"The Greek's Week Ahead" has been engineered to offer you a reference to the week's scheduled and unscheduled market-moving events.
How's that Carole King song go, "Winter, spring, summer or fall, all you have to do is call, and I'll be there, yes I will... you've got a friend..." Well, the Feds, and we mean Bernanke, Paulson, Congress and the President, were all there when we needed them through winter, spring, summer (all couple days of it so far), but they probably won't be there to prevent our fall this time around my friends.(Please find Carole King's great masterpiece below this article, posted for my dear friend.)
Normally we would have to suggest that the Federal Reserve's FOMC meeting, scheduled for Tuesday and Wednesday, might offer rescue. However, the Fed has done all it can to signal that it is now inflation-centric, if not manic. They should be panicked! Therefore, it would seem likely that Bernanke and crew will leave the liquidity rescue helicopter behind this week. That means our friends won't be there for us this time around, and so the market would seem to have little to help it hold ground above its March 10 low.
The remainder of the week is littered with tragic consumer confidence and housing metrics we've grown accustomed to. Still, on Friday, Personal Income and Outlays for May could offer some good news thanks to the beginning of government stimulus distribution. That euphoria may last only as long as the Farm Prices Report at 3:00 PM though, thanks to widespread flooding in the Midwest.
Following the quadruple witch inspired volatility on Friday, it seems likely the market might reconsider the day's move and buy a little back on Monday. However, our troubles are not going away either, and Iran is coming more and more to the forefront, so who's to say...
There are no scheduled economic reports for Monday, but in keeping with that fresh agricultural mention, we should note that an Australian agency is set to update its quarterly commodities forecasts for agricultural produce and metals. Also overseas, a Mumbai court will hear Vodafone's (NYSE: VOD) challenge to a $2 billion tax levied on its purchase of an Indian company. That's called country risk folks, and Vodafone likely discounted it into its acquisition analysis if their analysts or counselors are worth their salt.
Monday's very short earnings schedule includes just Walgreen (NYSE: WAG) and North American Energy Partners (NYSE: NOA). Canadian natural gas concern Encana (NYSE: ECA) will hold its analyst meeting today.
Tuesday's news flow starts bright and early with the weekly ICSC-UBS Same-Store Sales Report. This data continues to benefit from Americans who can't keep a dime in their pockets, as they rush to spend the government stimulus on a new bikini and iPhone. Great job of offering a blind eye to the tough times that lay ahead America. God bless that positive spirit we have though; it's a net asset. Last week, sales rose a relatively strong (compared to recent months) 2.1% year-over-year.
Also early on the schedule, the S&P Case Shiller Home Price Index will be offered up by one of the two parties' representatives, hopefully S&P's David Blitzer. Love the bow tie David, but there's one guy out there who outdoes you with it. I'll be sure to post him here soon... In any event, home prices are expected to decline further for the reported month of April.
At 10:00 AM on Tuesday, the Conference Board will further depress us by telling us how depressed we are. June's Confidence Index is seen by economists at 56.5 this time around, versus 57.2 in May. If it goes below 50, support groups across the nation will likely see increased membership. At 40, atheists start watching TV evangelists. At 30, Wal-Mart (NYSE: WMT) rolls out a delivery service and Mexican immigrants start climbing the fence to go home. At 20, Bush goes into hiding. At 10, we all quit our jobs, raid the liquor stores and hang out on the beach. Hey, wait a second, isn't that what we hope to do when we retire??? Ah ha!
Lest we forget, the Federal Reserve begins its turning point Federal Open Market Committee Meeting Tuesday. The discussion and resulting policy statement and later minutes are very likely to show intense inflationary concern. By now you see, Bernanke has figured out that Israel and Bush will engage Iran, and oil prices could top $200 for an extended period. Can you believe it took the world's best economists and strategists this long to figure it out? I can.
Congress is getting busy again this week, as a Senate committee discusses a bill that is intended to ban some groups of institutional investors from participation in the oil futures market. Here's a clue... maybe it's not manipulation driving oil prices, but sovereign hoarding of oil (read China) and smart money buy into the commodity ahead of an Iranian event!
Years after it begins, everyone will look back on this period and blame Iran for the rise in crude, but you should never forget how they completely excluded it from discussion before the event. This is called conforming, and because discussion of war, however likely it may be, is often viewed as paranoia-based or sensationalistic, the conforming majority will shy away from discussing it. This is why you read Wall Street Greek. Do you think investment bank crude oil price targets of $150 and $200 during a period of economic weakness are not well-informed?
