The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.
The federal government is desperately seeking the perfect fiscal stimulus package to save America. The administration is frantically readying specifics for the State of the Union Address, and Congress busily meets to debate the topic this week. The Federal Reserve, meanwhile, attempts to use everything in its bag of tricks to restore confidence. Well,
The Greek knows the perfect medicine to do the trick. Maria Bartiromo warms January every year as she traverses the Atlantic to cover the World Economic Forum in Davos, Switzerland. Heck, if she can melt snow in the Alps, then the
Money Honey outta be able to stimulate the economy.
Don't you just love Davos time?...
The best cure for the horror of a trading week we witnessed in that pitiful period just passed is a three-day weekend. Now, we kindly warn the faint-hearted to please leave the room as we recap the destruction. After a positive start to last week, the Dow Composite sank through the rest of the period. The Dow Jones Industrials moved 4% lower on the week, while the S&P 500 sank 5.4% and the Nasdaq fell 4.1%.
The troubles were not limited to U.S. shores though, with just about every major global market also sinking. Only Taiwan rose on the week, moving some 2.1% higher. Leading losers in Asia were the Philippines, down 9.5%, and Indonesia, down 8.6%. The important markets of India and Hong Kong fell 7.8% and 7.7%, respectively. Things weren’t much better in Europe, with Sweden doing best in losing just 3.2%. On the other end of the spectrum, Belgium and Norway lost 7.7% each. The DJ STOXX Index sank 4.7%.
In the states, all sectors sank except fixed income, where declining yields and increased demand drove bond prices higher. Still, fund money flows were positive except in the municipal bond space, where presumably the trouble brewing at MBIA (
NYSE: MBI) and trouble cooked already at Ambac (
NYSE: ABK) sent investors for the exits. Even gold gave back a little ground last week, after first topping $900 a troy ounce. Oil, its distillates and natural gas all gave back ground as well, while corn climbed on an increased government ethanol mandate and shorter ending stocks than were expected. Okay, you can come back into the room now, as we’ll shift from recent horror, to future hope.
Think positive...
Speculation about the likelihood and degree of fiscal stimulus will be front and center again this week, as Congressional committees in both branches of Capitol Hill meet to discuss just that. We here at
The Greek believe the President’s idea to impact GDP by 1% or so with stimulus would be effective, and we also approve of the rumored $800 tax rebate check. That would prove meaningful to a heck of a lot of folks, and for those who might consider it just a pittance, it offers incentive to go buy something they’ve been coveting for awhile. Retailer shares reacted positively to the news. Also, the theoretical $1,600 bonus for married couples is precisely the shot in the arm the American household needs right now.
Apparently Democrats are more concerned about how we are going to pay for these desperately needed offerings, and John McCain on the Republican side also harped on the subject. I heard NY Democratic Senator Charles Schumer mouthing off about how much better increased government spending would be, over the proposed direct payout.
How do you feel about that America? Would you rather the government decide where to spend this cash infusion, or do you think you might do better with that decision yourself? Feel free to comment using the “comment” link below this article.
Market-Moving Event Schedule:
Monday
U.S. markets are closed to honor the memory of Dr. Martin Luther King Jr. A handful of companies were still scheduled to report earnings on Monday though, including DST Systems (
NYSE: DST), Equity Lifestyle Properties (
NYSE: ELS), First Defiance Financial (
Nasdaq: FDEF), HDFC Bank (
NYSE: HDB), Innovex (
Nasdaq: INVX), Royal Phillips Electronics (
NYSE: PHG), S&T Bancorp (
Nasdaq: STBA) and Satyam Computer Services (
NYSE: SAY).
Tuesday
The Senate Finance Committee begins important discussion of fiscal stimulus. We hope the Committee gets things off on the right foot, and does not send a message to the market of a bogged down debate that could lead to a late impacting, future government aid package. Americans need that money now! We’ll get an indication of just how badly so, with the 10:00 a.m. release of State Street’s Investor Confidence Index.
Two important foreign central banks are scheduled to make announcements on Tuesday. The Bank of Canada is expected to cut its target rate by a quarter point as it weighs the near-term impact of a slowing American economy on its Republic. The Bank of Japan will end its two-day meeting on Tuesday, and is expected to announce that it will hold rates steady at 0.5%. It’s hard to envision any central bank raising rates now, outside of China where growth continues, but the ECB continues to raise the specter of inflation in its public discussions.
Barron’s reports that at some point this week China will announce its economic growth figures for the fourth quarter and the full year of 2007. This report, if it shows impact from U.S. softening, could set off the fire alarm in the world’s emerging markets. Up to this point, still high-flying Asian investors (relatively speaking) have only smelled what they think is smoke. With the U.S. flailing, pension fund flows have likely been increasing into emerging markets, helping to offset profit-taking impact and the global growth slowdown scare.
