Hugely important information from the Federal Reserve will be served to investors this week. We will receive the regular monetary policy statement and also the Fed’s quarterly economic forecasts, plus a press conference by the Fed Chairman to close out the day. We’re expecting economic forecasts to be lowered considering the impact of sequester spending cuts. The market will likely focus on the Fed’s faith in the economic recovery and housing traction. There’s plenty more news reaching investors this week, and you can find it all herein.
There’s just one economic data point on the slate for Monday, the Housing Market Index, a measure of builder sentiment produced by the National Association of Home Builders (NAHB). The index fell by a point in February, to a mark of 46. Economists expect the index to recover lost ground in March, with the consensus expectation set for a reading of 47. The forecast range extends from 46 to 49, according to Bloomberg’s survey of economists. In a recent write-up linked to here, we asked whether recent mortgage rate increases could stall an unstable housing recovery.
International events will garner some attention this week. On Monday, France’s President Hollande will meet with Germany’s Chancellor Merkel. This comes after Merkel led a push to make deposit holders in Cyprus pay for some of the nation’s bailout.
On the corporate news front, Alliant Energy (NYSE: LNT) and Employers Holdings (NYSE: EIG) are holding shareholder meetings. There are several investor conferences this week bringing presentations from some important companies. The Consumer Analysts Group of Europe Conference brings a presentation by Coca-Cola Enterprises (NYSE: CCE) and Philip Morris International (NYSE: PM). The Barclays Select Series Insurance Forum offers news from Unum Group (NYSE: UNM) and Arch Capital Group (Nasdaq: ACGL). The Roth Conference offers a presentation by Black Diamond (NYSE: BDE). The Williams Financial Group discussion series invites Semtech (Nasdaq: SMTC). Jarden (NYSE: JAH) is scheduled to split 3-for-2 and Franklin Electric (Nasdaq: FELE) splits 2-for-1. A bankruptcy court reviews Patriot Coal’s (OTC: PCXCQ.PK) request to pay bonuses. The earnings schedule has reports for Ameresco (Nasdaq: AMRC), Charm Communications (Nasdaq: CHRM), Cumulus Media (Nasdaq: CMLS), eFuture Information Technology (Nasdaq: EFUT), Hastings Entertainment (Nasdaq: HAST) and Intersections (Nasdaq: INTX).
The latest Federal Open Market Committee (FOMC) meeting begins Tuesday, but the monetary policy statement won’t come until Wednesday. A Bank of Japan (BOJ) governor is set to retire today, with his replacement being more dovish. The media should have some interest in the change. The OECD publishes its economic survey, which might serve as a wake-up call, though I do not think for the U.S. A Senate committee will take a look at the American Airlines / U.S. Airways (NYSE: LCC) merger. Another panel will consider President Obama’s trade plans.
Housing Starts will be reported for February at 8:30 AM ET. Economists are looking for an improvement this month, with the consensus forecast set for an annual pace of 919K, versus the 890K pace reported in January. Permits are expected to run at the same pace of 925K this month. If the report comes in as expected, or even a little less robust, it should be enough to keep faith in the housing recovery alive and well. I don’t see any reason to expect otherwise.
The latest retailer same-store sales data comes to the wire in the premarket Tuesday. Last week’s data covering the period ending March 9 showed a week-to-week improvement of 0.7%, versus the 0.2% increase the week before. The year-to-year gain of 1.8% matched the prior week result. Redbook had the year-to-year change at plus 2.7%, versus the prior week’s gain of 2.2%. It was a good week, and investors will be hopeful of healthy numbers this week as well.
In corporate news, a New York bankruptcy court will determine what the fate of Hostess Brands like Twinkies is. Kulicke & Soffa (Nasdaq: KLIC) and Nvidia (Nasdaq: NVDA) have shareholder meetings scheduled. The Consumer Analysts’ Group of Europe Conference brings presentations by Coca-Cola (NYSE: KO) and International Flavors & Fragrances (NYSE: IFF). The BAML Global Industrials Conference highlights a look at Ingersoll Rand (NYSE: IR) and the Roth Conference highlights ACADIA Pharmaceuticals (Nasdaq: ACAD). Look for earnings reports from Adobe Systems (Nasdaq: ADBE), Cintas (Nasdaq: CTAS), DSW (NYSE: DSW), Rentech (NYSE: RTK) and many more.
