In Bizarro World Bad News is Good News

As wild as it may sound to some Main-Streeters, there will be a group of traders and portfolio managers hoping for a poor Employment Situation Report this week. That’s because it would force market expectations back toward a dovish Fed outlook, and that would support stocks, as crazy as it sounds. But the report better not be too bad, or it would also sink stocks. If the data is positive, look for stocks to take that badly as well in this brave new Bizarro World.

Monday

The Institute for Supply Management (ISM) issues its Manufacturing Report on Business for the month of May at 10:00 AM. Economists see this index edging up to a mark of 51.0, from 50.7 the month before. This index is much lower now versus the start of the year, reflecting slower expansion bordering on contraction. Readings above 50.0 reflect economic expansion in the manufacturing sector.

The PMI Manufacturing Index is also up for report today. Economists expect the measure for the end of May to match April’s close at 52.1, after its Flash reading slipped to 51.9. This index, like the ISM measure, is down from the start of the year and measured 54.6 at the end of March.

Monthly Construction Spending data is due for report at 10:00 AM ET. While construction spending has been growing regularly for some time now, over the last several months, the pace seems to be slowing. Economists expect an increase of 1.0% in April, after a surprising decline of 1.7% in March.

Federal Reserve Vice Chairwoman Janet Yellen is sitting on a panel in China, and will be discussing regulation. San Francisco Federal Reserve Bank President John Williams is talking about inflation targeting in Stockholm, Sweden.

The Bank of Korea is hosting a two-day conference on global liquidity concerns. Russia and the E.U. are holding a summit in Yekaterinburg, Russia.

Automakers will report Monthly Motor Vehicle Sales for the month of May today. Economists expect the annual pace of domestic vehicle sales ran at 12.0 million in May, down from 11.9 million in April. Total vehicle sales are expected to have risen to an annual pace of 15.2 million in May, up from 14.9 million in April.

Look for analyst and shareholder meetings at C.R. Bard (NYSE: BCR), Infinity Pharmaceuticals (Nasdaq: INFI), comScore (Nasdaq: SCOR), Ford (NYSE: F) and NYSE Euronext (NYSE: NYX). The RBC Capital Markets Global Energy Conference has Range Resources (NYSE: RRC). The Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference brings the presentation of Wyndham Worldwide (NYSE: WYN). Colony American Homes, a REIT, is expected to price its IPO this week. The EPS schedule highlights reports from SAIC (NYSE: SAI), Verint Systems (Nasdaq: VRNT), ABM Industries (NYSE: ABM), Cantel Medical (NYSE: CMN), Cracker Barrel (Nasdaq: CBRL), CollabRx (Nasdaq: CLRX), G-III Apparel (Nasdaq: GIII) and Optibase (Nasdaq: OBAS).

Tuesday

The International Trade Report for the month of April is expected to show the trade deficit expanded to $41.2 billion, from $38.8 billion the month before. In March, exports fell 0.9% while imports were down 2.8%. Export and import activity have dulled since recovering post the crisis and recession.

The regular weekly retail same-store sales report of the International Council of Shopping Centers (ICSC) is on tap for Tuesday. Last week’s report covering the period ending May 25 showed a week-to-week sales decrease of 0.9%, following the 0.2% rise the week before. On a year-to-year basis, sales were higher by 2.8%, versus the 3.1% increase in the prior week.

Several Fed speakers are on the board for Tuesday, with Federal Reserve Governor Raskin, Kansas City Fed Chief George and Dallas Fed Bank President Fisher all scheduled to speak in the afternoon.

In corporate news, American Airlines is in bankruptcy court seeking approval for its restructuring plan. Look for analyst and investor meetings at Entegris (Nasdaq: ENTG), Informatica (Nasdaq: INFA) and Infoblox (Nasdaq: BLOX). The Bank of America Merrill Lynch Global Technology Conference (NYSE: BAC) has the presentations of Applied Materials (Nasdaq: AMAT), Altera (Nasdaq: ALTR) and NVIDIA (Nasdaq: NVDA). The J.P. Morgan (NYSE: JPM) Diversified Industries Conference has the presentation of Tyco International (NYSE: TYC). The Deutsche Bank (NYSE: DB) dbAccess Global Financial Services Investor Conference brings AIG (NYSE: AIG) to the podium. The Jefferies Global Healthcare Conference offers news from Agilent Technologies (NYSE: A). The EPS schedule highlights news from Dollar General (NYSE: DG), Air T Inc. (Nasdaq: AIRT), American Woodmark (Nasdaq: AMWD), Analogic (Nasdaq: ALOG), Bazaarvoice (NYSE: BV), Bob Evans Farms (Nasdaq: BOBE), ePlus (Nasdaq: PLUS), Exa (NYSE: EXA), Mattress Firm Holdings (Nasdaq: MFRM), Mitcham Industries (Nasdaq: MIND), NCI Building Systems (NYSE: NCS), Qiwi (Nasdaq: QIWI) and SHFL Entertainment (Nasdaq: SHFL).

