"The Greek's Week Ahead" has been engineered to provide investors with a market-moving event planner they can refer to throughout the week. In case you missed it over the weekend, you might want to catch our weekly wrap up, "Week in Review - Government Sponsored Destruction." We would also like to remind you about our newest creation, (stock) Market Moving News, where we hope you'll visit daily to see each day's market moving events.
In case you thought Hank Paulson had set the market straight last week, and that everything would be silky smooth this week, well wake up sister! While you soaked in the sea and the sun over the sweltering weekend, Iran punched the U.S. in the mouth. Perhaps annoyed by the silent presence of Under Secretary Burns at its meeting with EU representatives, Iran made a clear statement to the world. Modern day Persia will not be halting uranium enrichment any time soon, nor does it ever plan to succumb to the whims of the United States and Israel. Hold on a second while we take a break to reinforce the bunker...
I wonder if it's a bad idea to let the entirety of the blogosphere know we've got a stock of canned goods and bottled water over here on the Upper East... Don't get any ideas should the chaos break out though, as "The Greek" knows karate, and a few more Greek words. You see, karate is derived from the Grenglish, "kara" for cars, and the Greek "te" for what. You see, it means "what cars?" since "The Greek" travels by foot, sort of like David Carradine did in "Kung Fu"... (Karate is actually derived from the Japanese, "kara" for empty and "te" for hand).
"Too many economists, research directors and analysts had a whole weekend to try to earn their bonus, and so you might expect a series of new reports on how the GSE situation will play out..."
It's not just Iran we have to worry about this week though. There's an equally despicable foe equity investors might have to deal with shortly. Too many economists, research directors and analysts had a whole weekend to try to earn their bonus, and so you might expect a series of new reports on how the GSE situation will play out. We here at "The Greek" expect Fannie (NYSE: FNM) and Freddie (NYSE: FRE) to work their way toward zero, despite last week's government chicanery. We expect you'll see a few essays saying something like that this week. Remember that Ackman fellow who all the Ambak (NYSE: ABK) and MBIA (NYSE: MBI) longs loved to hate a few months ago, since he had that long-held short view on the two insurers and a report to back it. I wonder what he's up to...
The Week Ahead
Without question, the week's direction should be dictated by the heavy flow of earnings reports from major companies across all industry sectors. The relatively quiet economic schedule includes a tasty stew of economic metrics, measures of confidence and housing data.
If not for Iran's blatant statement of defiance over the weekend and our expectation for Wall Street news-making, we would have looked for a slow start to the week. On the economic slate, Leading Indicators for the month of June is expected to show a decline 0.1%. The forecasting metric had been on the rise over the prior three months. In other news, Japanese markets will be closed on Monday.
Not that there's any chance of a surprise or market impact from the news, but the State Street Investor Confidence Index will be reported anyway on Tuesday at 10:00 AM. In June, the metric actually ticked up a bit, to 81.4. Even so, we see little chance of upside surprise this month considering just how much risk stocks had priced in up until last Wednesday's turn.
The Treasury Secretary is getting more press coverage than Britney Spears these days, so one has to wonder how long until his world implodes. Wait a second, it already has, so I guess the only question left unanswered is if he's wearing panties or not! Reminder, we are a blog and therefore allowed to be funny and smart at the same time. Look for the Treasury Secretary's comments on the economy and markets at 8:00 AM ET. The fact that this is scheduled, and early, certainly implies another initiative might be in store. Considering the workload Paulson's had to carry over the past year, we give the man credit for enduring like a rock. Philadelphia Fed President Plosser, hawk extraordinaire, takes the hand-off for his own economic presentation at 8:30.
As Barack Obama heads westward, toward the Middle East from Afghanistan, back east, India's government has a hurdle to overcome. You read it here at "The Greek" first, when our Emerging Markets Asia columnist, Guneet Sahni, discussed the pending no confidence vote in his report, "Asian Growth Engines Face Challenges and Stiff Inflation." Guneet's Asian market takes can be found here at the start of each week. The most recent copy is on its way...
Look for the regular ICSC-UBS Weekly Same-Store Sales Report to begin to soften as government stimulus dwindles into the nothingness. The weekly retail take still managed 2.2% year-over-year growth last time around.
Wednesday's regular economic reports should be interesting this week. The Petroleum Status Report, for one, did an about face last week, as the EIA noted a build in inventory of 3 million barrels. This did not go unnoticed, and when taken with the fact that Chinese GDP growth had cooled more than was expected, it drove oil prices down by 11.2%. Needless to say, commodity traders will be looking for follow through to confirm tangible demand destruction.
The Mortgage Bankers Association's will report its Purchase Applications Report on schedule Wednesday morning. Last week's seasonally adjusted data, adjusting for the holiday in the week before, showed only a modest increase in activity despite a significant drop in long-term rates.
The Federal Reserve will publish its Beige Book of regional economic activity at 2:00 PM ET. It will offer insight into a specific geographic segment of the United States, but the variation in regional economies has diminished as the broader economy slips deeper into decline. Congress is set to vote on a housing market bill that should help to sure up the GSEs a bit by giving them access to cheaper capital.
In New York City, the United Nations is holding an international conference on water, a commodity that might prove more important and scarce than oil soon enough, especially if Al Gore is right. Be sure to see the video of him in our weekly videos.
Thursday's economic headliner should be the Existing Home Sales Report for the month of June. The 10:00 AM release is expected to show that the annual rate of home sales fell further, to 4.94 million, from 4.99 million in May. Even so, the pace of sales in the largest portion of the housing market would still be above the 4.89 million low seen in January and April of this year. Stay tuned to "The Greek" for Michael Douville's upcoming piece on the real estate market. Look for it on Tuesday afternoon.
Weekly Initial Jobless Claims are seen measuring 375K, versus 366K last week. Claims have ranged from as low as 348K to 404K in recent weeks, portending a further increase in the unemployment rate, which will be reported next week. New York Federal Reserve President Timothy Geithner and SEC Chairman Christopher Cox are scheduled to testify before the House Financial Services Committee on Thursday; the topic of discussion... financial regulatory restructuring.
Brazil's oil workers' union is set to vote on a strike planned for August 5th. Even so, that must be less of a disaster than it would be in the States, given the nation's automotive fleet runs on ethanol. At 10:30, the EIA will report on natural gas inventories, which have been increasing. Natural gas futures trade at about $10.50 per MMBtu, not cheap, relatively speaking. Of course, the price of natural gas is impacted by the price of oil and a growing degree of substitution between the two.
Durable Goods Orders (June) are expected to have decreased 0.4%, according to Bloomberg's consensus of economists. While we discount the relevance of inventory data here at "The Greek," we take order activity soberly. June's results will compare against no change posted in May and a 0.5% decline in April. Signs continue to point toward second half recession.
The University of Michigan's Consumer Sentiment take is expected to read 56.4, the same as the prior month level. New Home Sales, that smaller portion of the housing market, is seen running at an annual pace of 505K in June, versus 512K in May. If the consensus forecast proves true, new home sales will have reached a new bottom.