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This Week should be keyed by two important events, the Congressional hearings involving Goldman Sachs (NYSE: GS) on Tuesday, and the first quarter GDP report on Friday. As you'll see below, corporate earnings should also play a significant role in moving markets, since a slew of reports are due for release this week. The Fed is also due to publish its latest monetary policy statement this week.
There were no economic reports released Monday. The Milken Institute kicked off its global conference in Los Angeles. Citigroup's (NYSE: C) CEO Vikram Pandit keyed a financial forum in New York run by Chatham House. Meanwhile, news broke that the US might start selling off its Citi stake.
Democrats reportedly killed a provision from a derivatives bill that might force Warren Buffet's Berkshire Hathaway (NYSE: BRK-A, BRK-B) to set aside $8 billion in new reserves (collateral against securities).
This week's activity picks up on Tuesday in a big way when Goldman Sachs' (NYSE: GS) CEO Lloyd Blankfein and SEC-charged VP Fabrice Tourre appear before a Senate panel. Goldman has taken a strong stance against the SEC's fraud charge, so the line of questioning from Democrats seeking to draw more popular opinion in for its financial regulatory reform legislation should have all of Wall Street's attention.
Meanwhile, in a separate grouping, Federal Reserve Chairman Ben Bernanke will address the President's debt-reduction commission on the subject of fiscal sustainability. Finishing up with the Hill, a Senate committee will examine federal mine-safety laws in the wake of the recent tragedy.
Four economic reports color Tuesday, two of which are due in the pre-market. The ICSC Weekly Same-Store Sales data should continue to show strong year-over-year comparisons, due to the pitiful prior year data. Last week's year-to-year change reached 4.6%. On a week-over-week view, the changes have proven lackadaisical, with the last reading marking just a 0.2% increase.
One of those infamous credit rating agencies (of MBS fame), S&P, produces its joint S&P/Case Shiller Home Price Index at 9:00 AM. We have not been a fan of the index, as it offers outdated information. I prefer the current price data available from Existing Home Sales. In any event, we'll get February's Home Price Index Tuesday. January's report showed an adjusted (for seasonality) 10-City Index gain of 0.4%, while the 20-City measure produced a 0.3% adjusted price increase. More importantly, according to the Existing Home Sales data, the median price of a home gained 0.4% in March.
The second set of the day's economic reports present themselves at 10:00 AM. Despite the mid-April decrease in the Reuters/Michigan Sentiment metric, economists see a modest gain in the Conference Board's Consumer Confidence Index, to 53.5, from 52.5 for March. There is an important contrast between the two measures that bears watching here. The Expectations portion of the Michigan measure dropped sharply at last check, and so we'll be watching to see if there is consistency in this data point. Consumer sentiment is trailing the recovery in retail sales, but that's because absolute sales levels are still well below par while marking growth.
State Street (NYSE: STT) will report on Investor Confidence today. Its March reading showed a gain of 5.4 points in global confidence levels, to an index mark of 108. North American Confidence gained modestly, adding 0.3 to 110.4. Confidence was lifted by Asia-Pacific region gain, as it rose 4.1 points and overwhelmed European decline of 2.5 points. Europe might not be much better off in this latest reading, depending on where the reading fell in the time line of the Greek saga.
Wednesday is Fed Day, with the Federal Open Market Committee (FOMC) due to make its latest policy statement at 2:15 PM. The Fed is widely expected to keep rates at their historically low range of 0 to 0.25%. Thomas Hoenig has been a leading indicator for the FOMC, as his dissenting vote with regard to the language of the statement tells us the Fed is thinking about altering its "extended period" phrase. The whole of the market is looking for the Fed to begin speaking in nearer terms as far as future rate hikes are concerned. Such a change may not be yet forthcoming, due to housing doldrums, though Hoenig's dissension makes a good case for the change. If the change were to take place now, it would likely act against stocks in a significant way; and it seems investor enthusiasm is primed for a letdown based on hedge fund equity positions and advisor favor.
Overseas, Brazil's central bank might raise its key rate by as much as 0.75%, according to Barron's and Brown Brothers Harriman. Brazil's economy is blazing, according to last week's economic forecast published by the IMF. The forecast predicts 5.5% growth for Brazil in 2010.