Wednesday will be as big as a day gets for the market, with some very key information emanating from the Federal Reserve. First, at 2:00 PM ET, the Federal Open Market Committee (FOMC) will declare its current monetary policy plans. Expectations are for no change to rates and asset purchases. Also at 2:00 PM, we’ll get the latest updated Fed forecast data. The quarterly report offers insight into the Fed’s expectations for GDP, employment and inflation. We may get a downgrade to growth on the sequester cuts. Then at 2:30 PM comes the Chairman’s press conference, within which he may continue to speak positively about economic recovery. However, he is not expected to announce any time schedule for monetary policy change. He may offer some insight into the metrics that matter most to the Fed, and those are likely to remain employment and inflation relative. This information will dictate trade not only for Wednesday, but for the next few weeks. You won’t like what takes the baton after that… earnings.
We’ll get the regular mortgage activity data from the Mortgage Bankers Association Wednesday morning. Last week’s report showed a decrease in activity on higher mortgage rates, leading us to ask if higher interest rates might stall the housing recovery.
The weekly Petroleum Status Report is up for release at 10:30 AM EDT. Last week’s report covering the period ending March 8 showed crude oil inventories increased 2.6 million barrels to a level still well above the upper limit of the average range for this time of year. Total motor gasoline stocks fell by 3.6 million barrels to the middle of the average range for this time of year.
President Barack Obama visits Israel for the first time in his entire presidency. I expect this will raise speculation about Iran and spook oil prices and major integrated oils like Exxon Mobil (NYSE: XOM). In other international news, U.K. Finance Minister George Osborne will deliver his 2013 budget.
Weekly Initial Jobless Claims are due for release at 8:30 AM ET Thursday. Last week’s data covering the period ending March 9 showed claims fell by 10K to a level of 332K. The four-week moving average declined to a historically significant point last week, exciting the market a bit. On the news last week, I asked the question whether 7.1 million Americans mattered or not, because they remain unaccounted for in labor statistics.
The Markit Economics PMI Manufacturing Index (Flash) is due around 9:00 AM EDT Thursday. The index drifted lower at the close of February to a reading of 54.3. Economists see the measure up to 55.0 this time around.
At 9:00 AM, catch the FHFA House Price Index. This reading for January is seen showing a 0.7% increase, versus last month’s noted 0.6% gain.
Bloomberg’s Consumer Comfort Index is up for its weekly release at 9:45 AM. Last week’s data showed a 0.8 point increase in confidence to -31.6. It was the highest level since last April, and the sixth straight week of improvement.
Existing Home Sales will be reported for February at 10:00 AM ET. Economists see sales rising to an annual pace of 5.01 million, up from 4.92 million in January. The housing market is critical to the market’s confidence, so each of this week’s data points will be scrutinized by us and should be noted by you.
Leading Economic Indicators (LEI) will be reported at 10:00 AM for the month of February. The LEI is seen by economists increasing by 0.4% in February, versus the 0.2% gain in January.
The Philadelphia Federal Reserve Bank issues its survey on manufacturing conditions at 10:00 AM. The Philly Fed’s General Business Activity Index is seen improving to a still negative -1.5 mark in March, better than its -12.5 level the month before.
The EIA presents its weekly Natural Gas Storage Report at 10:30 AM. Last week’s report covering the period ending March 8 showed natural gas stores decreased by 145 Bcf, to a level 440 Bcf below last year and 198 Bcf above the five-year average.
The new Chinese leader Xi Jinping will visit Vladimir Putin in Moscow, an interesting early travel plan that should be noted by metals investors and commodity interests.
In corporate news, an FDA advisory panel reviews a drug application for opioid dependence by Titan Pharmaceuticals (Nasdaq: TTNP). Reader’s Digest Association is asking for approval from a bankruptcy court for a $105 million loan for reorganization purposes. Look for analyst and investor meetings at AstraZeneca (NYSE: AZN), Palo Alto Networks (Nasdaq: PANW) and Susser Petroleum (Nasdaq: SUSP). Honeywell (NYSE: HON) presents at the Bank of America Merrill Lynch Global Industrials & EU Autos Conference. Fluor (NYSE: FLR) presents at the BB&T Commercial & Industrial Conference. The earnings schedule includes news from Ross Stores (Nasdaq: ROST), Nike (NYSE: NKE), China Zenix Auto (NYSE: ZX) and IHS (NYSE: IHS).
There are no economic reports scheduled for Friday.
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