OPEC is scheduled to issue its monthly oil market report, where it should be
all like,
“I told you so hungry energy consuming world.” OPEC will likely point toward American economic weakness as good reason to keep production steady, or dare I say, even warn of potential production cuts. Hopefully, George Junior got a few good words in for us on his Mid-East trip last week.
Tuesday’s earnings schedule will be headlined by Apple (
Nasdaq: AAPL), Bank of America (
NYSE: BAC) and Wachovia (
NYSE: WB). Even the mighty have fallen, with Apple joining Monsanto (
NYSE: MON), Research in Motion (
Nasdaq: RIMM) and other recently strong shares in retracing ground recently. Apple seems set to report strongly, however, and the consensus of analysts expects EPS growth of 41%, to $1.62 from the company’s fiscal first quarter report.
Other notables on the schedule include Cree Inc. (
Nasdaq: CREE), CSX Corp. (
NYSE: CSX), DuPont (
NYSE: DD), Eaton (
NYSE: ETN), Fair Isaac (
NYSE: FIC), Fastenal (
Nasdaq: FAST), Fifth Third Bancorp. (
Nasdaq: FITB), Jacobs Engineering (
NYSE: JEC), Johnson & Johnson (
NYSE: JNJ), National City (
NYSE: NCC), PetMed Express (
Nasdaq: PETS), Plantronics (
NYSE: PLT), Precision Castparts (
NYSE: PCP), Regis Corp. (
NYSE: RGS), STMicroelectronics (
NYSE: STM), Suncor Energy (
NYSE: SU), Susquehanna Bancshares (
Nasdaq: SUSQ), Tellabs (
Nasdaq: TLAB), Texas Instruments (
NYSE: TXN), UAL Corp. (
Nasdaq: UAUA), UnitedHealth (
NYSE: UNH), Waters Corp. (
NYSE: WAT) and a bunch more.
Wednesday
The House Budget Committee picks up the baton from the Senate, when it commences its own debate regarding fiscal stimulus on Wednesday. The weekly Same-Store Sales Report from the ICSC-UBS is pushed back day for the holiday-shortened week. Recall, last week’s data showed a sharp drop in growth rate to 1.1%. With all indications that the consumer is softening, and is also now well aware of his own situation, you can expect further weakness in this figure.
The Mortgage Bankers Association’s Mortgage Applications Index should continue to show benefit from sharply lower interest rates. Yields have dropped precipitously on the flight to safety and expectations for a Fed rate action. The treasury market forecasts a 50 point cut at least, and is actually looking toward 75 points. Now that the Fed’s “transparency” has raised expectations, they can let us all down with action that is more likely to mirror their conservatism. If we don’t get 75 points in aggregate by the end of the month, I see my hope for near-term rally sharply damaged.
The Greek continues to expect the Fed to follow up the President’s State of the Union introduced stimulus plan with a sharp cut at the regular January meeting. Sharp better mean 75 to 100 basis points though, and 50 to 75 seems more likely from this group...
It’s Davos time! Yes, it’s already that time of year when Maria Bartiromo gets to don her snow bunny outfit and board a plain to Switzerland to the World Economic Forum. While there, she will utter her favorite word (now ours as well), “Davos,” again and again. I must admit, it’s a turn on for
The Greek!
We love you Money Honey! Hopefully Switzerland will also be a turn on for the Greek national soccer club in June when it defends its European championship.
The EIA will report on Petroleum Status at its regular time, 10:30, but the market remains focused on the economic outlook and this week, on OPEC’s announcement.
The Greek continues to see oil prices declining this year until Iran, so we would underweight energy. We outlined this view in our article,
Sunset for Solar Stocks, in case you missed it.
Wednesday’s earnings schedule includes some of the market’s heavy hitters including Brinker International (
NYSE: EAT), Capital One Financial (
NYSE: COF), Coach (
NYSE: COH), ConocoPhillips (
NYSE: COP), Delta Airlines (
NYSE: DAL), eBay (
Nasdaq: EBAY), General Dynamics (
NYSE: GD), Kennametal (
NYSE: KMT), Motorola (
NYSE: MOT), Netflix (
Nasdaq: NFLX), Noble Corp. (
NYSE: NE), Piper Jaffray (
NYSE: PJC), Praxair (
NYSE: PX), QLogic (
Nasdaq: QLGC), Qualcomm (
Nasdaq: QCOM), Reinsurance Group of America (
NYSE: RGA), Rockwell Automation (
NYSE: ROK), Ryland Group (
NYSE: RYL), SLM Corp. (
NYSE: SLM), Southwest Airlines (
NYSE: LUV), Sovereign Bancorp (
NYSE: SOV), St. Jude Medical (
NYSE: STJ), Stryker (
NYSE: SYK), SunTrust (
NYSE: STI), Symantec (
Nasdaq: SYMC), Teradyne (
NYSE: TER), United Technologies (
NYSE: UTX), WellPoint (
NYSE: WLP) and many more.