Wednesday

ADP’s Private Employment Report for May is expected to show private nonfarm payrolls increased by 171K, versus last month’s 119K. Economists expect private nonfarm payrolls, as reported by the government on Friday, to show an increase of 178K jobs, versus the 176K reported last month.

The latest mortgage activity data arrives from the Mortgage Bankers Association Wednesday before the market open. Last week’s report covering the period ending May 24 showed mortgage applications decreased by 8.8%. Applications tied to the purchases of homes increased by 3.0% on a seasonally adjusted basis. The Refinance Index decreased by 12%. Effective mortgage rates increased significantly again, and once again impacted mortgage activity, leading our founder to author The Fed Could Derail the Real Estate Recovery.

Nonfarm Productivity and Costs data will be revised for the first quarter today. Economists see productivity growth sticking at 0.7% for the quarter, after it contracted in the fourth quarter by 1.9%. The Unit Labor Cost increase is expected to stay at 0.5% after increasing 4.6% in Q4.

Factory Orders for April are expected to have increased by 1.4%, after falling by 4.0% in March. This data has shown slower growth since recovering from recession level lows, and so it is now on its own without the benefit of easy comparable data.

After reporting its manufacturing data a few days prior, ISM will publish its Nonmanufacturing Report on Business today at 10:00 AM. ISM’s service segment index is expected to improve to 53.8 in May, from 53.1 in April.

The Federal Reserve issues its Beige Book of regional economic activity at 2:00 PM ET.

Look for the EIA’s regular Petroleum Status Report at 10:30 AM ET. Last week’s report covering the week ending May 24 showed crude oil inventory increased by 3.0 million barrels, and remained above the upper limit of the average range for this time of year. Total motor gasoline inventory decreased by 1.5 million barrels but remained in the upper half of the average range for this time of year.

The geopolitical pages have Arab ministers discussing Syria in Cairo, Egypt. United States, Russian and U.N. representatives are discussing the same issue in Moscow. South Korean markets are closed Monday.

The corporate wire has shareholder meetings and analyst gatherings at International Flavors & Fragrances (NYSE: IFF), Constellation Brands (NYSE: STZ), Encore Capital Group (Nasdaq: ECPG) and Under Armour (NYSE: UA). The Bank of America Merrill Lynch Global Technology Conference offers presentations by Hewlett-Packard (NYSE: HPQ), Juniper Networks (Nasdaq: JNPR) and Autodesk (Nasdaq: ADSK). The Credit Suisse (NYSE: CS) Future of Payments Conference highlights the presentation of Capital One Financial (NYSE: COF). The Deutsche Bank dbAccess Global Financial Services Investor Conference brings Fifth Third Bancorp (Nasdaq: FITB) to the podium.

The EPS schedule highlights reports from Amerco (Nasdaq: UHAL), Ascena Retail Group (Nasdaq: ASNA), Coldwater Creek (Nasdaq: CWTR), Cyberonics (Nasdaq: CYBX), Francesca’s Holdings (Nasdaq: FRAN), FuelCell Energy (Nasdaq: FCEL), Greif Inc. (NYSE: GEF), Hooker Furniture (Nasdaq: HOFT), Hovnanian Enterprises (NYSE: HOV), Jiayuan.com (Nasdaq: DATE), Layne Christensen (Nasdaq: LAYN), Measurement Specialties (Nasdaq: MEAS), rue21 (NYSE: RUE), Sigma Designs (Nasdaq: SIGM), Streamline Health Solutions (Nasdaq: STRM), Thermon Group (NYSE: THR), Vera Bradley (NYSE: VRA) and VeriFone (NYSE: PAY).

