The Greek's Week Ahead has been engineered to prepare you for the events that could impact your portfolio this week.All signs point to a near-term retest of January market lows. Last week started out benign enough though, as the market rallied through Tuesday on signs that favorable resolution was in store for the bond insurers. In fact, MBIA (
NYSE: MBI) received good news from Standard & Poor's and Moody’s on Monday and Tuesday, respectively. The rating agencies confirmed the insurer’s ability to cover its obligations with affirmation of the company’s triple-A rating. Moody’s deserved its reward, as its management team had been proactive in raising capital and aggressive in argument for its strong position.
Then on Wednesday, Ben Bernanke made his way to Capitol Hill for his semi-annual testimony to Congress. While towing the company line in reassuring the American public that the economy should keep growing in his view, Ben made quiet mention that more than one small bank might go under as result of recent lending turmoil. As if the thought of our Benjamins being lost to bad bankers was not enough, the dollar kept sinking, and closed the week near $1.52 per euro.
Just as bond insurers lost steam, stagflation took over as the new brick in the stock market wall of worry. Producer prices rose more than expected, driven by sticky food and energy costs that are embedding themselves into the system. At the same time, durable goods orders showed a significant degree of decline, and consumption was measured barely keeping up with the rate of inflation.
Meanwhile, commodities gained even more capital support, and gold reached $975 per troy ounce. Oil broke new records this week also, but weakened on Friday while still teasing $100 per Brent Crude barrel. With prices high despite troubling economic signs, the market has indeed shifted back to worrying about how bad the economy might get, and January’s lows look set to be retested.
The Week AheadThings will not get any easier this week, as the regular monthly onslaught of employment data reaches the newswires. A total of five labor reports are slated for the week, amongst other important news scheduled.
Monday Durable goods orders may have offered some insight into a weak Motor Vehicle Sales Report for February, which is set for release on Monday. Bloomberg's consensus expects 11.95 million sales for the month, versus 11.7 million reported in January. In other auto news, Ford (
NYSE: F) is expected to sell its Jaguar and Land Rover brands to Tata Motors (
NYSE: TTM) this week.
At 10:00 a.m., ISM Reports its Manufacturing Index for February. The consensus is looking for a measure of 48.1, compared to 50.7 seen in January. This concurs with recent regional reports showing contraction in the New York, Philly and Chicago areas. In the final economic report of the day, January Construction Spending is expected to show a decrease of 0.7%.
Monday's earnings schedule includes reports from HSBC Holdings (
NYSE: HBC), Petrobras (
NYSE: PZE), American Shared Hospital Services (NYSE: AMS), Gehl (
Nasdaq: GEHL), Hughes Communications (
Nasdaq: HUGH), IPCS Inc. (
Nasdaq: IPCS), Mark West Energy Partners (
NYSE: MWE), Salix Pharmaceuticals (
Nasdaq: SLXP), Santarus (
Nasdaq: SNTS) and a few others.
Tuesday Super Duper Tuesday brings critical primaries for the Democratic Party in the states of Ohio, Texas, Rhode Island and Vermont. Obama victories in both Texas and Ohio could prove enough to end Hillary Clinton's presidential hopes. Fed Chairman Bernanke takes a smaller stage than last week, but one with a microphone and thus capable of swinging the market. He will address the Independent Community Bankers Association. They are probably none too pleased with the Chairman's disclosure last week that some small banks may go bankrupt in the near-term.
The ICSC-UBS will report its regular weekly same-store sales data on Tuesday, and recent weekly trends have been surprisingly showing improvement. Still, the state of the consumer is shaky, and the data could offer new low-point at any time. The Bank of Canada is slated to make a decision on its key rates on Tuesday morning. A cut is in order in Canada ay? The Bank of Australia is also on schedule for a decision, but could actually raise rates.
Tuesday's earnings schedule includes Chico’s FAS (
NYSE: CHS), Clearwire (
Nasdaq: CLWR), National Bank of Greece (
NYSE: NBG), Bank of Montreal (
NYSE: BMO), Bank of Nova Scotia (
NYSE: BNS), Heely's (
Nasdaq: HLYS), Insituform Technologies (
Nasdaq: INSU), Middlebrook Pharmaceuticals (
Nasdaq: MBRK), Perficient (
Nasdaq: PRFT), Simcere Pharmaceutical (
NYSE: SCR), Staples (
Nasdaq: SPLS), X-Rite (
Nasdaq: XRIT) and others.
WednesdayOn Wednesday, the Challenger Job-Cut Report hits the wire before the market open. The release by Challenger, Gray & Christmas offers insight into employment reduction, as it measures the monthly amount of announced corporate layoffs. January’s report showed an increase of 69% over December, to a level of 74,986.
