WHAT’S ON TAP?
September is hardly turning out to be the nightmare many investors predicted it would. The market continued its march higher last week, but should run into some more difficult bumps this week as it tries to navigate higher. The consumer, the primary missing piece of the recovery rally, will be front and center this week. Earnings will be a bit heavier this week. On the docket are some potentially market moving names. Adobe and Best Buy report Tuesday while Oracle reports Wednesday. The only other important report of the week will be details on the FedEx quarter. Of course, FedEx pre-announced last week, but we could hear more positive news from them in their earnings release and conference call on Thursday. More important, is the fact that we are entering the period during earnings seasons where many companies will pre-announce. Do not be shocked to hear more reports like the FedEx report – cautious optimism with regards to the upcoming earnings season.
Monday – A slow day. Janet Yellen and Jeff Lacker both speak. Will merger Monday make its reappearance?
Tuesday-A big big day for the consumer. The government will release retail sales for August. Ignore the headline figure. The important figure will be ex-autos and gasoline. Cash for clunkers will provide a near-term boost to the headline figure.
- ICSC-Goldman Store Sales 7:45 AM ET
- Producer Price Index 8:30 AM ET
- Retail Sales 8:30 AM ET
- Empire State Mfg Survey 8:30 AM ET
- Redbook 8:55 AM ET
- Business Inventories 10:00 AM ET
Wednesday - Expectations remain for benign CPI reports in the near future. The more important news on Wednesday will be the industrial production and capacity utilization reports – both of which are expected to improve.
- Consumer Price Index 8:30 AM ET
- Industrial Production 9:15 AM ET
- EIA Petroleum Status Report 10:30 AM ET
Thursday - Thursday will be another big test for the market. Claims are expected to rise to 555K while housing is expected to show further signs of stabilization.
- Housing Starts 8:30 AM ET
- Jobless Claims 8:30 AM ET
- Philadelphia Fed Survey 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
Friday – A light news day. It is, however, a quadruple witching day. If you’re a volatility junkie this will be right up your alley.
Even ex-autos will show a slight improvement. However, don’t we have to look at data with a seasonal lens? Autos, housing, tourism and their effect on retail sales are all seasonal plays. The way I look at it and starting w/ April there was a general sense of optimism and perhaps the consumer responded temporarily based on hope. After all being mentally invested in a better outcome helped to reason away most of our truly serious problems.
To put it bluntly, official stats will always be supportive of the “recovery” story. The true question is should investors be buying the story when insiders at a ratio of 36:1 clearly are not?
Dean,
It’s a really interesting dynamic occurring. We have no insider buying, no revenue growth, massive consumer deleveraging, almost no real retail sales recovery, a very tepid recovery in rails, etc etc. And all of this is working against massive monetary stimulus and banks that are incentivized by pushing stock prices higher.
Which one will win out? Well, in the near-term the banks and the stimulus will win, but in the long-term the weak fundamentals will reassert themselves. IMO….
The reason why the consumer is not buying the recovery story is because they sense life around them is not supportive of the recovery story. Not only do they have less money, people are still losing their jobs, friends, friends of friends, relatives, spouses and so on. With falling house values, saving money is becoming more important than spending it. The JPMs amd the GSs are so far removed from the real world its pathetic. They may be right only because they understand the relationship between the government and this market. The consumer only understands their world..jobs, house prices, 401K (which they can’t touch), credit card credit availability and those are not getting better. They have no way to rationalize the claims of wall street with their own observations. Obama will try to use his charisma to boost people’s confidence in his upcoming speech by telling people it’s OK to buy stocks now. He will have to convince people to ignore what they see around them, trust big government and wall street, and jump into stocks with both feet. As the public takes on more and more debt to save this market, one has to wonder whether government can literally really force a market to ignore fundamentals that are at odds with realtiy. Though insiders don’t seem to believe it obviously the president does. The question is do you?
With Obama poised to make his own “mission accomplished” statement of sorts about the financial markets, one has to wonder what impact this will have. How bad would it look if the day of, after or even a month out, after he gets done telling people it’s safe to buy stocks again, the market experiences even a singificant retrcement. The odds of that happening are pretty low I’d say. If it does happen or any significant retracement begins consider it a massive and utter failure of the Fed to continue to control this market. To put him up on stage they must be feeling pretty confident their plan is working and will continue to work. The last time he told us to buy it turned out to be right and price is well above where it was at that point and probably will be for some time. Will history repeat itself?
Brian,
My guess is that when the recovery is undeniably obvious, the response will be similar to al Queda’s celebration of W’s carrier landing (financially speaking, of course)…
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