Unholy Trading Week in Store on Cyprus, GDP & More
The holiday shortened trading week still has a full week’s worth of data to digest, with some reports even scheduled for Friday. The most important news of the week might even come on Friday, when personal spending and inflation get a read. However, the week started off on a sour note, when Cyprus agreed to a drastic set of measures set forth by its European brothers. The tax being imposed on depositors as a result of the agreement place into question all deposits in the euro zone and raise specter globally. GDP gets a revision Thursday, after being revised once up to 0.1% growth from a 0.1% contraction at initial report. It makes for an interesting look Thursday morning. The week seems shaky, though the S&P 500 was hoping for a breakout into record territory to begin with. The SPDR S&P 500 (NYSE: SPY), SPDR Dow Jones Industrial Average (NYSE: DIA) and the PowerShares QQQ (Nasdaq: QQQ) each reversed intraday Monday as a result of market introspection around the real data.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Cyprus accepted the dramatic demands of its European masters in order to stay in the union, but at the cost of its international banking credibility and its citizen depositors. It’s a big day for more than just Cyprus though, as it sets a precedent that could prove a grave mistake for Europe with far reaching repercussions. This deal that taxes depositors indiscriminately raises the likelihood of future runs on banks globally and certainly in Europe. In other European news, a summit between the EU and Japan takes place Monday.
We have two reports on the economic slate Tuesday. The Chicago Fed’s National Activity Index, a gauge of overall business activity, reaches the wire at 8:30 AM ET. Last month’s report covering January showed the index deteriorated to negative 0.32 from positive 0.25 in December. The report for February will offer interesting insight clear of Washington D.C. political noise.
At 10:00 AM ET, look for the Dallas Federal Reserve Bank’s Manufacturing Survey for the month of March. The Texas Manufacturing Outlook Survey, as it is properly called, is expected to improve slightly to a mark of 3.4, according to Bloomberg’s survey of economists. Last month, the index measured 2.2.
A bankruptcy court is examining the Chapter 9 plea of the City of Stockton, California, with its bankruptcy being contested by municipal bondholders who are claiming that it is being used to force bigger cuts from them than from city workers and pensioners.
Several economic reports are set for Tuesday’s schedule. The important but volatile Durable Goods Orders Report is scheduled for 8:30 AM release. There’s something interesting I want you to realize about durable goods order trends. While the month-to-month comparisons seem to show improvement most months, the long-term chart comparing yearly results show a slowing of improvement.
Economists expect durable goods orders rose 3.5% in February, based on Bloomberg’s survey. That compares against the decrease in orders in January, when they fell 5.2%. Excluding transportation goods, which carry high ticket prices and can skew the message, orders are expected to edge up just 0.7%, versus last month’s 1.9% increase.
The first of the week’s real estate data reaches the wire on Tuesday when Case Shiller reports on its Home Price Index. The 9:00 AM report covers the month of January. Economists expect the group’s 20-city seasonally adjusted index to show price increase of 1.0%, against December’s increase of 0.9%. Such news continues to support the real estate sector, but even the slightest sign of weakness would damage housing stocks, which some say are priced for perfection. New Home Sales data for February follows at 10:00 AM ET. Economists are expecting a slip in the annual pace of new home sales to 425K, against January’s pace of 437K.
The Conference Board reports on Consumer Confidence at 10:00 AM ET. Confidence has been improving since Washington D.C. got out of the way of the economy earlier this year. The data for February showed the Confidence Index rose sharply to 69.6, up more than 10 points from the prior month. According to Barron’s, the consensus expects a lower reading of 67.5 for March. Tuesday also offers the regular retail same-store sales data. Last week, the International Council of Shopping Centers (ICSC) showed week-to-week sales increased 1.4%. On a year-to-year basis, sales were marked up 2.3%. Each measure represented improvement against the prior week. As we near Easter, sales should be markedly higher.
The Richmond Federal Reserve Bank reports on regional manufacturing activity at 10:00 AM. Economists expect the bank’s index to show a slight drop to a reading of 5.5 for March, which would be down from 6.0 in February.
State Street (NYSE: STT) reports on Investor Confidence at 10:00 AM. Last month’s report showed that global investor confidence (or risk taking in institutional portfolios) increased due to a greater appetite in North America. The Global Index measured 94.8, and the North American Index reached 86.3.
There’s a nuclear summit in Seoul, South Korea. It would make perfect sense for North Korea to do something provocative.
The U.S. Supreme Court will start talking about same-sex marriage.
In corporate news, look for analyst or investor meetings at United Parcel Service (NYSE: UPS) and General Cable (NYSE: BGC). A Delaware bankruptcy court considers whether to approve the $10.5 million sale of Pension Worldwide’s brokerage assets. The earnings slate highlights reports from SAIC (NYSE: SAI), Alexza Pharmaceuticals (Nasdaq: ALXA), Bacterin Int’l (Nasdaq: BONE), Landec (Nasdaq: LNDC) and Luna Innovations (Nasdaq: LUNA).
Even more housing data finds the wire on Wednesday, leading the day. In the pre-market, we’ll get the latest mortgage activity data from the Mortgage Bankers Association. Last week’s report covering the period ending March 15 showed mortgage applications decreased by 7.1%. Mortgage rates generally increased in the period.
