This Week – Put Up or Shut Up Time

FYI, we’re rooting for the bull

This week’s data flow should either confirm the nascent stock rally or offer the first real obstacle to it. The first reporting of GDP for Q4 might offer a damper if economists are right about a slower pace of growth, but I anticipate better consumer confidence numbers will focus investor attention back on the better future we seem to have ahead of us. The big stopper for the market has been the D.C. dilemma and political blockade to fiscal policy. But given the reelection of President Obama, Republicans have wised up to the fact that playing the bad guy and holding up economic and stock market growth won’t gain them any favor when next their seats come into question. And like the market, Facebook (NYSE: FB), which reports earnings this week, will have its big put up or shut up moment. When all is said and done this week though, what shows up on the monthly employment report Friday could very well determine the market’s conviction to rally into February.

Monday

Durables Goods Orders lead the week’s wire, with the report due at 8:30 AM ET. The very volatile flow of high ticket durables orders is hard to predict, and so the data can often swing industrial shares one way or another. This week’s data covers the month of December. Economists see new orders increasing by 1.6%, which marks a pickup in pace after November’s 0.7% increase. Excluding transportation goods, economists see just a 0.4% rise, versus the 1.6% increase marked in November. Monthly changes are important, but year-over-year changes here tell a story of slowing industrial growth. While things are still pretty miserable in Europe, I’m feeling some traction below the feet of the American economy today. Given the fiscal policy freeze that dictated trade in December, I wouldn’t look for much positive from any report for the month’s economic activity, but this one can surprise. You can find the durable goods orders data here.

The Pending Home Sales Index is up for report at 10:00 AM ET. Housing stocks outpaced the broader market last week, with the SPDR S&P Homebuilders (NYSE: XHB) rising 3.2% versus the 1.3% gain of the SPDR S&P 500 (NYSE: SPY). Existing Home Sales came in great last week, but New Home Sales fell short of expectations. Still, it was the debt ceiling resolution and a strong weekly jobless claims report that sent stocks higher, including the cyclical homebuilders. As for the Pending Home Sales Index, economists see it edging lower by 0.3% in December, after the index jumped 1.7% in November. Find your Pending Home Sales data here.

Closing out Monday’s domestic economic data, the Dallas Federal Reserve publishes its Manufacturing Survey at 10:30 ET. ISM’s Manufacturing Index, which measures manufacturing activity nationally, measured at 50.7 in December. The Dallas Fed’s Texas Survey produced a Business Activity Index of 6.8 in December. Economists are looking for this measure to slip a little in January, to 4.0. See the Dallas Fed Index here.

Earnings season rolls on for a good many companies reporting this week. Highlighting Monday’s list, look for reports from Yahoo (Nasdaq: YHOO), Caterpillar (NYSE: CAT), BMC Software (NYSE: BMC), Plum Creek Timber (NYSE: PCL), Roper Industries (NYSE: ROP), Seagate Technology (NYSE: STX), Biogen Idec (Nasdaq: BIIB), Zions Bancorp (Nasdaq: ZION) and several more.

Tuesday

Much of the early chatter Tuesday will be about the start of the 2-day Federal Open Market Committee (FOMC) meeting. However, the day offers several economic data points that will be more conclusive than that. First things first, and that will be the International Council of Shopping Centers’ (ICSC) Weekly Same-Store Sales Report, which is due before the bell rings. Last week’s report covering the period ending January 19 showed sales declined by 1.5% against the immediately preceding period. However, there was of course a holiday to fog up the information. On a year-to-year basis, sales measured 3.2% greater.

The 9:00 AM reporting of the S&P Case Shiller Home Price Index should garner a great deal of attention in the early going. It has of course been revealing a housing price recovery. This October measurement arrives a bit late, but the reporters say that makes it more accurate. Economists expect the 20-city measure to show another 0.7% seasonally adjusted increase month-to-month, same as the month before. The yearly comparison is expected to note a 5.8% increase for October, versus the 4.3% increase in September. You can find the Home Price Index here.

