The Economy and Earnings in the Week Ahead
August 06, 2012

Week Ahead: Earnings Continue to Dominate the Stock Market!

Light Week for the Economy!

by Ian Harvey

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The Key Events in the Week Ahead

August 06, 2012

Introduction

The week ahead has a fairly light calendar for the economy, though Ben Bernanke is speaking on Monday and Tuesday. The week after the jobs report is usually light on economic reports. The most important will be reports on consumer credit outstanding (Tuesday), productivity (Wednesday) and jobless claims (Thursday).

This light calendar suggests that any market moving news is likely to come from overseas.

Investors will continue to watch the saga around Knight Capital, which reported a more than $400 million loss after a software program triggered a major trading snafu. The firm Friday was seeking capital, but the incident was another black eye for Wall Street, coming quickly on the heels of the Facebook IPO trading debacle.

Most of the action affecting markets in the week ahead could come from Europe and events effecting their economy, but the discussion around the U.S. ”fiscal cliff” is getting louder. The “cliff,” is a term coined for the double expiration of tax cuts Dec. 31 and beginning of automated spending cuts Jan. 1.

Earnings in the Week Ahead

Quarterly earnings due in the week ahead include Walt Disney Co (DIS), Priceline.com (PCLN) and Chesapeake Energy (CHK). Results from Macy's Inc (M) and J.C. Penney Co Inc (JCP) should shed light on the strength of consumer spending and how it will impact on the economy.

A handful of companies are also scheduled to go public in the week ahead. U.K. soccer club Manchester United's debut will make it the first sports teams to go public in the U.S. in a long time.

Other companies expected to debut next week include restaurant operators Bloomin' Brands Inc. and CKE Inc. and recovery services provider Performant Financial Corp.

On Wednesday, Eastman Kodak Co. (EKDKQ) will auction off more than 1,000 of its lucrative imaging patents, which are worth as much as $2.6 billion.

Quarterly Earnings From Disney

Analysts polled by Thomson Reuters project Disney to post stronger top- and bottom-line results. The company is expected to benefit significantly from its release of "The Avengers" superhero movie, which became the all-time third-highest-grossing movie domestically, a welcome change for the company following the second-quarter flop "John Carter." The company has been seeing strength in its cable channels, thank

s to higher programming fees and advertising sales, as well as in its theme parks business. Retail Store Results – Macy’s, Kohl’s Corp. & Nordstrom Inc.

Meanwhile, retailers are projected to post a mixed bag of results in the week ahead. Macy's, which has been one of the industry's strongest performers, is expected to report another quarter of improved profit. Earlier this week, Macy's reported that its second-quarter sales jumped 3% to $6.12 billion, slightly above the $6.11 billion estimate from analysts, and said its spring season met its expectations.

Analysts see weaker profit from department-store chain Kohl's Corp. (KSS) and high-end retailer Nordstrom Inc. (JWN). Kohl's efforts to better compete on price have weighed on its bottom line, while Nordstrom has projected higher overhead expenses for the year amid increased spending for e-commerce. Both companies recently reported quarterly revenue figures that missed analyst expectations.

Manchester United Scheduled to Debut

English soccer club Manchester United's shares are expected to begin trading on the New York Stock Exchange toward the end of the week ahead. The company is aiming to sell 16.7 million shares in its initial public offering at a price within the $16 to $20 range for each share. The shares are set to price Thursday.

Manchester United, one of the most successful teams in professional soccer, would be the first sports teams to go public in the U.S. in quite some time. The last team to do so was the Cleveland Indians Baseball Co., which launched in 1998, according to data tracker Dealogic, and was later taken private.

Manchester called off plans for a $1 billion initial public offering in Singapore last year amid volatile markets.

Other companies expected to debut next week include restaurant operators Bloomin' Brands Inc. and CKE Inc. and recovery services provider Performant Financial Corp.

