The Economy and Earnings in the Week Ahead
July 30, 2012

Week Ahead: The Fed, the ECB and Jobs!

by Ian Harvey

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The Key Events in the Week Ahead

July 30, 2012

Introduction

Stocks are riding high on the prospect that central bankers will take action in the week ahead to kick start the economy and stem the euro zone’s debt crisis.

Both the Federal Reserve and the European Central Bank meet, and while they may take some action, neither is expected to deliver the whole menu of items looked for by markets. At the end of the week, the July employment report looms large and is expected to show on Friday that just 100,000 jobs were added this month in a slow growing U.S. economy.

Auto makers also report monthly sales Wednesday, and chain stores report their July sales Thursday.

Earnings in the Week Ahead

There are also earnings from about a fifth of the S&P 500 and General Motors (GM), AIG (AIG), Procter and Gamble (PG), Kraft (KFT), Time Warner (TWX), Berkshire Hathaway (BRK.A) and MasterCard (MA) are among the companies reporting.

Earnings in The Week Ahead


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TOP OPTIONS TRADES SINCE JUNE 01, 2012

TRADE GAIN TRADE GAIN
HLF July 47.50 Calls 53% APPL Aug 650 Calls 67%
DLTR Aug 110 Calls 32% UIS Oct 17 Calls 79%
HSY Aug 70 Calls 56% TSO Nov 25 Calls 54%
NKE Oct 92.50 Calls 49% HLF July 47.50 Calls (again) 38%
FB Aug 25.00 Puts 500% DISH Sept 30.00 Calls 100%

Economy in the Week Ahead

The economic reports will be dominated by the July jobs-and-unemployment report, due Aug. 3. Capital Economics, the London-based economic consulting firm, estimates payrolls will rise by 100,000 jobs, with the unemployment rate holding at 8.2%.

Monday

Earnings: CNA Financials, Ryan Air, CIT Group, Anadarko Petroleum, Dendreon, Seagate, Lincoln Resources

Economy:

• No major economic reports for Monday

Tuesday

Earnings: Anheuser-Busch, BP, Honda, Chrysler/Fiat, Discovery Communications, Deutsche Bank, UBS, TRW, Valero, Allstate, Electronic Arts, Genworth, FMC Corp, Dreamworks

Economy:

• FOMC Meeting starts
• 8.30 am Personal income
• 8.30 am Employment cost index
• 9.00 am S&P/Case Shiller home prices
• 9.45 am Chicago PMI
• 10.00 am Consumer confidence

Wednesday

Earnings: Allergan, Amerigroup, Automatic Data, Comcast, Dollar Thrifty, ENI MasterCard, Time Warner, Owens Corning, Harley-Davidson, Devon Energy, Dominion Resources, Green Mountain Coffee, Murphy Oil, Hartford Financial, Prudential Financial, MetLife, Tesoro, Boston Beer, Yelp, Avis Budget

Economy:

• July Vehicle sales
• 7.00 am Mortgage applications
• 8.15 am ADP employment
• 10.00 am ISM manufacturing
• 10.00 am Construction spending
• 2.15 pm FOMC meeting statement

Thursday

Earnings: General Motors, Apache, Clorox, Cigna, Kellogg, CBS, OpenTable, Mohawk Industries, Zipcar, Scripps Networks, Duke Energy, Time Warner Cable, Teco, CBOE Holdings, Rowan Cos, Plains Exploration, Beam, AIG, Kraft, LinkedIn, Sunoco, Pitney Bowes

Economy:

• July Chain stores sales
• 7.00 am Bank of England rate announcement
• 7.45 am European Central Bank rate announcement
• 8.30 am Initial claims
• 10.00 am Factory orders

Friday

Earnings: Procter and Gamble, Berkshire Hathaway, Toyota, Royal Bank of Scotland, Beazer Homes, Viacom, Allianz, NYSE Euronext

Economy:

• 8.30 am Employment report (July)
• 10.00 am ISM nonmanufacturing

CLICK HERE for a complete list of companies reporting in the week ahead.

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Economic Reports to Watch in the Week Ahead

1. For the fourth month in a row the number of jobs added to U.S. payrolls are expected to fall far below the 200,000 figure that briefly became the norm earlier this year. But job creation has slowed considerably since March and that isn’t expected to have changed in July.
After a decidedly disappointing June, during which 80,000 jobs were added, economists have lowered their expectations for July, forecasting an additional 100,000 jobs which would keep the unemployment rate steady at 8.2%.

2. Auto sales are due on Wednesday, and demand for smaller more fuel-efficient cars is expected to help car makers report sizable increases from sales a year ago. Toyota (NYSE: TM) and Honda (NYSE: HMC) are expected to benefit from the growing demand for small cars.

3. U.S. retailers will release July figures on Thursday. Despite falling consumer confidence due to a fragile labor market, analysts believe retailers will report an increase in same-store sales.

Overseas Events

The European Central Bank and Bank of England are also meeting in the week ahead.

The European Central Bank policy announcement on Thursday will be closely watched after Draghi's dramatic declaration this week to support the euro no matter what.

Other Important Articles Relating to the Week Ahead

1. The Week Ahead in the Stock Market – July 30, 2012

2. The Major ETFs in the Week Ahead – July 30, 2012

3. The Past Week Stock Market Results – July 30, 2012


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