By about 10:00 AM the market will be ready for a new bit of info to chew on, and it will get one when the Conference Board reports on its Consumer Confidence Index. Economists expect this January measure to perfectly match the 65.1 mark set in December. Now the December reading was a frightened figure, petrified by consumer fear of a fiscal cliff shocker. For this reason, I don’t agree with the consensus for January. I think the month will be markedly improved. You can find the Consumer Confidence Index her.

Investors will have interest in State Street’s (NYSE: STT) Investor Confidence Index, which is scheduled for report at 10:00 AM ET. The Investor Confidence Index rose slightly in December, increasing by 0.4 points to reach 80.9. The index measures levels of riskier assets in institutional portfolios. There is no economists’ consensus forecast available to us for this figure, but I would expect that it will increase significantly in January. You’ll be able to find the Investor Confidence Index here.

The day’s earnings schedule highlights Amazon.com (Nasdaq: AMZN), ACE Limited (NYSE: ACE), Boston Properties (NYSE: BXP), Boston Scientific (NYSE: BSX), Broadcom (Nasdaq: BRCM), Corning (NYSE: GLW), D.R. Horton (NYSE: DHI), Danaher (NYSE: DHR), Eli Lilly (NYSE: LLY), EMC Corp. (NYSE: EMC), Ford Motor (NYSE: F), Harley-Davidson (NYSE: HOG), Harris Corp. (NYSE: HRS), Illinois Tool Works (NYSE: ITW), International Paper (NYSE: IP), NextEra Energy (NYSE: NEE), Nucor (NYSE: NUE), Peabody Energy (NYSE: BTU), Pentair (NYSE: PNR), Pfizer (NYSE: PFE), Plantronics (NYSE: PLT), T. Rowe Price (Nasdaq: TROW), Tyco International (NYSE: TYC), United States Steel (NYSE: X), Valero Energy (NYSE: VLO) and more.

Wednesday

Obviously, the Federal Open Market Committee (FOMC) Monetary Policy Announcement, due at 2:15 PM ET, will dominate chatter most of the day Wednesday. The economy appears to be on the move, and so I wouldn’t be surprised to catch a glimpse of optimism from the FOMC. Rates are still expected to be held at their lowest, but the market will be keeping its radar attuned to any discussion about asset purchases. The latest jobless claims data at least has seemed supportive of the economic revival argument, but it may yet be too soon, especially for the Fed, to call.

It may help (or hurt) the Fed’s point of view that GDP will be reported at 8:30 AM ET. This will be the first reporting of the fourth quarter of 2012, and economists see a slower pace of growth against the third quarter’s final tally of 3.1%. We warned in one of our columns that fiscal cliff fear alone was hurting the economy. Well, based on the consensus forecast of economists for Q4 GDP growth, set at 1.0%, it looks like it certainly did. There may be some good news for the Fed in the report, though, as the GDP Price Index is expected to have increased by 1.7% last quarter, less than the 2.7% increase in Q3. For as long as inflation remains in check, the Fed can continue to support the housing and other lending markets, and set the economy back up on sturdy legs. You can find the GDP report here.

The ADP Private Employment Report is due for release at 8:15 AM ET Wednesday. This report is notorious, as it precedes the government’s monthly employment report. ADP’s data is actually an estimate of the private employment portion of that all-inclusive government report. Its accuracy has been called into question from time to time, and given that it only precedes the government data by two days, I question its importance to traders. That said, economists are forecasting a net private nonfarm payroll increase of 172K (or for the ADP estimate of it), which would mark a drop from ADP’s December estimate of 215K (the government data showed 168K in December). You can find your ADP Report here.

Also on the day, find the regular Mortgage Applications Survey results from the Mortgage Bankers Association in the pre-market and the Petroleum Status Report at 10:30 AM. Recent weeks' mortgage data have been influenced by seasonal issues, and the latest was inclusive of the Martin Luther King Jr. Day holiday as well. Thus, investors may need to wait a bit longer for noise-free news.

