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Trading Radar: S&P Broke to New Highs This Past Week, Housing Data Next Week

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Economics, earnings reports, and market events for the week ahead.

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This past week, the S&P (INDEXSP:.INX) rebounded off the economic weakness from the March payrolls report. What appeared to be a breakdown from congestion turned out to be a false signal as the S&P broke through the 1573 level of resistance to record highs. On Friday, though, equities gave some of it back as retail sales continued to show an economic slowdown. March retail sales were down 0.4% with much of this slowdown attributed to the drop in gas prices and weak auto sales concurrent with seasonally cold weather. Thus far, ex auto and gas, retail sales are only up 0.26% year-to-date, compared to a 2.41% gain in the first quarter of 2012. This doesn't inspire great confidence in any economic growth.

There was blood in the gold pits as the yellow metal took a 5% hit. Precious metals have remained in a downtrend for the past seven months and today could have been a change-in-trend day. Treasuries also had a big rally today as the deflation trade continued. After working off extreme overbought conditions this week, they have now retraced all of the week's losses. Additionally, the curve continued to reorient itself after many shorts got blown out on NFP day. Inflation breakevens, particularly in the more volatile 5-year sector, continued to struggle and have now gone down nearly every day since mid-March.

For next week, the two US economic reports we are focusing on are monthly housing starts and the NAHB Housing Market Index. For the former, with March retail sales, we know that purchases of "building materials" declined. While not wholly indicative of a slowdown in housing construction, it is certainly a negative sign. Positive anecdotes continue to show that recent housing demand has caused supply to fall behind. Tying this into the NAHB Index -- which measures broker and builder sentiment -- we see the outlook for new housing construction rolling over in 2012. In 2012, the diffusion index went on a joyride from 21 to 47 and has since rolled over to 44. Similarly, homebuilder stocks were up 51.5% during the same time period. A continued slowdown will be negative for them.

Globally, not a whole lot stands out. UK employment figures on Tuesday will be a touchpoint as economic data has waned in the recent months, and the idea of another recession has begun to gain more headway. The ILO 3-month unemployment change is expected to remain unchanged at 7.8% with 60,000 jobs being added to the economy. With the recent USDJPY volatility causing price shocks in commodities and fixed income assets, it's only fair to mention a Japanese data point: Japan's merchandise trade balance is expected to continue showing a deficit at 522.2 billion yen.

A large number of important earnings reports are due out this week as the reporting season begins to pick up. Notable reports include Google (NASDAQ:GOOG), Intel (NASDAQ:INTC), Yahoo (NASDAQ:YHOO), CSX (NYSE:CSX), Pepsi (NYSE:PEP), IBM (NYSE:IBM), and SanDisk (NASDAQ:SNDK). From the financial sector, Citigroup (NYSE:C), Morgan Stanley (NYSE:MS), Schwab (NYSE:SCHW), BlackRock (NYSE:BLK), and American Express (NYSE:AXP) will also report earnings.


Monday, April 15

US Economics (Time Zone: EDT)

08:30 Empire Manufacturing – consensus 7, prior 9.24
09:00 Total Net TIC Flows – prior $110.9B
09:00 Net Long-term TIC Flows – consensus $40.0B, prior $25.7B
10:00 NAHB Housing Market Index – consensus 45, prior 44
11:00 Fed buying $4.75b - $5.75b notes in 4.5 to 5.5-year range
11:30 Treasury selling $35b 3-month bills, $30b 6-month bills

Global Economics (Time Zone: GMT)

02:00 CNY Industrial Production
02:00 CNY Retail Sales
02:00 CNY Real GDP
04:30 JPY Industrial Production
13:00 CAD Existing Home Sales

Earnings

Before:
Schwab (SCHW)
Citigroup (C)


Tuesday, April 16
US Economics (Time Zone: EDT)

08:30 Consumer Price Index YoY – consensus 1.6%, prior 2.0%
08:30 CPI Ex Food & Energy YoY – consensus 2.0%, prior 2.0%
08:30 Housing Starts – consensus 930K, prior 917K
08:30 Building Permits – consensus 945K, prior 946K
09:15 Industrial Production – consensus 0.2%, prior 0.7%
09:15 Capacity Utilization – consensus 78.4%, prior 79.6%
09:15 Manufacturing Production – consensus 0.1%, prior 0.8%
11:30 Treasury selling 4-week bills

