The Week Ahead – Shall We Reassess?
You can thank God for a Good Friday reporting of the monthly jobs report, which was disastrous. If not for the three day weekend, we might have had some serious volatility to deal with. But after a festive spring weekend to sooth our souls, stocks were only slightly shaken this morning before finding greener ground. Still, markets must reassess expectations for the economy and the Fed now that the latest jobs report indicated things were pretty poor in March.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Stocks are at a crossroads, reassessing the situation. The market is about even from where it started the year, and facing various data that want to drive it in different directions. The economy and the Federal Reserve are most present today in the factor model for stocks, so keep an eye on developments therein.
Economically speaking, the week is not without news. Though investors will still be stewing over last week’s data found in the monthly jobs report. While the unemployment rate was unchanged at 5.5%, nonfarm payroll growth was dramatically short of economists’ expectations and not reflective of a healthy economy. The government reported 126K nonfarm payroll additions for March, versus expectations for 247K. The anemic pace of job creation was down from a revised lower February figure of 264K.
This week, the service sector, which dominates the American economy, gets a checkup. Both Markit Economics and ISM data points will be reported, with expectations set for not much change this month. Too many data points are pointing to trouble for Q1, but the service sector has not caved. According to Gallup, consumer spending is up as well; that would surely be benefiting from lower gasoline prices.
The FOMC meeting minutes will be released on Wednesday. They may have been rendered mute by the latest jobs report, but I still expect to see that an active debate is underway within the Fed with regard to the interest rate hike timeline. This could stir up concern anew, but I expect an unsettling of markets will quickly stagnate again as pundits point to the economic data flow as critical to the data-dependent Fed, and its comments coming through this week.
Keep your eye on the weekly Petroleum Status Report, as pretty soon the weekly builds in inventory we have grown accustomed to will switch over to weekly draws from inventory. Several factors, including dollar decline, are now serving energy and I expect the inflection point in the inventory flow to serve energy prices as well.
Expect post-holiday weekly jobless claims to tick back up after last week’s reported tiny claim total. The JOLTS Report this week will add to the labor discussion, as we learn about the growing number of jobs available to Americans.
International events will weigh heavy this week, as the Greek Prime Minister meets with Russia’s Vladimir Putin, possibly about alternatives to EU membership. The devil may offer Greece a tempting sin it may not be able to come back from, so I hope Greece finds more support from the IMF and its EU partners before such a fall. The Bank of Japan (BOJ) and Bank of England (BOE) report monetary policy this week, but we’ll keep our focus on the BOJ. Its dovishness contrasts with the Fed’s plans and has given the dollar its nascent bubbly look. We’ll want to look for signs of future change in that regard. The dollar is coming under significant stress given the latest economic data, which serves the Fed’s patience.
The earnings schedule reflects the formal start of earnings season with the report of Alcoa (NYSE: AA). Still, very few companies report during this Bright Week. Look to next week for the real start of the earnings flow.
DISCLOSURE: Kaminis is short UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Security
|
YTD
|
TTM
|
SPDR S&P 500 (NYSE: SPY)
|
+0.9%
|
+12.9%
|
SPDR Dow Jones (NYSE: DIA)
|
+0.2%
|
+10.6%
|
PowerShares QQQ (Nasdaq: QQQ)
|
+2.4%
|
+23.1%
|
SPDR Gold Shares (NYSE: GLD)
|
+1.1%
|
-8.2%
|
iPath S&P Crude Oil (NYSE: OIL)
|
-13.9%
|
-56.0%
|
PIMCO Total Return (Nasdaq: BOND)
|
+2.4%
|
+7.5%
|
PowerShares DB US $ Bullish (NYSE: UUP)
|
+6.2%
|
+19.4%
|
iPath S&P VIX ST Futures (NYSE: VXX)
|
-19.1%
|
-40.1%
|
Stocks are at a crossroads, reassessing the situation. The market is about even from where it started the year, and facing various data that want to drive it in different directions. The economy and the Federal Reserve are most present today in the factor model for stocks, so keep an eye on developments therein.
The Week Ahead
Economic Reports
Economically speaking, the week is not without news. Though investors will still be stewing over last week’s data found in the monthly jobs report. While the unemployment rate was unchanged at 5.5%, nonfarm payroll growth was dramatically short of economists’ expectations and not reflective of a healthy economy. The government reported 126K nonfarm payroll additions for March, versus expectations for 247K. The anemic pace of job creation was down from a revised lower February figure of 264K.
This week, the service sector, which dominates the American economy, gets a checkup. Both Markit Economics and ISM data points will be reported, with expectations set for not much change this month. Too many data points are pointing to trouble for Q1, but the service sector has not caved. According to Gallup, consumer spending is up as well; that would surely be benefiting from lower gasoline prices.
The FOMC meeting minutes will be released on Wednesday. They may have been rendered mute by the latest jobs report, but I still expect to see that an active debate is underway within the Fed with regard to the interest rate hike timeline. This could stir up concern anew, but I expect an unsettling of markets will quickly stagnate again as pundits point to the economic data flow as critical to the data-dependent Fed, and its comments coming through this week.
Keep your eye on the weekly Petroleum Status Report, as pretty soon the weekly builds in inventory we have grown accustomed to will switch over to weekly draws from inventory. Several factors, including dollar decline, are now serving energy and I expect the inflection point in the inventory flow to serve energy prices as well.