Research in Motion (Nasdaq: RIMM) will introduce its new BB10 software in New York City Wednesday. The day’s earnings highlight reports from Facebook (NYSE: FB), Boeing (NYSE: BA), Qualcomm Nasdaq: QCOM), JDS Uniphase (Nasdaq: JDSU), Northrop Grumman (NYSE: NOC), Hess (NYSE: HES), Rockwell Automation (NYSE: ROK), ADT (NYSE: ADT), Ameriprise Financial (NYSE: AMP), AvalonBay Communities (NYSE: AVB), Avery Dennison (NYSE: AVY), Citrix Systems (Nasdaq: CTXS), ConocoPhillips (NYSE: COP), Electronic Arts (NYSE: EA), Hudson City Bancorp (Nasdaq: HCBK), L-3 Communications (NYSE: LLL), Marathon Petroleum (NYSE: MPC), MeadWestVaco (NYSE: MWV), Murphy Oil (NYSE: MUR), Owens-Illinois (NYSE: OI), Phillips 66 (NYSE: PSX), Southern (NYSE: SO), Wisconsin Energy (NYSE: WEC) and many more.

Thursday

Expect no relief post hump-day. The close of the week will be busy, with a slew of economic reports set for Thursday release and a bunch more Friday. Look for the Challenger Gray & Christmas Job-Cuts Report in the premarket Thursday morning. December’s layoff data produced the second lowest total of 2012, with announced corporate layoffs down to 32,556. This data is often influenced by significant layoff announcements at major corporations.

Weekly Initial Jobless Claims data are due at the usual 8:30 AM ET reporting time. Last week’s report offered the second soft flow of new claims at a lower plateau. Jobless Claims reached down to 330K, but economists are looking for a pickup to 350K for this week’s data. Find the Jobless Claims Report here.

The GDP data reported earlier this week may serve to smooth the impact of the December Personal Income & Outlays data due for release at 8:30 AM Thursday. Even so, the investment community closely follows the personal consumption data found within this report and the Core PCE Price Index. Economists surveyed by Bloomberg look for a 0.3% increase in spending month-to-month, versus the 0.4% increase reported in November. Personal Income is expected up 0.7%, versus the 0.6% increase seen in November. The Core PCE Price Index, the Fed’s favored inflation gauge, is seen increasing by just 0.1% month-to-month, versus the absence of change seen in November. The consumption and inflation data found within this report are critical so pay attention to the report, which you can find here.

The Chicago PMI Business Barometer showed growth for the third month in a row in December 2012 on new order strength, with the index marking 51.6. Still, 5 of 7 component indexes declined in December, including a big drop in the Employment Index. Economists are looking for the report’s key index to drop in January to 50.5, but while above 50.0, that still marks economic growth for the fiscal cliff fumbled figure. You can find your Chicago-PMI data here at 9:45 AM ET.

Also at 9:45 AM ET, Bloomberg publishes its Consumer Comfort Index, the weekly measure of the consumer mood. This index has been on the decline of late, but I’m expecting a shift in the weeks ahead. Stock market rise is stirring enthusiasm, and as Americans grow increasingly positive about the economy, we would expect consumers to likewise gain courage. Last week’s report showed the index down almost a point, to -36.4. Find the Bloomberg Consumer Comfort Index here.

The only other report on the schedule is the regular Natural Gas Inventory tally from the EIA at 10:30 AM. You’ll find that report here.