Pending Home Sales data is due at 10:00 AM EDT Wednesday. Economists are looking for a 0.7% decrease in the February reading, matching against the 4.5% increase in activity seen in January. Investors will want to eye the SPDR S&P Homebuilders (NYSE: XHB) for perspective of how the market is receiving the news.
A slew of Federal Reserve representatives are scheduled to address the public Wednesday. They are all set to speak around noon, with addresses from Chicago’s Charles Evans, Boston’s Eric Rosengren, Cleveland’s Sandra Pianalto and Minneapolis’ Narayana Kocherlakota.
Look for the EIA’s regular Petroleum Status Report at 10:30 AM ET. Last week’s report covering the week ending March 15 showed crude oil inventory decreased by 1.3 million barrels, but remained well above the upper limit of the average range for this time of year. Total motor gasoline decreased by 1.5 million barrels and remained in the middle of the average range.
There’s a BRICs summit in South Africa today. Indian markets are closed today.
In corporate news, Pinnacle Foods is expected to make a 29 million share initial public offering at a price of $18 to $20 per share. Pinnacle is the maker of the Birds Eye frozen vegetables brand. The deal is backed by Blackstone Group (NYSE: BX). AMR Corporation's (OTC: AAMRQ.PK) subsidiary American Airlines seeks bankruptcy court approval for its proposed merger with U.S. Airways Group (NYSE: LCC).
Look for analyst and investor meetings at Zillow (NYSE: Z), AGL Resources (NYSE: GAS) and Aruba Networks (Nasdaq: ARUN). The Bank of America Merrill Lynch New York Auto Summit brings presenters Delphi Automotive (Nasdaq: DLPH), Dana Holding (NYSE: DAN) and Tenneco (NYSE: TEN). Look for EPS reports from PVH Corp. (NYSE: PVH), Paychex (Nasdaq: PAYX), Red Hat (NYSE: RHT), Adcare Health Systems (NYSE: ADK), Exceed (NYSE: EDS) and others.
With equity markets closed in the U.S. on Friday, a great deal of economic data is being bunched into Thursday. Three economic data points reach the wire in just the premarket. First of all, the GDP Report for the fourth quarter of 2012 is scheduled for revision. Economists are looking for GDP growth to be adjusted higher to 0.6%, up from 0.1% when last adjusted (from negative 0.1%).
Weekly Initial Jobless Claims is due for report at 8:30. Last week’s report covering the period ending March 16 showed weekly claims increased by 2,000, to 336K. The four-week moving average for jobless claims improved by 7,500 last week, on its way down to 339,750.
At 9:45 AM, the Chicago Purchasing Managers Index (PMI) is expected to show Chicago area business expanded at a slower rate. The index is seen dropping to 56.1 in March, down from 56.8 in February. Measures above 50.0 mark economic expansion.
Bloomberg’s Consumer Comfort Index fell last week by 2.3 points, to -33.9. The weekly measure of the consumer mood should be overshadowed this week by the monthly reports.
The EIA’s Natural Gas Report is due Thursday at 10:30 AM. Last week’s report covering the period ending March 15 showed working gas in storage declined by 62 Bcf. Stocks were 502 Bcf less than last year at this time, but still 162 Bcf above the five-year average for this time of year.
The Kansas City Fed issues its manufacturing index Thursday. Economists expect manufacturing improved in the middle of the nation, but remained in contraction. The index is expected to improve to negative 3.0 from negative 10 last month. Zero marks breakeven.
There will be a bankruptcy hearing today for Birmingham, Alabama.
The U.S. bond market closes early Thursday at 2:00 PM ET. Several markets around the world are closed for Holy Thursday.
The corporate wire has investor or analyst meetings for eBay (Nasdaq: EBAY) and Chicago Bridge & Iron (NYSE: CBI). The CIBC Retail & Consumer Conference has a presentation by Target (NYSE: TGT). The EPS schedule highlights news from Accenture (NYSE: ACN), GameStop (NYSE: GME), Mosaic (NYSE: MOS), China Nepstar Chain Drugstore (NYSE: NPD), Commercial Metals (NYSE: CMC) and more.
U.S. equity markets are closed for Good Friday, but banks are open in the U.S. Markets are also closed in Australia, Brazil, Canada, Hong Kong, Singapore and the U.K. among others. The new Pope should be awaited with great joy and love to preside over services for the first time. Orthodox Christians do not mark Good Friday until May 3rd this year.
There are two economic reports on the schedule friends, so stay tuned.
Personal Income & Outlays data are due for release at 8:30 AM. Economists are looking for personal spending to increase by 0.6% in February, compared to 0.2% growth in January. Personal income is seen higher by 0.9% in February, after falling 3.6% in January. The Fed’s favored inflation gauge, the Core PCE Price Index is expected to show 0.2% increase month-to-month, versus the prior month’s 0.1% increase.
The corporate wire has EPS from Birner Dental Management Services (Nasdaq: BDMS).
We wish you a happy Easter and Passover dear friends from your friends at Wall Street Greek.
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