Fedspeak:
08:00 Dudely speaks in NY
09:00 Evans speaks in Chicago
12:00 Duke speaks in Washington
3:00 Yellen speaks in Washington
5:00 Kocherlakota speaks in Minneapolis

Global Economics (Time Zone: GMT)

01:30 AUD RBA April Meeting Minutes
07:15 CHF PPI and Import Price Index
08:30 GBP PPI
08:30 GBP CPI
08:30 GBP Retail Price Index
09:00 EUR Eurozone CPI
09:00 EUR Eurozone ZEW Survey
22:45 NZD CPI

Earnings

Before:
Coca-Cola (KO)
BlackRock (BLK)
US Bancorp (USB)
WW Grainger (GWW)

After:
CSX (CS)
Intel (INTC)
Yahoo (YHOO)
Johnson & Johnson (JNJ)
TD Ameritrade (AMTD)


Wednesday, April 17

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Index
2:00 Fed Beige Book
11:00 Fed buying $1.25b-$1.75b bonds in 23 to 30-year range

Fedspeak:
9:30 Bullard speaks in NY
12:00 Rosengren speaks in NY

Global Economics (Time Zone: GMT)

05:00 JPY Consumer Confidence
08:30 GBP Jobless Claims Change
08:30 GBP 3M Employment Change
09:00 CHF ZEW Economic Expectations Survey
14:00 CAD Bank of Canada Rate Decision
23:50 JPY Merchandise Trade Balance
11:30 Germany selling EU4b 10-year notes

Earnings

Before:
Abbott Labs (ABT)
Mattel (MAT)
Bank of NY Mellon (BONY)
Bank of America (BAC)
St. Jude Medical (STJ)

After:
American Express (AXP)
SanDisk (SNDK)
Steel Dynamics (STLD)
eBay (EBAY)
SLM (SLM)


Thursday, April 18

US Economics (Time Zone: EDT)

08:30 Initial Claims – consensus 346K, prior 347K
08:30 Continuing Claims – prior 3079K
10:00 Philly Fed – consensus 3, prior 2
10:00 Leading Indicators – consensus 0.1%, prior 0.5%
11:00 Fed purchasing $2.75b-$3.5b notes in 7 to 10-year range
11:30 Treasury selling $18b in 5-year TIPS

Fedspeak:
09:00 Kocherlakota speaks in NY
09:30 Lacker speaks on credit in Charlotte, NC
12:00 Raskin speaks in NY

Global Economics (Time Zone: GMT)

01:30 CNY Property Prices
08:30 GBP Retail Sales
9:30 Spain selling 3,5, and 10-year notes
9:30 UK selling 30-year bonds
9:50 France selling 2 and 5-year notes

Earnings

Before:
Sherwin-Williams (SHW)
Union Pacific (UNP)
UnitedHealth (UNH)
KeyCorp (KEY)
Fifth Third Bancorp (FITB)
Pepsi (PEP)
Phillip Morris (PM)
Morgan Stanley (MS)
Verizon (VZ)
Freeport-McMoRan (FCX)
BB&T (BBT)

After:
Chipotle Mexican Grill (CMG)
IBM (IBM)
Capital One (COP)
Microsoft (MSFT)
E*TRADE (ETFC)
Google (GOOG)
Advanced Micro Devices (AMD)
Cypress Semi (CY)
Blackstone (BX)
Intuitive Surgical (ISRG)


Friday, April 19

US Economics (Time Zone: EDT)

No major economic reports
11:00 Fed buying $1.25b-$1.75b bonds in 23 to 30-year sector

Global Economics (Time Zone: GMT)

05:00 JPY Leading Index
06:00 EUR German PPI
12:30 CAD CPI

Earnings

Before:
General Electric (GE)
Honeywell (HON)
McDonald's (MCD)
Baker Hughes (BHI)
SunTrust (STI)
Under Armour (UA)
Schlumberger (SLB)
State Street (STT)

Twitter: @MichaelSedacca

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