Pfizer’s (NYSE: PFE) Zoetis should see IPO Thursday, and the animal health unit might find $2 billion in capital. The day’s highlighted earnings reports will arrive from Viacom (Nasdaq: VIAB, Nasdaq: VIA), McKesson (NYSE: MCK), Dow Chemical (NYSE: DOW), Aetna (NYSE: AET), MasterCard (NYSE: MA), United Parcel Service (NYSE: UPS), Altria (NYSE: MO), AutoNation (NYSE: AN), Ball Corp. (NYSE: BLL), Bemis (NYSE: BMS), C.R. Bard (NYSE: BCR), Cameron Int’l (NYSE: CAM), Chubb (NYSE: CB), Colgate-Palmolive (NYSE: CL), CONSOL Energy (NYSE: CNX), Dominion Resources (NYSE: D), Eastman Chemical (NYSE: EMN), Harman Int’l (NYSE: HAR), Helmerich & Payne (NYSE: HP), Invesco (NYSE: IVZ), Mead Johnson Nutrition (NYSE: MJN), NASDAQ OMX (Nasdaq: NDAQ), PACCAR (Nasdaq: PCAR), PerkinElmer (NYSE: PKI), Pitney Bowes (NYSE: PBI), Principal Financial (NYSE: PFG), Ryder System (NYSE: R), Sherwin-Williams (NYSE: SHW), Hershey (NYSE: HSY), Thermo Fisher Scientific (NYSE: TMO), Time Warner Cable (NYSE: TWC), Whirlpool (NYSE: WHR), Xcel Energy (NYSE: XEL), Zimmer Holdings (NYSE: ZMH) and more.

Friday

The last trading day of the week and the first of February offers several economic reports, including the granddaddy of them all, the monthly Employment Situation Report. Last month, when the unemployment rate was reported at 7.8%, we reminded investors of the real unemployment rate, which we calculated at 11.7%. We said underemployment, which includes part-timers who would rather be employed full-time (and others), was likely closer to 17.9% than the government’s published U-6 rate of 14.4%. Looking forward to this week’s report for January, economists expect the unemployment rate to ease to 7.7%. The consensus expects a private nonfarm payroll increase of 185K, versus the 168K increase in December.

The Markit PMI Manufacturing Index is due for report just before 9:00 AM. The organization produces manufacturing indexes across the globe and they’ll all be available as well through the relative period. The economists’ consensus is for an increase in the U.S. index to 55.5 for January, up from 54.0 in December. Find this data here.

The ISM Manufacturing Index is also up for report at 10:00 AM ET Friday. This is the more widely followed domestic measure of manufacturing. Economists are looking for this index to stick at 50.7 in January, where it was in December. That’s perilously close to break-even, so markets will be closely attuned here. See the ISM report.

The Reuters/University of Michigan Consumer Sentiment Index is up for report at 10:00 AM ET. As I mentioned earlier within this planner, I expect consumer sentiment to improve now that the fiscal cliff, debt ceiling and stock market anxiety have all been mitigated. Economists see this measure improving just a bit to 71.5 in January, from 71.3 in December. Investors will catch wind of this report as it finds coverage on the newswire, but those interested in more detail can find that here.

The final economic report on the day will be the Construction Spending data, due for release at 10:00 AM ET. Construction spending has been steadily increasing on a year-to-year basis for quite some time now. On a monthly basis, it decreased in November by 0.3%, but is seen increasing by 0.8% month-to-month by the consensus of economists. Find the construction spending data here.

Automakers will report on monthly motor vehicle sales Friday individually and the data will be compiled and aggregated. Domestic vehicle sales ran at an annual rate of 12.0 million in December and are seen running at that same pace in January. Total vehicle sales ran at a 15.4 million pace in December, and are seen slowing to 15.3 million in January. Investors in General Motors (NYSE: GM), Ford (NYSE: F) and the rest will have special interest in market share information implied. Find more on motor vehicle sales data here.

The SEC will meet to discuss regulations affecting small and emerging companies in Washington D.C.

The day’s earnings schedule highlights reports from Aon (NYSE: AON), Beam (Nasdaq: BEAM), Chevron (NYSE: CVX), Exxon Mobil (NYSE: XOM), Franklin Resources (NYSE: BEN), Ingersoll-Rand (NYSE: IR), Legg Mason (NYSE: LM), LyondellBasell Industries (NYSE: LYB), Mattel (NYSE: MAT), Merck (NYSE: MRK), National Oilwell Varco (NYSE: NOV), Newell Rubbermaid (NYSE: NWL), Perrigo (Nasdaq: PRGO), Tyson Foods (NYSE: TSN) and more.

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