Sorry, I got distracted today by this $200 oil nonsense…
I've had my say on oil and the banking industry this weekend (and don't miss my pick on AUO, in member comments!) so now it's time to get to work. To say we have a lot going on this week is a MAJOR understatement with a very full economic calendar, highlighted by a 2-day Fed meeting that hopefully will end in a pause or at most a quarter-point rate cut in order to give the dollar a chance to find a true bottom to stage a rally off of.
According to Briefing.com, here's what we have to look forward to this week:
| Date | ET | Release | For | Actual | Briefing.com | Consensus | Prior |
|---|---|---|---|---|---|---|---|
| Apr 29 | 10:00 | Consumer Confidence | Apr | 62.0 | 62.0 | 64.5 | |
| Apr 30 | 08:15 | ADP Employment | Apr | -55K | 8K | ||
| Apr 30 | 08:30 | GDP-Adv. | Q1 | 0.7% | 0.4% | 0.6% | |
| Apr 30 | 08:30 | Chain Deflator-Adv. | Q1 | 3.0% | 3.0% | 2.4% | |
| Apr 30 | 08:30 | Employment Cost Index | Q1 | 0.8% | 0.8% | 0.8% | |
| Apr 30 | 09:45 | Chicago PMI | Apr | 49.0 | 48.5 | 48.2 | |
| Apr 30 | 10:30 | Crude Inventories | 04/26 | NA | NA | 2421K | |
| Apr 30 | 14:15 | FOMC Policy Statement | |||||
| May 01 | 00:00 | Auto Sales | Apr | 5.1M | NA | 4.9M | |
| May 01 | 00:00 | Truck Sales | Apr | 6.3M | NA | 6.2M | |
| May 01 | 08:30 | Initial Claims | 04/26 | NA | NA | 342K | |
| May 01 | 08:30 | Personal Income | Mar | 0.4% | 0.4% | 0.5% | |
| May 01 | 08:30 | Personal Spending | Mar | 0.3% | 0.2% | 0.1% | |
| May 01 | 08:30 | PCE Core Inflation | Mar | 0.2% | 0.1% | 0.1% | |
| May 01 | 10:00 | Construction Spending | Mar | -1.0% | -0.5% | -0.3% | |
| May 01 | 10:00 | ISM Index | Apr | 49.0 | 48.0 | 48.6 | |
| May 02 | 08:30 | Average Workweek | Apr | 33.7 | 33.7 | 33.8 | |
| May 02 | 08:30 | Hourly Earnings | Apr | 0.3% | 0.3% | 0.3% | |
| May 02 | 08:30 | Nonfarm Payrolls | Apr | -70K | -80K | -80K | |
| May 02 | 08:30 | Unemployment Rate | Apr | 5.2% | 5.2% | 5.1% | |
| May 02 | 10:00 | Factory Orders | Mar | NA | 0.4% | -1.3% |
This is why we were fairly bearish going into the weekend. $118 oil, Consumer Confidence (or lack thereof) on Tuesday followed by high unemployment a low GDP on Wednesday could be a recipe for disaster and the Fed is going to look like they have no control over the situation if we don't see some moderation from the previous levels. With GDP estimates ranging from 0.4% to 0.7%, it's anyone's guess where this will go mid-week.
The hits just keep on coming on Thursday with Auto Sales and Personal Spending AND Construction Spending AND the ISM each capable of tanking the markets all by themselves. Unemployment is always big on Friday and Factory Orders will be awful if they don't show big improvements over last month. Feeling bullish yet?
Now let's talk about earnings. Another 500 companies report this week and we're going to be watching:
- Monday: BEAV (a Boeing Buddy ™) already beat, HUM had a beat, RSH in-line, TSN had a beat and are a buy if you think their +$600M feed cost won't last, VZ (got 'em) was in-line and WWY had such a good beat that Warren Buffett is buying them! Later today we get NLY, AXS, BLDP, CHINA, CVD, EEP, FLS, MTH, PBI, STM, TZOO and V (got 'em hedged).
- Tuesday: ADM, AVP (need 'em), BYD, BP (taking the June $65 puts on this boost), BNI, CBS, GLW (need 'em), FDP, LEA, MSO, MA (spread would be nice), MHP, MHS, ODP, PCZ, RDN, RDSA, SIRI (got 'em), SPG, TSCM (tempting short), TUES, X (we're short), US and VLO, who will clue us in to XOM's refinery earnings.
Wow, that's just 2 days and we haven't gotten to Tuesday night! Hopefully I'll remember to do the rest later…
If oil can't break $120 on this big push we may actually have a good week but that economic data is scary so we'll continue to let our callers do most of the work for us (and take most of the risk!). It's possible for the data to surprise up and the Fed to say they're done and for the market to gain 1,000 points but I think it's most likely we are at about the right level here, somewhere between 12,750 and 13,300.
Asian markets were mixed this morning with the Shanghai falling victim to 2.5% of profit taking. Japan finally got their inflation mojo back, with a 1.2% rate over the past 12 months, their highest rate in 10 years. This is not good news when you have a strong currency that may drop 10% very quickly…
Europe is also bursting with inflation but the markets there are in a good mood this morning with banks coming on strong but there are signs of dollar strength that are very encouraging for exporters. Barron's reported on the dollar's comeback this weekend (see Phil's Favorites) and that is the number one thing to keep our eye on this week.
Our man Kirkorian is picking up 13% of F, a good sign as long as you don't think he's lost his marbles. CAL says no to mergers but is really talking to British Airways (shhh) and it's going to be one heck of an interesting week.
Let's be careful out there!