The day's two regular reports finish off the schedule Wednesday. In the pre-market, look for more gains in the MBA's Weekly Mortgage Activity release. For the week ended April 16, the Market Composite Index of mortgage volume activity gained 13.6%, on Purchase Index rise of 10.1% and Refinance Index increase of 15.8%. Contracted fixed rates for 30-year and 15-year duration mortgages softened to 5.04% (from 5.17%) and 4.34% (4.45%), respectively.
The EIA will report Petroleum Status at 10:30 AM. For the week ended April 16, crude oil stocks increased by 1.9 million barrels. Gasoline stores increased by 3.6 million barrels. Both commodities stood above the upper limit of the average range for this time of year.
Barclay's (NYSE: BCS) Retail & Restaurant Conference kicks off in New York City. Bank of America (NYSE: BAC) has its annual stockholders meeting scheduled.
It's just the two usuals for Thursday, along with a storm of earnings reports and a few Congressional hearings.
Weekly Jobless Claims is up for report in the early going. In the week ended April 17, claims eased back toward recent trend, marking 456K, down from the revised 480K from the week before. The four-week moving average increased by 2,750, to 460,250. Census hiring should be providing some support now, and believe it or not, bank and mortgage brokerage hiring might follow...
The EIA will report on Natural Gas storage at 10:30. For the week ended April 16, natural gas stocks increased by 73 Bcf. At current mark, natural gas storage sits 286 Bcf above its five-year average.
A House of Representatives panel will take up credit-default Swaps and their role in Greece's debt crisis. In other words, the feds are doing all they can to turn up the heat on Goldman and Wall Street, which works in favor of getting financial regulatory reform passed. Meanwhile, the Senate Banking Committee will review "short-termism" in financial markets.
Five economic reports dot the schedule for Friday, but the market will be wholly focused on one key data point. GDP will be reported for the first quarter of 2010. This first reporting has economists looking for growth of 3.4%, which compares against the 5.6% rebound seen in Q4 2009. The GDP Price Index is seen increasing by 1.0% in Q1. Look for our early morning report Friday to review the data. Look for the Employment Costs Index at 8:30 as well. It's seen increasing by 0.4% in Q1, versus the 0.5% increase in Q4.
The Chicago Purchasing Managers Index (PMI) is due for report at 9:45 a.m. March's PMI came in slightly lower than February's reading, but at 58.8, still represented strong economic expansion. Because the Leading Index measured 61.8 in March, economists' expectations have been comfortably set at 60.0 for April's PMI.
The Reuters/University of Michigan will report Consumer Confidence at 9:55 a.m. Economists are looking for a recovery in this measure from the mid-April let-down. At that last check, the index fell to 69.5, from 73.6 in March. The Leading Component fell 5.6 points, and led us to warn readers that a harsh reality was sinking into American consumers hearts. Recovery will not be V-shaped, but slow going, perhaps W-shaped at best. We have been known to label the notion of a "jobless recovery" as fictional. Unemployment is sticking stubbornly high, and unfortunately satisfying our forecast. Consumers will not function optimally in such an environment, and we have a consumption driven economy here in the States.
Retail sales have been sustained somewhat by wealth stores, and thanks to stock market recovery, spending improved. However, we do not see this sustainable, and so economic recovery of note will require the return of manufacturing jobs (in new sectors like renewable energy, and perhaps, in a fair trading environment in competitive markets as well).
The Department of Agriculture will report on crop prices received by farmers at 3:00 p.m. This Crop Report is an important catalyst for commodity traders, recalling Trading Places with Eddie Murphy and Dan Aykroyd.
Berkshire Hathaway's (NYSE: BRK-A, BRK-B) annual meeting usually offers a spectacle for investment enthusiasts of all sorts, and Berkshire investors as well. Warren Buffet's annual letter is a treasure we hope we will have the pleasure of reading for many years to come.
The Kentucky Derby, another treasure we hope to long enjoy, kicks up the dirt on Saturday May 1st.
It's that week again! "Markos Birthday Celebration Week" kicks off again. The rules are simple. Friends of Markos must invite and treat him all week long, but never remind him of how old he's getting.
Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.