Week Ahead: The Fed, the ECB and Jobs!
by Ian Harvey
July 30, 2012
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.
TOP OPTIONS TRADES SINCE JUNE 01, 2012
|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%.
Earnings: CNA Financials, Ryan Air, CIT Group, Anadarko Petroleum, Dendreon, Seagate, Lincoln Resources
• No major economic reports for Monday
Earnings: Anheuser-Busch, BP, Honda, Chrysler/Fiat, Discovery Communications, Deutsche Bank, UBS, TRW, Valero, Allstate, Electronic Arts, Genworth, FMC Corp, Dreamworks
• 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
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
• 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
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
• 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
Earnings: Procter and Gamble, Berkshire Hathaway, Toyota, Royal Bank of Scotland, Beazer Homes, Viacom, Allianz, NYSE Euronext
• 8.30 am Employment report (July)
• 10.00 am ISM nonmanufacturing
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.
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.
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