Week Ahead: Retail Earnings, Factory Reports!
Economy – An Early Look at August Activity!
by Ian Harvey
August 13, 2012
The second-quarter earnings season comes to its unofficial end in the week ahead.
Cisco Systems (CSCO) and Home Depot (HD) report quarterly results, along with Wal-Mart Stores (WMT), Target (TGT) and farm equipment manufacturer Deere (DE).
A very full calendar for the economy in the week ahead will cover U.S. reports on homebuilding, shopping, manufacturing, inflation and consumer sentiment. The most important of these are likely to be reports that give early glimpses at August activity.
The data for the economy includes the Producer Price Index and Consumer Price Index reports on Tuesday and Wednesday, respectively.
A report on housing starts comes Thursday, along with the weekly updates on jobless claims and the Philadelphia Federal Reserve Bank's monthly report on manufacturing in its district.
Earnings in the Week Ahead
Several major U.S. retailers are due to report their latest quarterly results in the week ahead, including the world's biggest retailer, Wal-Mart Stores Inc. (WMT), as the sector contends with waning consumer confidence and global economic woes.
Meanwhile, monocrystalline sand producer Hi-Crush Partners LP is expected to go public next week, the only initial public offering scheduled for the week.
Retailers to Report Quarterly Earnings in the Week Ahead
Earnings from the retail sector will continue in the week ahead, with results due from Wal-Mart, Abercrombie & Fitch Co. (ANF), Aeropostale Inc. (ARO), Gap Inc. (GPS), Saks Inc. (SKS), Sears Holdings Corp. (SHLD) and Target Corp. (TGT), among others.
Analysts polled by Thomson Reuters expect retail giant Wal-Mart to post another quarter of stronger earnings. Same-store sales in the company's key U.S. stores have improved in the prior three quarters. However, Wal-Mart's recent gains come as its core lower-income customers are grappling with high gasoline prices and a still-soft jobs market that have moved many consumers to keep a tight watch on spending.
In the teen retail space, Abercrombie, normally an edgy bellwether for the group, earlier this month projected very soft second-quarter and full-year earnings, while smaller rival Aeropostale lowered its guidance for the quarter. Both companies were hurt by fashion misses, and inventory backup and slow sales led to heavy discounting at Abercombie.
Hi-Crush Partners to Begin Trading in the Week Ahead
Monocrystalline sand producer Hi-Crush Partners LP is expected to go public in the week ahead, with units scheduled to price Wednesday.
The company has said it expects to offer 11.3 million common units between $19 and $21 each in its IPO, which was first filed in July.
Hi-Crush's reserves consist of sand primarily from Wisconsin--where it is based--and other parts of the upper Midwest U.S. region. It said the demand for its sand, which is used as a "proppant" to enhance recovery rates of hydrocarbons, increased at an annual rate of 28% from 2006 to 2011.
The company plans to list its units on the New York Stock Exchange under the symbol HCLP.
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%|
|APPL Jan 13 650.00 Calls||71%||CSTR Oct 42.50 Puts||400%|
|LNKD Aug 92.50 Puts||30%||LNKD Aug 100.00 Calls||250%|
Economy in the Week Ahead
Markets will examine factory reports from two regional Federal Reserve district banks on Wednesday and Thursday for timely readings of the economy. Because the surveys are done by various Fed banks to cover the concurrent month, financial markets pay attention to them for a timely read on the economy.
Earnings: GroupOn, Sysco, Iam Gold
• No major reports for the economy on Monday
Earnings: Home Depot, TJX, Michael Kors, JDS Uniphase, Flowers Food
• 7.30 am NFIB survey
• 8.30 am Retail sales
• 8.30 am PPI
• 10.00 am Business inventories
Earnings: Deere, Target, Cisco, Applied Materials
• 7.00 am Mortgage applications
• 8.30 am CPI
• 8.30 am Empire state survey
• 9.00 am Treasury international capital flows
• 9.15 am Industrial production
• 10.00 am NAHB survey
• 8.00 pm Minneapolis Fed President Narayana Kocherlakota on Federal Reserve and role of its board
Earnings: Wal-Mart, Dollar Tree, Aeropostale, Gap
• 8.30 am Initial claims
• 8.30 am Housing starts
• 10.00 am Philadelphia Fed survey
• 8.00 pm Minneapolis Fed’s Kocherlakota on Federal Reserve and role of its directors
Earnings: Ann, J.M. Smucker
• 9.55 am Consumer sentiment
• 10.00 am Leading indicators
Reports about the Economy to Watch in the Week Ahead
Conferences in the Week Ahead
• On Wednesday, the New York Fed will release its Empire State Survey. The median forecast of economists surveyed by Dow Jones Newswires is that the top-line business conditions index will weaken to 6.0 this month from 7.39 in July.
• Economists expect some improvement in the Philadelphia Fed manufacturing survey, scheduled for Thursday, but the expected reading will still indicate a sector in recession. The general business activity index is projected to rise to -4.5 this month, which would be the fourth consecutive reading below 0, indicating the area factories are contracting.
• A look at August housing conditions will be reported Wednesday with the release of the National Association of Home Builders' housing-market index. The July index jumped six points to 35, the best reading since March 2007. Economists expect some giveback in August, with an expected index of 34.
• A first look at consumer sentiment will be reported Friday with the consumer-sentiment index for early August. The index is expected to stand at 72.2, little changed from an end-July reading of 72.3.
• The two major July reports on inflation are also on tap in the week ahead, but neither is expected to show a flare-up in price pressures.
• The median forecast for the producer-price index calls for a 0.3% gain in the July top-line index and a 0.2% rise in the core index that excludes food and energy.
• The consumer-price index, out Wednesday, is expected to show a 0.2% gain in both the top-line and core indexes.
• EnerCom Inc.'s The Oil & Gas Conference Sunday through Saturday in Denver;
• J.P. Morgan's Auto Conference on Monday and Tuesday in New York;
• Canaccord Genuity's Global Growth Conference Tuesday through Thursday in Boston; and
• Oppenheimer Holdings Inc.'s Technology, Internet & Communications Conference Tuesday and Wednesday in Boston.
Other Important Articles Relating to the Week Ahead