Long-term rates backed up a bit last week, as money raced for treasuries. So, mortgage activity could see a weekly lift in the reported Mortgage Bankers Association data on Wednesday morning.
With Europe hunkering down, ongoing consolidation in Detroit, and manufacturing generally in the dumps (judging by the Philly and New York Fed Reports last week), what should we expect from Wednesday's Durable Goods Report at 8:30... Economists see no change in new orders in May, versus a 0.5% decline in April. That's actually good news. Recall, April was representative of the entire year-to-date, with order decline throughout. However, one factor is working in the reports favor this time around, economic stimulus. Thus, don't be surprised by a possible (not really) increase in orders, and we suggest not getting enthused by it either, should it ensue.
New Home Sales for May are due at 10:00 AM, and economists forecast an annual run rate of 515K, down from 526,000 in April. So much for seasonal uplift from historic trough. That was as short-lived as sunshine is these days in New York City. On that note, I think our Midwesterner, Steve Ferguson, and I may soon get to work building an ark.
Clearly, Wednesday's regular Petroleum Status Report is a must see nowadays, but it should become increasingly clear that the Iran event will dictate near-term oil price movement. For this reason, I think it's important that those who took heed of our refiner recommendation recently, not fail to understand how skyrocketing oil prices could destroy gasoline demand while increasing costs for refiners; that's what we think would happen. So, in other words, we're not so bullish on refiners. The Iran event is too close to ignore.
At 2:15 on Wednesday, the Fed may move the market as much as ever, when it issues its FOMC Policy Statement. The short document will be combed through, and we expect turn up concern for investors. We expect no rate action from the committee though. It's the likely inflation focus that will scare investors, and rightfully so. Even a small rate cut would likely only offer brief respite from the reality of a tough inflationary environment going forward.
On Thursday, the final adjustment to first quarter GDP should be received in ho-hum fashion, with the consensus looking for a final reading of 1.0% growth. Corporate Profits are also due for adjustment at the same time Thursday.
As you know from reading "The Greek," the Fed regularly goes on tour after its FOMC Policy meeting, and the discussions of its members can offer great insight into what was left unsaid in the FOMC Policy Statement. Therefore, pay attention to Vice Chairman Kohn and St. Louis Fed President Bullard, as they discuss monetary policy just one day after the statement release.
A duo of interesting employment reports are on tap for Thursday, including the regular Initial Jobless Claims tally and the monthly Help-Wanted Index. Economists see Weekly Jobless Claims measuring 380K, versus 381K the week before. We've been stuck in this range as part-time employment opportunities have managed to keep the unemployment rate still tame, despite moving in the wrong direction. That said, we see the part-time job market saturated now, as students seek entry in the workforce over the summer and with job openings likely decreasing on economic pressure... not to mention the fact that the number of those working part-time due to economic hardship has already bulged. Those laid off from full-time positions have sought other means to support their families over the past six months. The Help-Wanted Index is losing steam, replaced by online posting of job openings. For this reason, economists pay closer mind to the Monster Employment Index. Still, in times like these, this report is always worth a look.
The final heavy-hitter for the day should be the Existing Home Sales Report, due out at 10:00 AM. Bloomberg's consensus of economists sees the May measure rising to an annual pace of 5.0 million, from 4.89 million in April.
The weekly Natural Gas Report from the EIA is released at 10:30. If oil spikes on Iran, natural gas will as well, since it's the closest substitute. Still, you're creative analyst here has something interesting coming your way in this regard... so keep your eye on "The Greek."
The FDA should rule by Thursday on Eli Lilly's Prasugrel, a blood-thinner and a drug that would compete against Plavix, co-marketed by Bristol-Myers Squibb (NYSE: BMY) and Sanofi-Aventis (NYSE: SNY).
Friday could hold the best news for investors this week, when Personal Income and Outlays are reported for May. Bloomberg's consensus expects personal spending to increase 0.7%, thanks to economic stimulus checks. This compares to a rise of 0.2% in April. Remember though, when we pay more, we spend more by default... Income is seen rising 0.4%, but this should get an unnatural boost from economic stimulus income.
The University of Michigan/Reuters will offer its Consumer Sentiment reading at 10:00. The experts are looking for a measure of 56.9 for June (adjusted from 56.7), down from 59.8 in May. The day's euphoria driven by the personal spending data may only last until 3:00 p.m. though, when Farm Prices are reported. The recent extensive floods throughout the Midwest are threatening significant farm acreage, and thus adding another driver for price rise.