Expect post-holiday weekly jobless claims to tick back up after last week’s reported tiny claim total. The JOLTS Report this week will add to the labor discussion, as we learn about the growing number of jobs available to Americans.
International events will weigh heavy this week, as the Greek Prime Minister meets with Russia’s Vladimir Putin, possibly about alternatives to EU membership. The devil may offer Greece a tempting sin it may not be able to come back from, so I hope Greece finds more support from the IMF and its EU partners before such a fall. The Bank of Japan (BOJ) and Bank of England (BOE) report monetary policy this week, but we’ll keep our focus on the BOJ. Its dovishness contrasts with the Fed’s plans and has given the dollar its nascent bubbly look. We’ll want to look for signs of future change in that regard. The dollar is coming under significant stress given the latest economic data, which serves the Fed’s patience.
THIS WEEK’S ECONOMIC REPORT
SCHEDULE
|
|||
Economic Data Point
|
Prior
|
Expect
|
Actual
|
MONDAY
|
|||
Many Overseas Markets Closed
|
|||
56.9
|
56.7
|
56.5
|
|
57.1
|
58.4
|
59.2
|
|
4.7
|
|||
$82
|
$86
|
||
TUESDAY
|
|||
$11.6B
|
$14.0B
|
||
4.877M
|
5.075M
|
4.998M
|
|
3.0%
|
|||
1
|
|||
WEDNESDAY
|
|||
4.6%
|
|||
-Crude Oil Inventory
|
4.8MB
|
||
-Gasoline Inventory
|
-4.3MB
|
||
Greek PM Meets Putin
|
|||
THURSDAY
|
|||
268K
|
285K
|
||
46.2
|
|||
-18bcf
|
|||
Wholesale Trade –
Inventories
|
0.3%
|
0.2%
|
|
-Sales
|
|||
Chain Store Sales
|
|||
FRIDAY
|
|||
-0.1%
|
-0.2%
|
||
-Import Prices
|
+0.4%
|
-0.3%
|
|
-$192.3B
|
-$43.0B
|
||
Orthodox Good Friday
|
EPS Reports
The earnings schedule reflects the formal start of earnings season with the report of Alcoa (NYSE: AA). Still, very few companies report during this Bright Week. Look to next week for the real start of the earnings flow.
HIGHLIGHTED EPS REPORTS
|
|
Company
|
Ticker
|
MONDAY
|
|
Arthur J. Gallagher
|
NYSE: AJG
|
Body Central
|
Nasdaq: BODY
|
Consumer Portfolio Services
|
Nasdaq: CPSS
|
Healthcare Services Group
|
Nasdaq: HCSG
|
Marketo
|
Nasdaq: MKTO
|
NII Holdings
|
Nasdaq: NIHDQ
|
Orthofix International
|
Nasdaq: OFIX
|
Quicksilver Resources
|
Nasdaq: KWKAQ
|
Schulman A. Inc.
|
Nasdaq: SHLM
|
The Wet Seal
|
Nasdaq: WTSLQ
|
Zep Inc.
|
NYSE: ZEP
|
TUESDAY
|
|
Dave & Buster’s Entertainment
|
Nasdaq: PLAY
|
Exceed Co.
|
NYSE: EDS
|
Greenbrier Co.
|
NYSE: GBX
|
Hooker Furniture
|
Nasdaq: HOFT
|
International Speedway
|
Nasdaq: ISCA
|
Joe’s Jeans
|
Nasdaq: JOEZ
|
Mitcham Industries
|
Nasdaq: MIND
|
Schnitzer Steel Industries
|
Nasdaq: SCHN
|
Team Inc.
|
Nasdaq: TISI
|
WEDNESDAY
|
|
Alcoa
|
NYSE: AA
|
Alcobra
|
Nasdaq: ADHD
|
API Technologies
|
Nasdaq: ATNY
|
Apogee Enterprises
|
Nasdaq: APOG
|
Bed Bath & Beyond
|
Nasdaq: BBBY
|
Family Dollar Stores
|
NYSE: FDO
|
Global Payments
|
NYSE: GPN
|
Mistras Group
|
NYSE: MG
|
MSC Industrial Direct
|
NYSE: MSM
|
Northern Technologies Int’l
|
Nasdaq: NTIC
|
OMNOVA Solutions
|
NYSE: OMN
|
Pier 1 Imports
|
NYSE: PIR
|
Resources Connection
|
Nasdaq: RECN
|
Richardson Electronics
|
Nasdaq: RELL
|
Rite Aid
|
NYSE: RAD
|
RPM International
|
NYSE: RPM
|
WD-40
|
Nasdaq: WDFC
|
THURSDAY
|
|
AngioDynamics
|
Nasdaq: ANGO
|
Ceres
|
Nasdaq: CERE
|
Constellation Brands
|
NYSE: STZ
|
Fuwei Films
|
Nasdaq: FFHL
|
PriceSmart
|
Nasdaq: PSMT
|
Ruby Tuesday
|
NYSE: RT
|
Synergy Resources
|
Nasdaq: SYRG
|
FRIDAY
|
|
Daqo New Energy
|
NYSE: DQ
|
DISCLOSURE: Kaminis is short UUP. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Labels: Market-Outlook, Market-Outlook-2015-Q2, Week-Ahead, Week-Ahead-2015
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