Thursday
At 8:30, the market will be closely attuned to the Weekly Initial Jobless Claims Report from the Labor Department. The last few weeks have drifted well off the peaks of late December. Bloomberg’s consensus of economists is looking for new claims amounting to 321K for the week ended January 19. Last week’s reading measured 301K, but offered no relief to the market.
The Greek continues to expect widening financial sector and retail/restaurant space layoffs to mount this year, driving unemployment well above the current 5.0%.
At 10:00 a.m., Existing Home Sales for December are seen at an annual run rate of 4.95 million. Last week’s Housing Starts Report showed they sank to lows not seen since 1991. We wouldn’t expect any positive surprise here either. What should start housing
stocks higher is a 100 point move by the Fed... Otherwise, the gradual thinning of home inventory should do it by mid-year, despite rising foreclosure channel flow. The stocks will lead their market’s recovery, not visa versa.
The EIA’s Natural Gas Report is due at 10:30. The EIA’s own website indicates this report will be on Thursday, but in the past, long holiday weekends have led the group to push back reports a day. If that’s the case here, look for Petroleum Status Thursday and Natural Gas on Friday.
Get ready for a meaty earnings schedule on Thursday, including 1-800-FLOWERS.COM (
Nasdaq: FLWS), Ameriprise Financial (
NYSE: AMP), Amgen (
Nasdaq: AMGN), AT&T (
NYSE: T), Avnet (
NYSE: AVT), Ball Corp. (
NYSE: BLL), Baxter Int’l (
NYSE: BAX), Becton, Dickinson & Co. (
NYSE: BDX), Broadcom (
Nasdaq: BRCM), Cadence Financial (
Nasdaq: CADE), Cash America (
NYSE: CSH), Consolidated Edison (
NYSE: ED), Cooper Industries (
NYSE: CBE), Cypress Semiconductor (
NYSE: CY), Danaher (
NYSE: DHR), DeVry (
NYSE: DV), Dover Downs (
NYSE: DDE), E*Trade (
Nasdaq: ETFC), Fairchild Semi (
NYSE: FCS), Hartford Financial (
NYSE: HIG), Int’l Speedway (
Nasdaq: ISCA), Janus Capital (
NYSE: JNS), Kelly Services (
Nasdaq: KELYA), Kimberly Clark (
NYSE: KMB), KLA-Tencor (
Nasdaq: KLAC), Kulicke & Soffa (
Nasdaq: KLIC), Lam Research (
Nasdaq: LRCX), Leggett & Platt (
NYSE: LEG), Lennar Corp. (
NYSE: LEN), Lockheed Martin (
NYSE: LMT), Martek Biosciences (
Nasdaq: MATK), Mathews International (
Nasdaq: MATW), MEMC Electronics (
NYSE: WFR), Microsoft (
Nasdaq: MSFT), Nokia (
NYSE: NOK), PMC-Sierra (
Nasdaq: PMCS), Potash (
NYSE: POT), Rockwell Collins (
NYSE: COL), Steak ‘n Shake (
NYSE: SNS), Sun Microsystems (
Nasdaq: JAVA), SunPower (
Nasdaq: SPWR), Technitrol (
NYSE: TNL), Teledyne Tech (
NYSE: TDY), Textron (
NYSE: TXT), Hershey (
NYSE: HSY), McGraw Hill (
NYSE: MHP), US Airways (
NYSE: LCC), Xerox (
NYSE: XRX) and more.
Friday
There’s nothing on the slate outside of earnings news on Friday. Those reports include Caterpillar (
NYSE: CAT), Harley-Davidson (
NYSE: HOG), Idexx Laboratories (
Nasdaq: IDXX), Arkansas Best (
Nasdaq: ABFS), Concurrent Computer (
Nasdaq: CCUR), Delta Apparel (
NYSE: DLA), Dime Community Bancshares (
Nasdaq: DCOM), Dr. Reddy’s (
NYSE: RDY), FirstFed Financial (
NYSE: FED), Johnson Outdoors (
Nasdaq: JOUT), Kensey Nash (
Nasdaq: KNSY), KT Corp. (
NYSE: KTC), Lakeland Financial (
Nasdaq: LKFN), MB Financial (
Nasdaq: MBFI), MDU Resources (
NYSE: MDU), Midsouth Bancorp (
NYSE: MSL), Multi-Color Corp. (
Nasdaq: LABL), NuStar GP Holdings (
NYSE: NSH), Prosperity Bancshares (
Nasdaq: PRSP), Provident Bancorp (
Nasdaq: PBNY), W.W. Grainger (
NYSE: GWW) and Weatherford Int’l (
NYSE: WFT).
We hope you once again found value in our weekly market-moving event planner, and we look forward to providing your daily insight all week long at
WallStreetGreek.com.
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