The Greek's Week Ahead has been engineered to prepare you for events that could impact your portfolio this week.
What frightens us about October? Is it the fog that covers the nooks of the pumpkin patch where something may lurk, or the approaching stride of a headless horseman? It could be that place we are all familiar with, the haunted house. Heck, these days, that could be any old homestead whose purchase was financed by a variable rate subprime mortgage! Or, could it be as described by Michael Santoli in his Barron's piece this week. He speaks of the inevitable comparison with 1987, that horror filled month of exactly one decade ago.
All comparisons aside, this October presents enough fear factors of its own to keep the Greek indoors until November. If there exists a wall of worry, then this fall and year to follow present a Dracula's castle of fright. As the door creaks open, Gap (
NYSE: GPS) executives fear it could be the bank examiner, come to check up on things. As the torches flicker, threatening to vanquish us into darkness, the Fed worries the dollar could fall into a bottomless pit and awaken inflation asleep deep within. Even worse, it could awaken the dragon of Asian investors, who might move their capital to faraway shores and assets.
And what about the specter of war... That bad man was here last week, and he was not welcome. Columbia made such a fool of him that he probably gets it now, that it's not just Bush that dislikes him; that in fact, the American people cannot digest him either. See, he thought we were all bamboozled into electing Bush and into goi
ng to war with Iraq (
well actually...).
The WMD man! Where's the WMD!? Ahmadinejad did not get it, that Americans actually fought a war to overcome that Nazi bastard, and that we learned about those atrocities that occurred over there first hand. We set those survivors free, and many of them came over here, to safety.
Maybe Germany outta invite this ignorant SOB to see Auschwitz, so he can bear witness with his own eyes. But, you know what, he'll just claim it a movie set,
like when Americans landed on the moon. Nobody could actually do that right? Who could even dream it? We are dealing with a culture where monsters are born who fantasize about shooting down airplanes from the sky, because to them, airplanes represent the most advanced of western technologies. Airplanes!
Now, I'm not generalizing and I'm not a racist, so please do not send me hate mail and don't issue one of those Fatahs on me, or I'll counter with what we Greeks call a fapa!
(Greeks from Athens to Astoria are on the floor laughing). I'm just saying, terrorists are fixated on airplanes. Think about it. Why? Then you will agree, and if you don't, just take a trip to Afghanistan and you'll get it. Flight applies the most advanced technology they come into personal contact with. Nuclear plants are coming up the rear though and could supplant the magic flying machines soon. That's if they last another month, in which case, they'll be passed by bunker buster bombs. Now let's take a look at the data shall we...
The week ahead...
Monday
started off the week's parade of economic data with the Institute for Supply Management's Manufacturing Index. We here at the Greek continue as a voice in the wilderness proclaiming that eventually, American manufacturing's support from overseas demand could be outweighed by the impact of a weakening America consumer, who we note still butters the bread of American industry.
If a Greek shouts in the forest, does he make a sound?
ISM's September Index continued a trend of decline, as the metric was reported at 52.0, short of Bloomberg's consensus of economists' view for a reading of 52.9. This follows August's reading of 52.9, and July's 53.8. Making room for all viewpoints, we note that any reading above 50 still represents an expansionary environment. One positive result of the decline in the index is that it could lead to prudent inventory management among manufacturers ahead of economic weakness.
In international news, the Bank of Japan released its quarterly tankan survey of business confidence Monday. The survey held at a level of 23 for the third quarter of 2007, matching the level measured in Q2. This reading, near a two-year high, exceeded the consensus expectation for a measure of 21 this time around.
While the week will likely be more notable for earnings warnings, Monday's scheduled earnings reporters included AngioDynamics (
Nasdaq: ANGO), Cal-Maine Foods (
Nasdaq: CALM), Palm, Inc. (Nasaq: PALM), Syms Corp. (
NYSE: SYM), Thor Industries (
NYSE: THO), Village Supermarket (
Nasdaq: VLGEA) and Walgreen (
NYSE: WAG).
On
Tuesday
, the weekly same-store sales report from the ICSC-UBS should attract attention, but usually doesn't. This week's reading showed no change in week-to-week sales and a 2.7% year-over-year increase. The result was an improvement over the prior week's 2.4% year-to-year change. Still, we believe the market is not going to find reason to celebrate from these kinds of changes until wider evidence exists that the consumer can survive the slew of pressures threatening him.
The National Association of Realtors released Pending Existing Home Sales data for the month of August on Tuesday. Not long ago, July's indicator dropped off a cliff, as it showed a 12.2% decrease. Barron's reported Lehman Brothers' expectation for a 4.5% August decline. The figure actually dropped 6.5%, marking the lowest point in its short history. There's not much to say here, however, I keep recalling a prescient talking head's prediction from late last year; the gentleman, who seemed as insane as the Greek did at the time, predicted a 40% drop in housing prices from the peak. As consensus gets closer to his opinion, we begin to seek bottom. However, we think the U.S. housing market will not find that footing until 2008, or later, depending on what surprises the pending war with Iran/Syria, and maybe others, holds.
At 4:00 p.m., U.S. auto sales for the month of September are expected to reach $12.4 million, down a bit from the 12.6 million recorded in August. Jim Cramer likes the changing economics of the American automakers, as indicated by his discussion following the GM/UAW (
NYSE: GM) settlement. What's not to like! Improved profitability, increased competitiveness, and the ability to play on a more even field with the likes of Toyota (
NYSE: TM) should help a bunch. Jim singled out Ford (
NYSE: F) as his play.
