This Week: PPI, LEI & Retailers' EPS Key

This week, the market should key on the earnings and conference calls of the nation's retailers. There should be a good sense of how back-to-school season is shaping up, and hopefully we will get an honest take from reporters like Wal-Mart, Aeropostale, The Gap, and others. On the economic slate, investors should take note of the Producer Price Index for signs of deflation and Leading Economic Indicators for signs of default!

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This Week: PPI, LEI & Retailers' EPS Key

We covered Monday's reports in an earlier article found here.

Tuesday

Your Tuesday will be just as busy as the day before, with five economic reports scheduled for before the market opens.

The International Council of Shopping Centers (ICSC) report follows last week's soft monthly retail sales data. Last week's weekly same-store sales data covering the period ended August 7 showed sales fell 0.2% week-to-week. Sales were still 3.7% higher than last year's very low activity. We expect more of the same this week, though, back-to-school season is beginning. Last week's Redbook data, which will also be released again Tuesday morning, showed 3.0% sales growth year-to-year in last week's check.

There could be a slight increase in July's Housing Starts, as Building Permits edged higher in June. Whatever happens, we're not looking for a significant and market stimulating data-point here. The economists' consensus forecast is set at an annual pace of 565 million. That would compare against June's sales pace of 549 million, which was down 5% from May's collapsed level.

Last week, we received consumer price data that showed a slight 0.1% increase in the Core CPI, which excludes volatile food and energy prices. The data worked counter to deflation concerns, but we should see change on the producer level before the consumer metric, especially in today's marketplace where large marketers enjoy economies of scale and can pressure producers. Economists see the Producer Price Index (PPI) for the month of July increasing 0.2% (like the CPI) and the Core PPI rising 0.1% (again like CPI). A lower number is possible here and could shake the market up a bit Tuesday morning. You've been warned.

Productivity data disappointed investors at last quarterly check, and Tuesday brings another look at more recent information. The Industrial Production and Capacity Utilization data are due for release at 9:15 AM. Economists see July's report showing a 0.6% increase in industrial production, after June only marked a 0.1% gain. When production goes up, so does capacity utilization. Economists expect Capacity Utilization to improve to 74.5%, from an unchanged June mark of 74.1%. Once again, we think economists forgot to adjust their numbers due to beach time. I've been to the beach once in three years, because I work for you.

The Conference Board's check up of China's Leading Economic Index shook up stocks in June. That report covered the month of April, and May's data showed a 0.8% increase to an index mark of 145.8. Tuesday offers the Board's check for June, and will be closely followed by investors.

The US Treasury and Housing Department will have a forum including PIMCO's Bill Gross, within which they will work on ideas for the futures of Fannie Mae (OTC: FNMAS.OB) and Freddie Mac (OTC: FMCC.OB). At 12:30 PM ET, Minneapolis Federal Reserve Branch President Narayana Kocherlakota will speak at Northern Michigan University.

The Gamescom trade fair starts in Cologne, Germany. The corporate news wire highlights the Men's Wearhouse (NYSE: MW) meeting with analysts and major earnings reports from Wal-Mart (NYSE: WMT) and Home Depot (NYSE: HD). Also look for reports from Analog Devices (NYSE: ADI), Abercrombie & Fitch (NYSE: ANF) and CF Industries (NYSE: CF).

The rest of the EPS schedule covers 3SBio (Nasdaq: SSRX), Aastrom Biosciences (Nasdaq: ASTM), Astro-Med (Nasdaq: ALOT), BioLase Technology (Nasdaq: BLTI), BluePhoenix Solutions (Nasdaq: BPHX), Bob Evans Farms (Nasdaq: BOBE), CACI Int'l (Nasdaq: CACI), Cardica (Nasdaq: CRDC), China Digital TV (NYSE: STV), China Recycling Energy (Nasdaq: CREG), China TechFaith Wireless (Nasdaq: CNTF), Elbit Systems (Nasdaq: ESLT), G&K Services (Nasdaq: GKSR), Greenman Technologies (Nasdaq: GMTI), Jack Henry (Nasdaq: JKHY), Jamba Juice (Nasdaq: JMBA), JSE Limited (OTC: JSLMF.PK), Key Tronic (Nasdaq: KTCC), La-Z-Boy (NYSE: LZB), Longtop Fin'l Technologies (NYSE: LFT), NXP Semiconductors (Nasdaq: NXPI), Photronics (Nasdaq: PLAB), Polymer Group (OTC: POLGA.OB), Pressure BioSciences (Nasdaq: PBIO), Saks (NYSE: SKS), Silicon Graphics (Nasdaq: SGI), Spectrum Brands (NYSE: SPB), Sypris Solutions (Nasdaq: SYPR), TJX Cos. (NYSE: TJX), ULURU (AMEX: ULU), VanceInfo Technologies (NYSE: VIT) and WSP Holdings (NYSE: WH).

