Things slow down a bit this week as earnings season comes to an end. There are only a few market moving earnings reports and the economic slate is relatively empty. Let’s take a look at what’s on tap.
In conjunction with Econoday:
Monday – A very slow news day. No earnings news and no major economic reports. Markets will likely move on upgrades and any merger news. Monday’s have been very positive days of late. It will be interesting to see if the momentum from Friday’s turnaround continues.
Tuesday – Big earnings reports from Disney (DIS) and Coke (KO). Economic news is light.
ICSC-Goldman Store Sales 7:45 AM ET
Redbook 8:55 AM ET
Wednesday – No important earnings reports.
International Trade 8:30 AM ET
EIA Petroleum Status Report 10:30 AM ET
The U.S. international trade gap in November widened to $36.4 billion from a $33.2 billion shortfall in October. Exports gained another 0.9 percent while imports surged 2.6 percent. The worsening in the trade deficit was largely due to an expansion of the petroleum deficit, which came in at $19.9 billion compared to a differential of $17.8 billion the previous month. However, the nonpetroleum gap also grew—to $27.1 billion from $25.6 billion in October. While it might be a little early for the recent strengthening of the dollar to impact exports and imports, sluggish growth in Europe could be slowing U.S. exports. On the import side, the price of crude was higher in December on a seasonally adjusted basis and that likely will bump imports up for the month.
International trade balance Consensus Forecast for December 10: -$35.7 billion
The U.S. Treasury monthly budget report showed a deficit of $91.9 billion in December – the largest December deficit on record. Fiscal year-to-date, the deficit is running ahead of last year: $388.5 billion versus $332.5 billion for a 17 percent rise. On the other side of the ledger, year-to-date receipts were down 11 percent at $478 billion. For historical perspective, the month of January typically shows a modest surplus for the month. Over the past 10 years, the average surplus for the month of January has been $19.4 billion and $0.4 billion over the past 5 years.
Treasury Statement Consensus Forecast for January 10: -$46.0 billion
Thursday – Pepsi (PEP) earnings.
Retail Sales 8:30 AM ET
Jobless Claims 8:30 AM ET
Business Inventories 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
Retail sales in December fell 0.3 percent after a 1.8 percent surge in November. Excluding autos, sales decreased 0.2 percent after jumping 1.9 percent in November. Excluding both autos and gasoline, the December number still was disappointing, declining 0.3 percent, following a 1.0 percent boost in November. Looking ahead, weak auto sales should weigh on January retail sales. Already announced, unit new motor vehicle sales fell 4.2 percent in January. But department store sales have been moderately positive.
Retail sales Consensus Forecast for January 10: +0.5 percent
Retail sales excluding motor vehicles Consensus Forecast for January 10: +0.6 percent
Initial jobless claims in the January 30 week rose 8,000 to 480,000 with the prior week showing a 7,000 dip. The problem is that levels have not come down as expected after a 35,000 jump for the week ending January 16, indicating a weaker labor market than earlier believed. With this past week’s unexpected drop in the monthly unemployment rate to 9.7 percent in January from 10.0 percent in December, traders will be watching to see if initial claims dip or not to either confirm the dip in the unemployment rate or to imply that the rate decline was a statistical fluke.
Jobless Claims Consensus Forecast for 2/6/09: 467,000
Business inventories rose 0.4 percent in November, the same rate of build posted in October. There is a good chance that November and October mark the cycle pivot and likely end of the inventory correction. The rebuilding recently has been led by wholesalers where inventories jumped 1.5 percent in November and 0.6 percent in October. But the restocking of inventories may be uneven. News from the factory orders report showed a 0.1 percent dip in factory inventories for December. We will get an update for December wholesale inventories on Tuesday, February 9, ahead of overall inventories.
Business inventories Consensus Forecast for December 09: +0.2 percent
Friday –No important earnings reports.
Consumer Sentiment 9:55 AM ET
The Reuter’s/University of Michigan’s Consumer sentiment index rose 1.6 points to 74.4 in the final January reading, compared to the mid-month reading of 72.8. Gains in the latest report were in the expectations component with this leading component now at 70.1 for a 2.6 point rise from mid-month. Looking ahead, the rise in the second half for the overall index could carry over into early February. But stocks have fallen and jobless claims have edged back up – suggesting a dip in sentiment.
Consumer sentiment Consensus Forecast for preliminary February 10: 75.0
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.