airlines (NYSE: LUV), Spartan Motors (Nasdaq: SPAR), Tempur Pedic (NYSE: TPX), The McClatchy Co. (NYSE: MNI), Ultratech (Nasdaq: UTEK), Umpqua Holdings (Nasdaq: UMPQ), Universal Forest Products (Nasdaq: UFPI), Valmont (NYSE: VMI) and Winnebago (NYSE: WGO).

Friday

The Treasury International Capital Report is due at 9:00 a.m. Affectionately called the TIC Report, this data offers insight into foreign capital flows into US investment securities, and visa versa.

At 9:15, look for September's Industrial Production data. Bloomberg's consensus sees production increasing 0.2%, versus the August increase of 0.8%. Capacity Utilization is expected to hold steady at 69.6%. At 9:55, the Reuters/University of Michigan Consumer Sentiment Index is expected to improve to 74.0 in its latest check, versus the 73.5 measure at last check.

At 10:15, Dallas Federal Reserve President Fisher is scheduled to speak to the role of globalization in the financial crisis. The EPS schedule includes General Electric (NYSE: GE), Bank of America (NYSE: BAC), A.O. Smith (NYSE: AOS), First Horizon National (NYSE: FHN), Genuine Parts (NYSE: GPC), Halliburton (NYSE: HAL), Mattel (NYSE: MAT), Prosperity Bancshares (Nasdaq: PRSP), Sensient Technologies (NYSE: SXT), Sify Limited (Nasdaq: SIFY) and a few others..