This Week: A Wintery Fall for Summers

The market was stirred up coming into this week because of the expectation that Larry Summers would be the President’s nominee to replace Ben Bernanke as Federal Reserve Chairman. However, as the week got started, Mr. Summers took himself out of the running, raising market expectations that the less disruptive Vice Chairwoman, Janet Yellen, would be the nominee. Add to that the non-conflict solution devised for Syria and you have a global market rally on your hands. We just have that issue of the Fed tapering to deal with, and that potential terrorist attack that unfolded in Washington D.C. Monday morning… and that Nasdaq options trading issue...

This Week

Index ETF	Week Ending Sept. 13	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	+2.0%	+19.0%
SPDR Dow Jones (NYSE: DIA)	+3.1%	+17.9%
PowerShares QQQ (Nasdaq: QQQ)	+1.5%	+19.8%

Stocks are off to a hell of a start this week, thanks in great part to Larry Summers’ decision to withdraw from consideration for Federal Reserve Chairman. The S&P 500 and Nasdaq are nearing their highs on the year, but we will get another test when the Federal Reserve talks tapering and more on Wednesday.

Economic Events

THIS WEEK’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expected
MONDAY
Empire State Manufacturing Index	8.24	9.0
Industrial Production	0.0%	+0.5%
-Capacity Utilization	77.6%	77.9%
-Manufacturing Production	-0.4%	+0.5%
TUESDAY
Consumer Price Index	+0.2%	+0.1%
-Core CPI	+0.2%	+0.2%
ICSC Weekly Store Sales	+1.5%
-Year-to-Year Pace	+2.3%
Redbook Store Sales	+4.6%
Housing Market Index	59	59
Treasury Int’l Capital
WEDNESDAY
Housing Starts	896K	915K
-Permits	943K	950K
FOMC Policy Statement	0% - 0.25%	0% - 0.25%
FOMC Forecasts
Chairman Press Conference
Mortgage Activity	-13.5%
EIA Petroleum Status
-Crude Oil Inventory	-0.2 M
-Gasoline Inventory	+1.7 M
THURSDAY
Existing Home Sales	5.39 M	5.255 M
Leading Economic Indicators	+0.6%	+0.6%
Bloomberg Consumer Comfort	-32.1
Weekly Jobless Claims	292K	341K
EIA Natural Gas Report	+65 Bcf
Philly Fed Index	9.3	10.0
Current Account	-106.1 B	-96.7 B
Sandra Pianalto Speaks
FRIDAY
Atlanta Fed Biz Inflation Expectations
Esther George Speaks
Daniel Tarullo Speaks
James Bullard Speaks
Narayana Kocherlakota Speaks

The economic schedule is heavy on the Fed this week. Not only will we have the latest FOMC monetary policy decision, but the Fed will publish its latest economic forecast update. We have noted the Fed’s outlook gradually deteriorating throughout the year, but this time around we may see it steady. The big event will usher in the beginning of Fed tapering of asset purchases, which is expected to be discussed in detail this week. I have a feeling the actual event will be a lot less eventful than the build up to the event led investors to believe it would be, whatever that means. Interest rates have been climbing since the Fed’s forewarning, and stocks suffered a tumultuous summer on the scare. Now we may just move forward smoothly, surprising all the chickens with their heads cut off into buying stocks again.

The week also brings a slew of housing, manufacturing and other economic data. The reports that intrigue me most are the Leading Economic Indicators Index and the Existing Home Sales data. This should be telling about the real state of economic affairs and real estate post interest rate rise. Expectations are for steady economic expansion but slowing housing activity, and those are my expectations here as well for the two reports.

On the close of the week, look for just about every Fed representative to have something to say about the data published on Wednesday. Several Fed men are lined up to speak Friday, and I expect they will all get behind Janet Yellen. With Summers out of the running, stocks have a major worry set aside and one less reason to sell off.

Corporate Events

There’s not much brewing on the corporate earnings front, but important barometers of business spending, consumer attitudes, and food inflation will report this week. Look for important info from Herman Miller, Steelcase and Oracle on business spending, and consumer measures from Rite Aid, Pier 1 Imports and Darden Restaurants. Major food producers General Mills and ConAgra are due to report as well.

HIGHLIGHTED EPS REPORTS
Company	Ticker
MONDAY
NAPCO Security Technologies	Nasdaq: NSSC
Oclaro	Nasdaq: OCLR
WPCS International	Nasdaq: WPCS
Cvent Inc.	NYSE: CVT
TUESDAY
Coty	Nasdaq: COTY
FactSet Research Systems	NYSE: FDS
ALCO Stores	Nasdaq: ALCS
Adobe Systems	Nasdaq: ADBE
Digital Cinema Destinations	Nasdaq: DCIN
WEDNESDAY
Biota Pharmaceuticals	Nasdaq: NABI
General Mills	NYSE: GIS
Cracker Barrel	Nasdaq: CBRL
Steelcase	NYSE: SCS
Herman Miller	Nasdaq: MLHR
Oracle	Nasdaq: ORCL
CLARCOR	NYSE: CLC
Apogee Enterprises	Nasdaq: APOG
THURSDAY
Rite Aid	NYSE: RAD
The Marcus Corp.	NYSE: MCS
Synthesis Energy Systems	Nasdaq: SYMX
IHS Inc.	NYSE: IHS
ConAgra Foods	NYSE: CAG
Pier 1 Imports	NYSE: PIR
Scholastic	Nasdaq: SCHL
TIBCO Software	Nasdaq: TIBX
Cintas	Nasdaq: CTAS
FRIDAY
Darden Restaurants	NYSE: DRI

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