Wednesday

You'll catch a break Wednesday, as only the two regular reports are scheduled. In the premarket, look for the Mortgage Bankers Association's Weekly Applications Survey. Last week's report covered data for the week ending August 6. Despite the lowest mortgage rates in the survey's history, the Market Composite Index only edged up 0.6%. The Purchase Index, which measures mortgage applications for home purchase, increased 0.3%. This component has been fizzling out and could even turn negative soon if business conditions falter further (which we expect). The Refinance Index gained 0.6%, benefiting from declines in average contracted rates on 30-year and 15-year fixed rate mortgages to 4.57% (from 4.6%) and 3.95% (from 4.03%), respectively.

The EIA's Petroleum Status Report is due at 10:30 AM ET. Last week's report covering the period ended August 6, showed crude oil inventory decreased by 3.0 million barrels. Total motor gasoline inventory increased by 0.4 million barrels. Both crude oil and total motor gasoline inventory remain above the upper limit of the average range for this time of year. However, the average world crude oil price increased $4.10 since last week, to $78.79. The spot price for conventional gasoline in the New York Harbor was 204.84 cents per gallon, 1.23 cents less than last week's price but 12.59 cents over this time last year.

The corporate EPS wire highlights data from Target (NYSE: TGT), Deere (NYSE: DE), BJ's Wholesale Club (NYSE: BJ) and Chico's FAS (NYSE: CHS). The remainder of the list includes AFC Enterprises (Nasdaq: AFCE), Applied Materials (Nasdaq: AMAT), Baldwin Technology (AMEX: BLD), Brocade Communications (Nasdaq: BRCD), China Distance Education (NYSE: DL), ChinaEdu (Nasdaq: CEDU), Chipmos Tech (Nasdaq: IMOS), Citi Trends (Nasdaq: CTRN), Concord Medical Services (NYSE: CCM), Duoyuan Global Water (NYSE: DGW), Eaton Vance (NYSE: EV), Flexsteel Industries (Nasdaq: FLXS), Gushan Environmental Energy (NYSE: GU), Gymboree (Nasdaq: GYMB), Hott Topic (Nasdaq: HOTT), IFM Investments (NYSE: CTC), LeCroy (Nasdaq: LCRY), Limited Brands (NYSE: LTD), NetApp (Nasdaq: NTAP), NetEase.com (Nasdaq: NTES), Open Text (Nasdaq: OTEX), PetSmart (Nasdaq: PETM), Suntech Power (NYSE: STP), Synopsis (Nasdaq: SNPS) and ValueVision Media (Nasdaq: VVTV).

Thursday

Four economic reports key Thursday, but the market will be focused on Weekly Jobless Claims, which have intensified over the last two weeks, and Leading Economic Indicators for the month of July.

Weekly Jobless Claims shocked the market and economists who were looking for a correction after the prior week's climb. Instead, claims over the week ended August 7 climbed another 2,000, to 484K. This two-week period of high filings led the four-week moving average up more than 14K, to 473,500. Economists were well-off the mark last week, but will give it another try now, looking for the August 14 period to include 480K filers. That marks a sort of capitulation of economists, as they accept a new paradigm of a new economy.

Leading Economic Indicators for July will be reported at 10:00 AM. June's indicators marked the second monthly drop in three months, and so the adjustment of Q2 GDP lower should have been no surprise to the Fed, highly paid economists, nor investors. However, it seems mostly Wall Street Greek readers were found in the pool of unsurprised over the last month or so. Economists are looking for a gain in the LEI of 0.1% for July. That's not spectacular, and so should not offer any stock-buying incentive should growth materialize. The biggest driver of GDP and the LEI have been mostly government stimulus factors, which are leading indicators but not so reliable (versus hopeful). Just because the government has provided the fuel of low rates and big monetary creation does not guarantee the economy catches fire.

A couple days after the New York area manufacturing data release, the Philly Fed reports on its activity. The Philadelphia Fed Survey is expected to post a General Business Index Level of 7.0 for August. That will compare against July's mark of 5.1, which was down from June's 8.0. While all positive, these are far from enthusing levels.

The EIA reports on Natural Gas Inventory at 10:30 AM ET. The report for the period ended August 6 showed natural gas stores increased by 37 Bcf. Natural gas stocks were 158 Bcf less than this time last year, but 219 Bcf above the five-year average for this time of year.