Still on Wednesday morning, the heavily followed ADP Employment Report for the month of February is due. ADP measures private employment, and serves as a prelude to the Labor Department’s Employment Situation Report. Its accuracy in doing so, however, is debatable.
The yield curve is still pretty steep, considering pervasive inflation concern that coexists with a Fed set on rate cuts. Thus, the Mortgage Bankers Association's regular mortgage activity report should continue to show a scarcity of new applications.
The revision of Q4 Productivity and Costs is anticipated to show no changes, according to prognosticators. That means the data shows a nonfarm productivity increase of 1.8% and unit labor cost increase of 2.1%. January Factory Orders are seen having fallen 2.5%, according to Bloomberg. Almost every data point is indicating economic contraction, and yet Ben Bernanke and President Bush continue to play us for fools.
ISM's Nonmanufacturing Survey for the month of February is seen measuring 47.5, up from 41.9 in January. It should not be long now before the service sector falls in line behind struggling manufacturing, a frightening thought since the American economy is dominated by service industry. The Fed's Beige Book is set for release at 2:00 p.m. on Wednesday, and it should not offer comforting news either, considering recent regional reports.
The regular EIA Petroleum Status Report should show yet another build of inventory and OPEC is seen holding production steady, but the petrol market is more concerned about long-term international demand at the moment. Also, with Venezuelan troops headed to the border with Columbia, yet another geopolitical concern is born.
Wednesday's earnings schedule includes Athenahealth (
Nasdaq: ATHN), BJ’s Wholesale Club (
NYSE: BJ), Costco (
Nasdaq: COST), H&R Block (
NYSE: HRB), PetSmart (
Nasdaq: PETM), Saks (
NYSE: SKS), American Safety Insurance (
NYSE: ASI), Canadian Solar (
Nasdaq: CSIQ), Coldwater Creek (
Nasdaq: CWTR), inTest Corp. (
Nasdaq: INTT), MI Developments (
NYSE: MIM), Mindray Medical (
NYSE: MR), TIVO Inc. (
Nasdaq: TIVO) and others.
ThursdayEarly Thursday morning, the Bank of England and the European Central Bank are expected to keep their respective target rates steady, according to Barron's. However, we expect the BOE to cut rates. If the ECB keeps rates steady, expect another hard week for the dollar, and a new low as well.
The Monster Employment Index, compiled by Monster Worldwide (
Nasdaq: MNST), is due for release Thursday before the open. It has grown in importance, as job listings have migrated from print to online form. The index measures job availability, and we expect it to deteriorate as help wanted postings likely become scarcer in the months ahead. The regular weekly initial jobless claims report Thursday should attract plenty of attention after new claims filings climbed to 373K last week.
Monthly Chain Store Sales are set for report, but February's results might offer surprisingly positive news considering the trends we've witnessed in the ICSC weekly same-store sales results. The Pending Home Sales Index, which declined 1.5% in December should show another move lower for January. While the EIA Natural Gas Report reaches the wire on Thursday at 10:30, the commodity continues to close the price gap with oil. What's interesting about this is that it occurs even while inventory data remains benign.
Thursday's earnings schedule includes Joy Global (
Nasdaq: JOYG), Korn Ferry (
NYSE: KFY), National Semiconductor (
NYSE: NSM), Building Materials Holding (
NYSE: BLG), Depomed (
Nasdaq: DEPO), iCAD (
Nasdaq: ICAD), Jones Soda (
Nasdaq: JSDA), Nexstar Broadcasting (
Nasdaq: NXST), STAAR Surgical (
Nasdaq: STAA), Sun Healthcare (
Nasdaq: SUNH), Transact Technologies (
Nasdaq: TACT), Urban Outfitters (
Nasdaq: URBN) and Wind River Systems (
Nasdaq: WIND).
FridayThe employment week closes out on Friday with the Labor Department’s Employment Situation Report. Expectations will already be set low, since last month’s report showed the first monthly decline in employment in four years. Nonfarm payrolls fell 17,000 last time around. We expect unemployment to move higher from 4.9% seen in the last report, to 5.0% or more.
The Bank of Japan is expected to keep its key interest rate steady on Friday. The RBC Cash Index will offer a measure of consumer attitude and spending by household later that morning. Then in the afternoon, consumer credit for January is seen increasing by $7.3 billion.
Friday's earnings reports include NovaGold Resources (
AMEX: NG), HealthAxis (
Nasdaq: HAXS) and Veolia Environnement SA (
NYSE: VE).
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