This Week Keyed on Europe, Housing Data and Retailer EPS
The holiday shortened week following President’s Day will present data keying on Greece and European resolve, new housing and economic metrics, and also several key company earnings reports from important retailers. See our entire preview for this week's stock market schedule below.
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The most significant data point this week affecting U.S. markets will most likely be foreign born. Given the weight of the European decision on whether to move forward with the second bailout package for Greece or not, and the unknowns that accompany the abandonment of Greece, the step towards bailout achieved Tuesday is an important support for stocks. However, there remains a ways to go and a process to see through before the issue is cleared. If over time the Europeans determine that their efforts, which will likely be their last according to the Germans, would not be enough for Greece, there is a chance they might allow Greece to fail and decide to do so as early as March.
On the economic data front, the week presents several housing data points that are covered later in this report. Tuesday will offer the Chicago Fed’s National Activity Index, and this latest report will cover the month of January. February’s report showed significant improvement in the index, as it shifted to +0.17 in December, from -0.46 in November. That said, the index’s three-month moving average stayed negative while gaining to -0.08. Thus, Tuesday’s report offers an opportunity for some confirmation that economic growth has in fact shifted to a level that is above average historically. The gains last month were helped by improvements in production and employment data.
The week will have a lot to say about housing, after last week’s news on housing starts and mortgage activity offered little to celebrate. I wrote about the housing industry in great depth last week, and I suggest readers review that work. This week brings data on Existing and New Home Sales. The Existing Home Sales report reaches the wire Wednesday morning. Economists surveyed by Bloomberg see the annual pace of sales rising modestly to 4.69 million in January, up from 4.61 million in December. That’s no blockbuster improvement, but even the optimists aren’t looking for significant gains until spring. New Home Sales are seen improving to an annual pace of 315K, according to economists, up from 307K. Again, not the robust growth that housing stock enthusiasts will need to keep the gains compiled since October safe.
Investors will be interested in the Consumer Confidence Index from the University of Michigan/Reuters on Friday. Doubt has been building in consumers since the latest months’ retail sales data was reported. Economists surveyed by Bloomberg are only looking for a small improvement to a mark of 73.0 this month, up from 72.5 at last check.
Last week’s improvement in jobless claims, taking the weekly tally to its lowest point in near four years, will have many keen to see the latest check. The four-week moving average also improved last week, but just slightly to 365,250. The weekly count was just 348K; economists are looking for 355K this week.
With gains in the Philly and Empire State Manufacturing Indexes reported last week, investors will be looking for follow through from the Kansas City Fed’s report.
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