Thursday

The European Central Bank (ECB) issues monetary policy Thursday, after cutting rates at its prior meeting in May. The Bank of England (BOE) is also meeting today to issue its latest policy. Each bank is expected to keep rates steady this time around. In other related news, G-20 finance ministers and central bankers will be meeting in St. Petersburg. Also, European leaders will be discussing the roadmap for Europe in Helsinki, Finland.

The Challenger Job-Cut Report reaches the wire in the premarket Thursday. The measure of announced corporate layoffs showed 38,121 of them in April, 49,255 of them in March and 55,356 of them in February.

Investors will be tuned into the Weekly Initial Jobless Claims report Thursday, due at 8:30 AM ET. Last week’s report covering the period ending May 24 showed weekly claims increased by 10K, to 354K. Economists see claims dropping back to 345K this week. The 4-week moving average increased by 6,750 last week to 347,250.

The Bloomberg Consumer Comfort Index, a weekly measure of the consumer mood, deteriorated by 0.3 points last week, and reached a mark of -29.7. Consumers are not generally in a good mood today in my opinion, though the latest data from the University of Michigan begged to differ. A large portion of the consumer confidence reflected in the University of Michigan data is based on future hope, versus the less positive consumer view of things today. Such flighty faith is easily lost, as those of us who follow the data know.

The Quarterly Services Survey is due Thursday, providing data on the IT services sector. That includes more than just technology though, with data on from businesses varying from professional, scientific and technical services, administrative & support services, and waste management and remediation services.

The EIA’s Natural Gas Report is due Thursday at 10:30 AM. Last week’s report covering the period ending May 24 showed working gas in storage increased by 88 Bcf. Stocks were 664 Bcf less than last year at this time and 88 Bcf below the five-year average for this time of year.

The day’s Fed speakers include Fed Governor Raskin and Philly Fed President Plosser.

Many retailers will be reporting their monthly chain store sales on Thursday for the month of May, but reports will be reaching the wire for several days after today as well. Netflix (Nasdaq: NFLX) will be added to the Nasdaq 100 Index today, replacing Perrigo (Nasdaq: PRGO) there. Look for analyst and investor meetings at Lincoln National (NYSE: LNC), FEI (Nasdaq: FEIC), Visa (NYSE: V), Seaspan (NYSE: SSW) and Salesforce.com (NYSE: CRM). EPS reports are due from J.M. Smucker (NYSE: SJM), Ann Inc. (NYSE: ANN), Ciena (Nasdaq: CIEN), Quiksilver (NYSE: ZQK), RealD (NYSE: RLD), Bio-Reference Laboratories (Nasdaq: BRLI), Comtech Telecommunications (Nasdaq: CMTL), Conn’s (Nasdaq: CONN), Cooper Companies (NYSE: COO), Fairway Group (NYSE: FWM), IDT (NYSE: IDT), Mad Catz Interactive (NYSE: MCZ), Mitcham Industries (Nasdaq: MIND), Rally Software (Nasdaq: RALY), SeaChange International (Nasdaq: SEAC), Titan Machinery (Nasdaq: TITN), UTi Worldwide (Nasdaq: UTIW) and Vail Resorts (NYSE: MTN).

Friday

Friday is all about the monthly Employment Situation Report for May. Nonfarm Payrolls are expected to be up by 167K this month, after increasing by 165K in April. Private Nonfarm Payrolls are seen higher by 178K this month, versus the 176K increase last month. The Unemployment Rate is expected to stay at 7.5%. Average Hourly Earnings is expected higher by 0.2%, matching the increase of the prior month. The Average Workweek is expected to increase by a tenth of a point to 34.5 hours.

Consumer Credit data will be reported for the month of April at 3:00 PM ET. Economists expect an expansion of credit of $14 billion for the month, versus March’s expansion of $8.0 billion.

President Obama will meet with China’s President Xi Jinping starting on Friday.

The corporate wire has analysts and investor meetings at SAIC (NYSE: SAI), OneBeacon Insurance (NYSE: OB) and White Mountains Insurance (NYSE: WTM). The EPS schedule has reports from Christopher & Banks (NYSE: CBK), Crossroads Systems (Nasdaq: CRDS), Dago New Energy (NYSE: DQ), JinkoSolar (NYSE: JKS) and Oil-Dri Corporation (NYSE: ODC).

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You might also enjoy some of our recent work including: Deflation, Symptom of Economic Illness

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