For the week of May 10th (in conjunction with Econoday):
It’s a relatively light week on the news front so investors could be focused entirely on the problems in Europe. Earnings are still fairly heavy, but investors are disinterested in earnings news as Greece has become a true game changer. Markets could face a stiff test over the coming months as data from the last month is likely no longer relevant. Let’s take a look at what’s on tap:
BOE Announcement 7:00 AM ET
ICSC-Goldman Store Sales 7:45 AM ET
Redbook 8:55 AM ET
Wednesday – Cisco (CSCO) reports after the bell.
International Trade 8:30 AM ET
The U.S. international trade gap widened in February on both oil and non-oil imports. The trade deficit for February grew to $39.7 billion from a revised $37.0 billion the month before. The worsening in the trade deficit was led by the nonpetroleum balance which widened to $27.2 billion from $25.6 billion in January. The petroleum deficit came in at $22.9 billion, compared to $22.5 billion in January. Look for a further widening in the gap in March based on higher oil prices.
International trade balance Consensus Forecast for March 10: -$41.0 billion
The U.S. Treasury monthly budget report showed a deficit of $65.4 billion in March—a sizable sum but well under the year-ago March deficit of $191.6 billion. The improvement was reflected in the fiscal year-to-date deficit, which six months into the fiscal year has turned lower, down 8.2 percent from a year ago but at a still enormous total of $717.0 billion. Outlays, benefiting from TARP repayments, were down a fiscal year-to-date 5.7 percent versus a year ago. Year-to-date receipts were down 3.6 percent from a year ago. Looking ahead, the month of April typically shows a large surplus. Over the past 10 years, the average surplus for the month of April has been $97.8 billion and $98.5 billion over the past five years. The April 2009 number was actually a deficit of $20.9 billion.
Treasury Statement Consensus Forecast for April 10: -$40.0 billion
Jobless Claims 8:30 AM ET
Initial jobless claims improved for a third straight week for the May 1 week, falling 7,000 to 444,000 and pulling the four-week average down 4,750 to 458,500. Continuing claims for the April 24 week fell 59,000 to 4.594 million.
Jobless Claims Consensus Forecast for 5/8/10: 440,000
Import and Export Prices 8:30 AM ET
Ben Bernanke Speaks 9:00 AM ET
Retail Sales 8:30 AM ET
Retail sales in March jumped 1.6 percent after gaining 0.5 percent in February. Sales posted healthy increases three months in a row and in five of the last six months. Motor vehicles provided a huge contribution in March, spiking 6.7 percent after dipping 1.9 percent in February. But even excluding autos, sales in March posted another healthy boost, rising 0.6 percent which came after a 1.0 percent surge in February. The increase was not related to changes in gasoline prices as sales excluding autos and gasoline improved by 0.7 percent, following a 1.1 percent increase in February. Looking ahead, a moderate easing in motor vehicle sales from the March surge will weigh on overall retail sales for April. Higher gasoline prices should support ex-autos sales.
Retail sales Consensus Forecast for April 10: +0.2 percent
Retail sales excluding motor vehicles Consensus Forecast for April 10: +0.5 percent
Industrial Production 9:15 AM ET
Industrial production in March edged up only 0.1 percent after gaining 0.3 percent the month before. But the manufacturing component was notably strong with a 0.9 percent jump, after advancing 0.2 percent in February. For the other major components, utilities output plunged 6.4 percent after no change the prior month while mining production increased 2.3 percent after rising 1.7 percent in February. Capacity utilization expanded to 73.2 percent in March from 73.0 percent the month before. Looking ahead, we should get a robust gain in April for at least the manufacturing component as aggregate production worker hours were up 0.8 percent for the month.
Industrial production Consensus Forecast for April 10: +0.6 percent
Capacity utilization Consensus Forecast for April 10: 73.7 percent
Consumer Sentiment 9:55 AM ET
The Reuter’s/University of Michigan’s Consumer sentiment index for the final April reading bounced back by more than 2-1/2 points from the preliminary mid-April estimate to 72.2. The improvement was centered in the leading component which is expectations. Expectations rose more than 4 points from mid-month to 66.5. Current conditions, the second component, edged slightly higher from mid-month to 81.0. April’s full-month reading was weighed down by the first half of the month portion of the survey. Final April is still softer than final March which came in at 73.6. We may see further improvement in the initial May reading as the implied figure for just the second half of April is 75 (assuming that 50 percent of the full sample occurs for the initial estimate).
Consumer sentiment Consensus Forecast for preliminary May 10: 73.8
Business Inventories 10:00 AM ET
Business inventories rose 0.5 percent in February with all three components pitching in: retailers up 0.3 percent, manufacturers up 0.5 percent, wholesalers up 0.6 percent. Overall inventories have now risen in four of the last five months. Business should want to rebuild given recent strength in retail sales. But based on the latest factory inventories number, we will likely see another gain in overall March inventories. Manufacturers’ inventories rose a moderate 0.3 percent in March.
Business inventories Consensus Forecast for March 10: +0.4 percent
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.