WHAT’S ON TAP? – Pragmatic Capitalism

Earnings season is essentially over. The market no longer has this positive catalyst backing it. Dell is the only potentially market moving report on Thursday. Economic data is relatively heavy, but scattered throughout the week:

Monday – A no news day. Look for investors to position themselves early in the week in anticipation for Wednesday’s new homes data.

3-Month Bill Auction – 1:00 PM ET

6-Month Bill Auction – 1:00 PM ET

Tuesday – A potentially sloppy day. The retail sales data has been terrible, but is largely ignored by the mainstream media and Wall Street. Case/Shiller should show more signs of stabilization and consumer confidence is likely to show more weakness as retail sales continue to slip.

ICSC-Goldman Store Sales – 7:45 AM ET

Redbook – 8:55 AM ET

S&P Case-Shiller HPI – 9:00 AM ET
Consumer Confidence – 10:00 AM ET
State Street Investor Confidence Index – 10:00 AM ET

4-Week Bill Auction – 1:00 PM ET

52-Week Bill Auction – 1:00 PM ET
2-Yr Note Auction – 1:00 PM ET

Wednesday- The pivotal day during the week. Investors expect a robust 3.2% growth in durable goods and another jump in new homes data. The two could offset one another.

Durable Goods Orders – 8:30 AM ET

New Home Sales – 10:00 AM ET

EIA Petroleum Status Report – 10:30 AM ET

Dennis Lockhart Speaks – 11:30 AM ET

Thursday – GDP is expected to come in at -1.4%. Expect this to be more or less in-line. The claims estimate is calling for a hefty 565K. Don’t be shocked to see “better than expected” data.

GDP – 8:30 AM ET

Jobless Claims – 8:30 AM ET

EIA Natural Gas Report – 10:30 AM ET

7-Yr Note Auction – 1:00 PM ET

Friday – The personal income data has been very weak lately. Don’t expect the trend to change.

Personal Income and Outlays – 8:30 AM ET

Consumer Sentiment – 9:55 AM ET

All in all, the news appears very mixed this week. After such a huge move in the recent weeks I have a hard time justifying a heavy equity weighting. This market, however, has very powerful momentum higher and rally chasers and short covering appear the be the primary drivers. Being short this market is extremely dangerous, however, the risk/reward appears most unfavorable from the long side. Hedged strategies should continue to achieve excellent risk/adjusted returns in this choppy market.

Cullen Roche

Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.

He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.