Week Ahead – Jolly Good Times?

All the news is good, and yet stocks have opened the week lower Monday. Eyes are still focused eastward at Europe and China as international economic data continues to weigh somehow here at home despite strong domestic data. The week is light of U.S. economic indicators, but retail sales data is due. Investors and analysts will be busy enough with festive investor conferences and analyst days and those are always filled with jolly good news no matter the corporate presenters.

Santa Claus Rally

5-Day SPY Chart at Seeking Alpha

Stocks rallied through the first week of what is historically speaking the best performing month of the year. There was some volatility to work through on Thursday, but after Friday’s confirmation about the good health of the U.S. economy in the monthly jobs report, we should be ready to roar higher now.

Security	YTD	TTM
SPDR S&P 500 (NYSE: SPY)	+12.6%	+15.0%
SPDR Dow Jones (NYSE: DIA)	+8.5%	+12.1%
PowerShares QQQ (Nasdaq: QQQ)	+19.8%	+22.5%
iPath S&P 500 VIX ST Futures (NYSE: VXX)	-38.7%	-42.2%
PowerShares DB US Dollar Bullish (NYSE: UUP)	+10.2%	+9.9%
SPDR Gold Shares (NYSE: GLD)	-1.5%	-3.5%
iPath S&P Crude Oil (NYSE: OIL)	-31.8%	-31.3%

The dollar also found support again thanks to the economic confirmation, and that put pressure on commodities priced in dollar terms, including gold and energy. It still looks like the ECB will grow increasingly likely to go to extraordinary lengths to support the euro zone given that economic growth expectations continue to be adjusted lower. However, there is also some risk to the dollar posed by the potential for terrorism this month as we approach Hanukah and Christmas. In 2009, the “underwear bomber” attempted to blow up an aircraft on Christmas Day, and this past week a report surfaced about terrorist hopes to destroy several aircraft around Christmas this year. Thus, investors should probably have hedges in place on the week of Christmas and also for New Year’s Eve.

The economic schedule hardly offers much of note this week. We will still need to pay attention to the Producer Price Index (PPI) indication about producer level inflation. The data should begin to reflect lower energy prices before long, and that expectation has this indicator somewhat muted this month. Retail sales data is due Thursday and expected to be relatively positive. The consumer economy of the U.S. is of utmost importance to the investment community. We must see consumer spending and confidence continue to improve, and it should thanks to lower levels of unemployment and sharply lower gasoline prices. Small businessmen will weigh in on Tuesday, but I’m expecting them to increasingly become more positive about the environment given political change they likely favor due to the increased costs they have born over recent years.

THIS WEEK’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior	Expected
MONDAY
Investor Movement Index	5.22
Lockhart Speaks
TUESDAY
ICSC Weekly Store Sales	-1.8%
-Year-to-Year Pace	+2.8%
Redbook Store Sales	+4.8%
NFIB Small Biz Index	96.1
JOLTS	4.735 M
Wholesale Trade (Inventories)	+0.3%	+0.2%
WEDNESDAY
Mortgage Activity	-7.3%
EIA Petroleum Status
-Crude Oil Inventory	-3.7 MB
-Gasoline Inventory	+2.1 MB
Treasury Budget	$-121.7 B	$-63.0 B
Quarterly Services Survey	+0.8%
THURSDAY
Retail Sales	+0.3%	+0.4%
-Less Autos & Gas	+0.6%	+0.5%
Business Inventories	+0.3%	+0.3%
Export Prices	-1.0%	-0.2%
-Import Prices	-1.3%	-1.7%
Weekly Jobless Claims	297K	295K
Bloomberg Consumer Comfort	39.8
EIA Natural Gas Report	-22 bcf
FRIDAY
Producer Price Index	+0.2%	-0.1%
-Core PPI	+0.4%	+0.1%
Consumer Sentiment	88.8	89.5

Earnings reports this week surprisingly still include some important names. An important homebuilder reports in Toll Brothers; an important measure of leisure spending in Vail Resorts; important retailers perhaps showing the state of discretionary spending and employment in Lululemon and Men’s Wearhouse. The entire list follows here.