Kodak -- Patent Auction

Eastman Kodak Co. (EKDKQ) in the week ahead will put more than 1,000 of its lucrative imaging patents on the auction block, a sale the company's creditors are counting on for payment.

The imaging company is seeking to keep the auction process confidential, but The Wall Street Journal reported that Apple Inc. (AAPL), Microsoft Corp. (MSFT), Google Inc. (GOOG) and Samsung Electronics Co. (005930.SE) are among the giant technology companies that are vying for the patents.

Worth as much as $2.6 billion, the patents cover the technology used in digital cameras, smartphones and tablet computers to capture, transmit, manipulate and store images. According to Kodak, it has been able to earn more than $3 billion over the past decade by licensing the patents.

The patent auction is slated for Wednesday, but Kodak will head to the Manhattan bankruptcy court Monday to seek approval of a bonus plan for executives and managers.

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Economy in the Week Ahead

There are a few reports in regard to the economy and a steady stream of earnings news in the week ahead. But after major meetings this past week where both the Federal Reserve and 'European Central Bank - ECB' held out the idea of more quantitative easing (QE), the markets could coast in anticipation of central bank action in the fall.

While Fed Chairman Ben Bernanke appears twice in speaking engagements in the coming week, his next major speech is not expected until he attends the Fed’s Jackson Hole symposium at the end of the month. It was at that event two years ago that he discussed quantitative easing, and traders are hoping for a repeat performance, anticipating that QE3, or that a third asset purchases could be announced when the Fed meets in September.


Here is a brief list of some of the key events in the week ahead.

All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday

Earnings: Humana, Chesapeake Energy (CHK), Vornado, Caesar Entertainment, Boston Properties

Economy:

• 9.00 am Fed Chairman Ben Bernanke speaks at Conference of International Association for Research and Wealth on economic measurement

Tuesday

Earnings: Disney (DIS), Cablevision, CVS Caremark, FirstEnergy, Marsh and McLennan, MGM Resorts, Fossil, Tenet Healthcare, Sirius XM Radio, Molson Coors, Priceline

Economy:

• 10.00 am JOLTs Job openings
• 1.00 pm $32 billion 3-year auction
• 2.30 pm Fed Chairman Bernanke at Teacher town hall on financial education

Wednesday

Earnings: News Corp, Liberty Media, Dean Foods, ING Group, Macy’s (M), Ralph Lauren, SodaStream, Rio Tinto, Computer Sciences, International Flavors and Fragrances

Economy:

• 7.00 am Mortgage applications
• 8.30 am Productivity and costs
• 1.00 pm $24 billion 10-year auction

Thursday

Earnings: AMC Networks, Advanced Auto Parts, Kohl’s, Tim Hortons, DeVry, Windstream, Randgold Resources, Scotts Miracle-Gro

Economy:

• 8.30 am Trade balance
• 8.30 am Jobless claims
• 10.00 am Wholesale trade
• 1.00 pm $16 billion 30-year auction

Friday

Earnings: JC Penney (JCP), Brookfield Asset Management

Economy:

• 8.30 am Import prices

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

Data on the June U.S. trade deficit and July import prices are among the economic reports on tap next week.

The U.S. trade gap narrowed for the second straight month in May, as exports picked up and falling oil prices helped drive down imports. Meanwhile, the cost of goods imported into the U.S. posted the largest decline in more than three years in June, also reflecting the continued fall of oil prices.

Conferences in the Week Ahead

Among the significant conferences in the week ahead are:-

• Jefferies Group Inc.'s Global Industrial and Aerospace & Defense Conference Tuesday through Thursday in New York,
• the Credit Suisse Industrials Conference on Tuesday and Wednesday in New York, and
• Tudor Pickering's Hotter 'N Hell Energy Conference Wednesday and Thursday in Houston.

Other Important Articles Relating to the Week Ahead

1. The Week Ahead in the Stock Market – August 06, 2012

2. The Major ETFs in the Week Ahead – August 06, 2012

3. The Past Week Stock Market Results – August 06, 2012


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