Two Fed representatives have scheduled speaking engagements Thursday. Look for St. Louis Fed President James Bullard, the deflation man, to address the economic outlook and monetary policy in Arkansas at 11:30 AM ET. At 1:00 PM, you can catch Chicago Fed President Charles Evans press lunch.

In the wake of its disclosures of names to sovereign pressure, the Swiss discuss the their financial center future, or rather a lack of one. General Growth Properties (NYSE: GGP) seeks bankruptcy court approval to send its exit plan to creditors for another approval; secondary creditors oppose the plan. An FDA advisory panel reviews Lilly's (NYSE: LLY) anti-depression med Cymbalta for a secondary use as a pill for pain. Caterpillar (NYSE: CAT) meets with analysts in New York Thursday. Varian (NYSE: VAR) holds an investor day. The CEOs of SAP (NYSE: SAP) and Sybase (Frankfurt: SYB.F) will discuss the future at a meeting in Frankfurt.

The day's earnings schedule highlights reports from Hewlett-Packard (NYSE: HPQ), Ross Stores (Nasdaq: ROST), Staples (Nasdaq: SPLS), Limited Brands (NYSE: LTD) and The Gap (NYSE: GPS). The rest of the day's data includes news from 1-800-Flowers.com (Nasdaq: FLWS), A/S Dampskibsselskabet Torm (Nasdaq: TRMD), Acorn Int'l (NYSE: ATV), Aeropostale (NYSE: ARO), America's Car-Mart (Nasdaq: CRMT), AutoChina Int'l (Nasdaq: AUTC), Blue Coat Systems (Nasdaq: BCSI), Bon-Ton Stores (Nasdaq: BONT), Casual Male Retail Group (Nasdaq: CMRG), China Finance Online (Nasdaq: JRJC), CNOOC (NYSE: CEO), Cost Plus (Nasdaq: CPWM), Delta Apparel (AMEX: DLA), Dick's Sporting Goods (NYSE: DKS), Dollar Tree Stores (Nasdaq: DLTR), Flowers Foods (NYSE: FLO), Foot Locker (NYSE: FL), Gamestop (NYSE: GME), Global Sources (Nasdaq: GSOL), Harris Interactive (Nasdaq: HPOL), Intuit (Nasdaq: INTU), John B. Sanfilippo & Sons (Nasdaq: JBSS), Lancaster Colony (Nasdaq: LANC), LSI Industries (Nasdaq: LYTS), Magnetek (NYSE: MAG), Marvell Technology (Nasdaq: MRVL), Mentor Graphics (Nasdaq: MENT), Navios Maritime (NYSE: NM), New York & Company (NYSE: NWY), Phonera (Nasdaq: PHON), Pointer Telocation (Nasdaq: PNTR), Salesforce.com (NYSE: CRM), ScanSource (Nasdaq: SCSC), School Specialty (Nasdaq: SCHS), Sears (Nasdaq: SHLD), Shamir Optical (Nasdaq: SHMR), Stage Stores (NYSE: SSI), Stein Mart (Nasdaq: SMRT), Tech Data (Nasdaq: TECD), Telecom Corp. of New Zealand (NYSE: NZT), The Buckle (NYSE: BKE), The Cato Corp. (Nasdaq: CATO), The Children's Place (Nasdaq: PLCE), The Wet Seal (Nasdaq: WTSLA), Toro (NYSE: TTC), Towers Watson (NYSE: TW), Trans World Entertainment (Nasdaq: TWMC), Verigy (Nasdaq: VRGY), Williams-Sonoma (NYSE: WSM), Yingli Green Energy (NYSE: YGE), Zumiez (Nasdaq: ZUMZ) and ZYGO (Nasdaq: ZIGO).

Friday

Look for the release of state and regional employment trends for the month of July Friday. Otherwise, there's no economic report on the slate. Thus, you might be able to get on the highway early today.

The FDA considers Jazz Pharmaceuticals' (Nasdaq: JAZZ) hopes to sell its sodium oxybate drug to treat fibromyalgia. The day's EPS schedule includes news from J.M. Smucker (NYSE: SJM), Hormel Foods (NYSE: HRL), Camelot Information Systems (NYSE: CIS), Corinthian Colleges (Nasdaq: COCO), Hibbett Sports (Nasdaq: HIBB) and Nordson (Nasdaq: NDSN), Ann Taylor Stores (NYSE: ANN) and Kirkland's (Nasdaq: KIRK).



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