HIGHLIGHTED EPS REPORTS
Company	Ticker
MONDAY
ABM Industries	NYSE: ABM
Central Garden & Pet	Nasdaq: CENT
Diamond Foods	Nasdaq: DMND
H&R Block	NYSE: HRB
IDT Corp.	NYSE: IDT
Ingles Markets	Nasdaq: IMKTA
KiOR Inc.	Nasdaq: KIORQ
Laudauer	NYSE: LDR
Liberty Tax	NYSE: TAX
Medley Capital	NYSE: MCC
Photronics	Nasdaq: PLAB
Triangle Petroleum	Nasdaq: TPLM
Vail Resorts	NYSE: MTN
TUESDAY
ADDvantage Technologies	NYSE: AEY
Analogic	Nasdaq: ALOG
Autozone	NYSE: AZO
Burlington Stores	Nasdaq: BURL
CHC Group	Nasdaq: HELI
Conn’s	Nasdaq: CONN
Enzo Biochem	NYSE: EZN
Freshpet	Nasdaq: FRPT
HD Supply	NYSE: HDS
Korn/Ferry Int’l	NYSE: KFY
Krispy Kreme Doughnuts	NYSE: KKD
Miller Energy Resources	Nasdaq: MILL
Mitcham Industries	Nasdaq: MIND
NCI Building Systems	NYSE: NCS
Ossen Innovation	NYSE: OSN
Pep Boys	NYSE: PBY
Science Applications Int’l	Nasdaq: SAIC
The Pantry	Nasdaq: PTRY
UTi Worldwide	Nasdaq: UTIW
WEDNESDAY
Aviat Networks	Nasdaq: AVNW
Cantel Medical	NYSE: CMN
Casey’s General Stores	Nasdaq: CASY
Cherokee	Nasdaq: CHKE
Comtech Telecommunications	Nasdaq: CMTL
Comverse	Nasdaq: CNSI
Costco Wholesale	Nasdaq: COST
Ferrellgas Partners	NYSE: FGP
Fifth Street Senior Floating Rate	Nasdaq: FSFR
Francesca’s Holdings	Nasdaq: FRAN
Hovnanian Enterprises	NYSE: HOV
INTL FCStone	Nasdaq: INTL
Investors Real Estate Trust	Nasdaq: IRET
KMG Chemicals	NYSE: KMG
Lands End	NYSE: LE
Layne Christensen	Nasdaq: LAYN
Men’s Wearhouse	NYSE: MW
Monmouth Real Estate Inv.	NYSE: MNR
Oxford Industries	NYSE: OXM
Panhandle Oil & Gas	NYSE: PHX
Peregrine Pharmaceuticals	Nasdaq: PPHM
Restoration Hardware	NYSE: RH
Sigma Designs	Nasdaq: SIGM
Star Gas Partners	NYSE: SGU
Straight Path Communications	Nasdaq: STRP
Titan Machinery	Nasdaq: TITN
Toll Brothers	NYSE: TOL
Vera Bradley	NYSE: VRA
Wet Seal	Nasdaq: WTSL
THURSDAY
Adobe Systems	Nasdaq: ADBE
Ciena	Nasdaq: CIEN
DLH Holdings	Nasdaq: DLHC
Esterline Technologies	NYSE: ESL
Lee Enterprises	NYSE: LEE
Lululemon Athletica	Nasdaq: LULU
Methode Electronics	NYSE: MEI
Nordson	Nasdaq: NDSN
Quiksilver	NYSE: ZQK
RadioShack	NYSE: RSH
FRIDAY
Exceed Company	NYSE: EDS

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Our Report on Gold
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Our Report on McDonald’s (NYSE: MCD)

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