Week Ahead: The Data for the Economy will be Over-shadowed by the Bernanke Speech!
by Ian Harvey
August 27, 2012
There is a busy calendar of economic news in the week ahead, but the Bernanke speech trumps all else. The Fed beige book on the economy, second quarter GDP revisions and consumer confidence are among the reports expected. Retailers will release chain store sales Thursday, giving an early look at the back-to-school shopping season.
The Republican convention will also be underway, and Wall Street will be watching to see how well the week goes for GOP presidential candidate Mitt Romney, favored over President Obama by many in the markets but slightly behind Obama in the polls.
Earnings in the Week Ahead
Earnings season is winding down, with only five S&P 500 components scheduled to report in the week ahead, including Tiffany & Co (TIF), Joy Global Inc (JOY) and H.J. Heinz (HNZ).
With 98 percent of S&P 500 companies having reported results, 67 percent have topped expectations by an average surprise factor of 4.3 percent, according to Thomson Reuters data. The 67 percent beat rate is higher than the long-term average of 62 percent. However, there have been some notable disappointments lately, including Hewlett-Packard Co (HPQ).
Traders in the energy markets will also be watching the progress of Isaac in the week ahead, as the storm moves into the Gulf of Mexico, with oil and gas drilling rigs in its path.
Investors will also be sorting out the aftermath of the late Friday jury verdict, which gave Apple (AAPL) a $1 billion victory over Samsung. Samsung was found to have infringed on Apple patents on phones and tablets. Apple’s stock gained more than 1.7 percent in after-hours trading, reaching a new high.
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%|
|SLV Nov 30.00 Calls||114%|
The Economy in the Week Ahead
Economic indicators for the week ahead includes August reads on consumer confidence and sentiment, the latest read on Chicago PMI and July pending home sales. The Fed's Beige Book, a collection of anecdotal information on current economic conditions, will also be released.
Earnings: Tiffany (TIF)
• 6:00 a.m. Chicago Fed President Charles Evans speaks in Hong Kong
• 10:30 a.m. Dallas Fed Survey
• 12:15 p.m. Cleveland Fed President Sandra Pianalto on economy
Earnings: H.J. Heinz (HNZ) and Credit Agricole (CRARY)
• 9:00 a.m. S&P Case/Shiller home prices
• 10:00 a.m. Consumer confidence
• 10:00 a.m. Richmond Fed survey
• 1:00 p.m. $35 billion 2-year Treasury auction
Earnings: Joy Global (JOY) and TiVO (TIVO)
• 7:00 a.m. Mortgage applications
• 8:30 a.m. Real GDP (Q2 second)
• 10:00 a.m. Pending home sales
• 1:00 p.m. $35 billion 5-year Treasury auction
• 2:00 p.m. Beige book
Earnings: Toronto Dominion Bank (TD) and Zumiez (ZUMZ)
• Chain stores report monthly sales
• 8:30 a.m. Initial claims
• 8:30 a.m. Personal income
• 11:00 a.m. Kansas City Fed survey
• 1:00 p.m. $29 billion 7-year Treasury auction
• Presidential candidate Mitt Romney speaks at Republican convention
Earnings: No major earnings to report for Friday
• 9:45 a.m. Chicago PMI
• 10:00 a.m. Fed Chairman Ben Bernanke speaks at Jackson Hole symposium
• 9:55 a.m. Consumer sentiment
• 10:00 a.m. Factory orders
• 10:25 a.m. European Central Bank President Mario Draghi on panel at Jackson Hole symposium
The market is torn between macroeconomic concerns on one hand, and relatively good earnings and business trends on the other – but there is encouragement by the fundamentals in the stock market even though, unquestionably, the economy has slowed.
The S&P 500 fell 0.5 percent last week, a relatively mild decline after six weeks of gains. On Tuesday, it surged to its highest level since June 2008 before pulling back. The Dow Jones industrial average .DJI slid 0.9 percent for the week, while the Nasdaq .IXIC slipped 0.2 percent.
The market has been so strong lately that there's the idea Bernanke could pull back from QE3 as a result of that – which really means that the market is able to stand on its own two feet.
Other Important Articles Relating to the Week Ahead
1. The Week Ahead in the Stock Market – August 27, 2012
2. The Major ETFs in the Week Ahead – August 27, 2012
3. The Past Week Stock Market Results – August 27, 2012
4. Stock Market Monday and Underperformance, August 27, 2012
5. Hedge Fund Managers Becoming More Bullish, August 27, 2012
6. New Range Options from CBOE , August 27, 2012