This Week: Bernanke’s Testimony is Must See TV

Stocks took more ground last week, still recovering post the Bernanke blunder of June. But this week, big Ben will have another opportunity to upset things. He will be tested and tried by ignorant and intelligent representatives of our nation, depending on your party alignment. Bernanke will have to explain himself in public hearing, and tell us all why, pray tell, is his Federal Reserve pulling back stimulus at precisely the moment when the economy is slowing. He’ll also want to let us know why the Fed’s forecasts are grossly overstated. This is must-see TV folks, so don’t miss it. Catch our daily thoughts at the blog.

Index ETF	Week Ending July 12	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	+2.8%	+15.2%
SPDR Dow Jones (NYSE: DIA)	+2.1%	+16.6%
PowerShares QQQ (Nasdaq: QQQ)	+3.7%	+11.5%

Economic Events

THIS WEEK’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior Period	Expected	Actual
MONDAY
China GDP	+7.7%	+7.5%	+7.5%
Retail Sales	+0.5%	+0.8%	+0.4%
-Ex Autos & Gasoline	+0.3%	+0.3%	-0.1%
Empire State Manufacturing Survey	+7.8	+5.0	+9.46
Business Inventories	+0.2%	+0.0%	+0.1%
TUESDAY
Consumer Price Index	+0.1%	+0.4%	+0.5%
-Core CPI	+0.2%	+0.2%	+0.2%
ICSC Store Sales	+3.0%		-1.1%
Treasury International Capital
-Foreign Demand for LT US Securities	-$21.8 B	NA	-$27.2 B
Industrial Production	+0.0%	+0.2%	+0.3%
Housing Market Index	52	52	57
WEDNESDAY
Housing Starts	914 M	951 M
Bernanke Testimony	NA	NA
Beige Book	NA	NA
Mortgage Activity	-4.0%	NA
EIA Petroleum Status	-9.9 M
THURSDAY
Bloomberg Consumer Comfort	-27.3	NA
Weekly Jobless Claims	360K	344K
EIA Natural Gas Report	+82 Bcf	NA
Bernanke Testimony	NA	NA
Philly Fed Survey	+12.5	+9.0
Leading Economic Indicators	+0.1%	+0.3%
FRIDAY
G-20 Central Bankers & Finance Ministers Meet in Moscow

As easy as it is to pinpoint keys to this weeks’ market movement, all of the data matters in my book, because it all measures against the Fed’s view of the economy. Whether the Fed’s tapering plan is on target or not will be answered by the data.

Still, there are a handful of standout data points this week, starting with the reporting of Q2 GDP by the nation of China. Economists were looking for 7.5% growth, which is down from the Q1 pace of 7.7%; and that is exactly what they got. Do any of you find that at all curious, that a nation that large with growth running so high, could exactly match its forecasted expectations? It’s a highly suspect result, and the fact that it was on target implies real growth is slower than 7.5%.

Federal Reserve Chairman Bernanke addresses the two houses of Congress, testifying to the financial committees of each branch this week. It’s a semi-annual event that was once known as the Humphrey-Hawkins Hearing. Congressmen regularly use this high profile event as a “photo opp.” They’ll beat on the Fed Chairman in order to look good back home, and they’ll bring up topics of interest to their constituents. Oftentimes, the Congressmen are misinformed or ill-equipped to discuss the matters they bring up, and so the questions can often be asinine. For this reason, I call it must-see TV, and some of the best content C-SPAN has to offer.

In all seriousness though, it does offer the Fed Chief an opportunity to clarify the Fed’s position on the economy and on its plans. Bernanke’s tapering statements in June, when he announced the Fed would be pulling away its asset purchase tool over the course of the next year or so, shook up securities markets. Bond markets collapsed as yields rose, because the Fed’s purchases of treasury securities and mortgage-backed securities help to keep rates low; it’s due to the extra synthetic demand they create for the securities. Also, because of the rising borrowing costs to corporate America and the impact that rate increases would have on Americans generally, stocks declined.

However, the Fed could be justified if economic growth were picking up. The problem is that all signs indicate the economy slowed in Q2 and is bearing the heavy burden of European and China issues, along with still high real unemployment. So the hearing could get testy, and is definitely worth watching.

Otherwise, you’ll want to follow the flow of the data, with several housing and manufacturing reports coming to the wire. Also, the Leading Economic Indicators Index for the month of June should play an important role in the trend of trading. Investors will be watching energy prices as well, because the recent increases could pressure consumers in our still vulnerable environment.

Corporate Events

Earnings season really starts this week, with many big names coming to the wire.

HIGHLIGHTED EPS REPORTS
Company	Ticker
MONDAY
Citigroup	NYSE: C
J.B. Hunt	Nasdaq: JBHT
PacWest Bancorp	Nasdaq: PACW
Cintas	Nasdaq: CTAS
AmeriServ Financial	Nasdaq: ASRV
TUESDAY
Coca-Cola	NYSE: KO
Johnson & Johnson	NYSE: JNJ
Yahoo	Nasdaq: YHOO
CSX	NYSE: CSX
Mosaic	NYSE: MOS
WEDNESDAY
Bank of America	NYSE: BAC
Abbott Laboratories	NYSE: ABT
Intel	Nasdaq: INTC
IBM	NYSE: IBM
American Express	NYSE: AXP
THURSDAY
Philip Morris	NYSE: PM
Morgan Stanley	NYSE: MS
UnitedHealth	NYSE: UNH
Google	Nasdaq: GOOG
Microsoft	Nasdaq: MSFT
FRIDAY
General Electric	NYSE: GE
Honeywell	NYSE: HON
Schlumberger	NYSE: SLB
Whirlpool	NYSE: WHR
VF Corp.	NYSE: VFC

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