In important geopolitical news, the leaders of North and South Korea are meeting Tuesday for only the second time since the end of the Korean War. Imagine how Korean industry could benefit from manufacturing in the North, should that day ever come.
The fall conference season is in full swing, with CIBC's industrial-company confab kicking off. Tuesday's light earnings schedule includes Micron Technology (
NYSE: MU), Pepsi Bottling Group (
NYSE: PBG), SMF Energy (
Nasdaq: FUEL) and Twin Disc (
Nasdaq: TWIN).
Wednesday's
economic slate kicks off with the Mortgage Bankers Association Purchase Applications Report. Considering the pending home sales report of earlier in the week, we do not expect much good news from the mortgage finance market in the near term, at least not where it concerns a new home purchase.
The second half of this week is clearly where the focus of importance is. Wednesday starts things off with the Challenger Job-Cut Report, which measures the number of announced corporate layoffs per month. Last month's data provided a signal of things to come, as announced layoffs soared 85% over the month before. At 8:15 a.m., the ADP Report will provide a great deal of insight into Friday's Employment Situation Report. August's report of 38,000 job additions to the private sector proved ominous, but not foretelling as to just how bad the Employment Situation Report would be.
The ISM Nonmanufacturing Survey is important because of the great significance of the service sector in the United States. Bloomberg's consensus of economists expects a measure of 54.5, compared to August's 55.8. This will be followed by the regular 10:30 Petroleum Status report. With a tropical system forming off the coast of Florida, as of Tuesday morning, the report could be left mute.
Mylan Laboratories (
NYSE: MYL) is holding an investor's day, while Wednesday's earnings reports include Arrow International (
Nasdaq: ARRO), Immucor (
Nasdaq: BLUD), Mechel OAO (
NYSE: MTL), RPM International (
NYSE: RPM), Smart Modular Technologies (
Nasdaq: SMOD), Team Inc. (
Nasdaq: TISI), Wolverine World Wide (
NYSE: WWW) and Workstream (
Nasdaq: WSTM).
With jobs in focus again,
Thursday
kicks off with the Monster Employment Index, which we remind you, has become more important than the Help-Wanted data, due to the increasing penetration of the Internet medium. Weekly initial jobless claims are expected to reach 310,000, according to Bloomberg's consensus of economists, which is not especially troubling.
At 7:00 AM EDT, the Bank of England is scheduled to issue its decision on rates, while the ECB follows with its action. While CIA-man Nicholas Sarkozy pushes for a European rate cut to match that of American expansionary direction, the ECB's Jean-Claude Trichet seems set to an independent path. As a result, the ECB is widely expected to keep rates steady.
At 10:00 a.m. and following logical route considering economic expectations, factory orders are expected to have declined 2.8% in August. At 10:30, the EIA will post inventory data for natural gas.
In company specific news, Bear Stearns (
NYSE: BSC) is scheduled to meet with investors on Thursday. Considering the amount of chatter surrounding the company regarding the offering of ownership interests to investors ranging from Warren Buffet to Chinese interests, this makes for an especially interesting meeting. Thursday's earnings news includes reports from Acuity Brands (
NYSE: AYI), Centennial Communications (
Nasdaq: CYCL), Constellation Brands (
NYSE: STZ), Family Dollar (
NYSE: FDO), International Speedway (
Nasdaq: ISCA), Lawson Software (
Nasdaq: LWSN), Marriott International (
NYSE: MAR), Matrix Service (
Nasdaq: MTRX), Pall Corp. (
NYSE: PLL), Research in Motion (
Nasdaq: RIMM), Saba Software (
Nasdaq: SABA), Sealy Corp. (
NYSE: ZZ) and UAP Holding (
Nasdaq: UAPH).
Friday
is the day the market will anticipate all week, and with expectations for an Employment Situation rebound, the market is likely to rise into the report. Of course, much of the probability of this occurrence is tied to the employment data that precedes the Labor Department figure. Nonfarm payrolls are expected to rise by 115,000, after last month's surprise 4,000 jobs lost. Still, this doesn't represent healthy growth, and unemployment is expected to edge higher to 4.7%. Troubling the inflation hawks among us, average hourly earnings are expected to increase 0.3%.
Somewhat less important, yet still very interesting, the RBC Cash Index, which measures consumer attitudes, is due for release. The measure reached just 71.1 last month, down from 89.3 the month before. Topping off the week's data that could help us judge the fate of the American consumer, Consumer Credit is expected to have increased $9.5 billion in August, after an increase of $7.4 billion in July.
Friday concludes the quiet reporting week with data from ATS Medical (
Nasdaq: ATSI), Emmis Communications (
Nasdaq: EMMS) and that
well known giant of industry, EVRAZ Group (
Nasdaq: EVGPF.PK). The bond market closes at 2 p.m. ahead of the Columbus Day holiday on Monday.
Here's a relatively unknown bit of Greek trivia for you. Did you know, Christopher Columbus spent his early teens growing up on an island called Chios, in Greece. Chios was occupied by many empires over time, including the Genoese and Venicians. If you travel to Chios today, there are still people bearing the name Columbou. Your favorite Greek here has seen with his own eyes, an estate, said to be where Columbus lived. Not sure about that part folks, as the story teller is a known thief, though an otherwise nice guy who brings me a bottle of mastic flavored ouzo every year... Anyway, legend holds that Columbus returned to Chios (also Xios, Khios and Hios) to recruit navigators, sailors and maps before his journey to India. Here is where I add my little bit to the story...
and that's why they got lost and ended up founding America; must have had something to do with Hiotiko ouzo!
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