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Trading Radar: Yellen to Testify Before Congress; China GDP On Tap


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

Two major events that happened at the end of this past week will carry over into the next: The potential for a default by Portugal's second largest bank Banco Espirito Santo (ELI:BES), and the potential for a ground invasion of Gaza by Israel. Most investors think that the incident in Portugal is idiosyncratic and it will not bleed over into other peripheral banks, whether or not BES' holding group goes into default. Gaza remains a wild card. Further military action may damage Israeli-domiciled companies only, but a full-scale war may cause macroeconomic pressures. 

Next week brings the semi-annual Humphrey Hawkins testimony, when Fed Chair Janet Yellen appears before Congress; it is scheduled for Tuesday and Wednesday mornings. It is typically unlikely for a Fed official to make any hints about potential changes to monetary policy in comments to public officials, but the one notable exception is Ben Bernanke's speech in May 2013, when he hinted that the Fed may cut its pace of asset purchases in the next few meetings, which shocked global risk assets. This past  Thursday (July 10), Vice Chair of the Federal Reserve Stanley Fischer made his first public appearance since being nominated, and helped clarify what "macroprudential tools" the Fed will develop to help follow through on its emerging third mandate, financial stability.  

The main economic event next week is the release of June retail sales. Only nonfarm payroll reports and FOMC meetings can cause more market volatility than a retail sales figure. Retail sales are expected to rise 0.6% in the month versus a 0.3% gain in the month prior. Johnson Redbook said yesterday that sales rose 5.9% year-on-year in June, helped by holiday sales; this was the largest single-month gain in the past five years. Similarly, auto sales also reached their highest annualized rate since 2006.

China is scheduled to release second-quarter GDP next Tuesday night. Growth is expected to remain roughly on track at 7.4% year-over-year, the same pace it kept in the first quarter. The quarter-over-quarter rate will increase to 1.8% from 1.4% in the prior quarter. Economic data released for the past four months has been generally better than expected, which bodes well for the official GDP release.

Producer prices for June will be released on Wednesday, but economists have been frustrated at the new dataset, which includes final demand input prices. The index has fluctuated wildly since the new data was included, mostly due to changes in esoteric services prices. New home construction data will be released on Thursday. Recent warnings from Lumber Liquidators (NYSE:LL) and Owens Corning (NYSE:OC) have raised doubts about whether there will be continued increased growth in the housing market.

Second-quarter earnings reports will begin in earnest tomorrow. Wells Fargo (NYSE:WFC) was the first to report earlier today and it did not live up to lofty expectations. More financial companies are scheduled to report next week, including Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and BlackRock (NYSE:BLK). On the tech side, Intel (NASDAQ:INTC), Google (NASDAQ:GOOG), and Yahoo (NASDAQ:YHOO) are scheduled to report.

Monday, July 14

US Economics (Time Zone: EST)
No major reports scheduled
11:00 Fed to purchase $1b-$1.25b bonds in 22-30 year range
11:30 Treasury to sell $25b 3-month bills and $23b 6-month bills
1:10pm Williams to speak in Sun Valley, Idaho
Global Economics (Time Zone: GMT)

CNY Foreign Direct Investment
09:00 EUR Eurozone Industrial Production
16:30 Draghi speaks to EU Parliament Committee
Citigroup (C)

Tuesday, July 15

US Economics (Time Zone: EST)
08:30 Advance Retail Sales (June) - expected 0.6%, prior 0.3%
08:30 Retail Sales Ex-Auto - exp 0.5%, prior 0.1%
08:30 Retail Sales Ex-Auto & Gas - exp 0.5%, prior 0.0%
08:30 Import Price YoY - exp 1.1%, prior 0.4%
08:30 Empire Manufacturing (July) - exp 17, prior 19.28
10:00 Business Inventories (May) - exp 0.6%, prior 0.6%
11:00 Treasury to sell 4-week bills
10:00am Yellen (dove, chair) to give semi-annual Humphrey Hawkins testimony to Senate Committee

Global Economics (Time Zone: GMT)

BoJ Monetary Policy Statement
01:30 AUD Minutes of RBA July Meeting
08:30 GBP CPI & PPI
09:00 EUR German ZEW Survey - Current Situation, Expectations
13:00 CAD Existing Home Sales
9:00am Carney to testify to House of Commons Treasury Committee


JPMorgan (JPM)
Goldman Sachs (GS)
Intel (INTC)
Yahoo! (YHOO)
Johnson & Johnson (JNJ)

Wednesday, July 16

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
08:30 PPI Final Demand YoY (June) - expected 1.8%, prior 2.0%
08:30 PPI Ex Food & Energy YoY - exp 1.7%, prior 2.0%
09:00 Net Long-term TIC Flows (May) - exp $25B, prior -$24.2B
09:00 Total Net TIC Flows - prior $136.8B
09:15 Industrial Production (June) - exp 0.4%, prior 0.6%
09:15 Capacity Utilization - exp 79.3%, prior 79.1%
10:00 NAHB Housing Market Index (Jul) - exp 50, prior 49
2:00 Fed's Beige Book
10:00am Yellen (dove, chair) to give semi-annual testimony to House Committee
12:00pm Fisher (hawk, voter) speaks in Los Angeles

Global Economics (Time Zone: GMT)

02:00 CNY Fixed Asset Investment
02:00 CNY Retail Sales
02:00 CNY Industrial Production
02:00 CNY GDP
08:30 GBP ILO 3M Unemployment Rate (May)
14:00 CAD BoC Rate Decision


Abbott Labs (ABT)
US Bancorp (USB)
Blackrock (BLK)
Bank of America (BAC)
St Jude Medical (STTJ)
Sandisk (SNDK)
Yum! Brands (YUM)
eBay (EBAY)
Las Vegas Sands (LVS)
Kinder Morgan (KMI)
Charles Schwab (SCHW)
PNC Financial (PNC)

Thursday, July 17

US Economics (Time Zone: EST)

08:30 Initial Jobless Claims, June 28, exp. 310k, prior 304k
08:30 Continuing Claims - exp 2583K, prior 2854k
08:30 Housing Starts (June) - exp 1025K, prior 1001K
08:30 Building Permits - exp 1042K, prior 991K
10:00 Philly Fed - exp 16.0, prior 17.8
11:00 Fed to purchase $1.75b-$2.25b notes in 4 to 5-year range
1:35pm Bullard (hawk, nonvoter) speaks in Kentucky
Global Economics (Time Zone: GMT)

Japan Investors Purchases of Foreign Stocks/Bonds
09:00 EUR Eurozone CPI


Baker Hughes (BHI)
Sherwin-Williams (SHW)
Keycorp (KEY)
UnitedHealth (UNH)
Mattel (MAT)
Fifth Third Bancorp (FITB)
Philip Morris (PM)
Morgan Stanley (MS)
WW Grainger (GWW)
Capital One Financial (COF)
Schlumberger (SLB)
Skyworks (SWKS)
Google (GOOG)

Advanced Micro Devices (AMD)
Blackstone (BX)

Friday, July 18

US Economics (Time Zone: EST)

09:55 University of Michigan Consumer Confidence (July prelim) - expected 83.0, prior 82.5
10:00 Leading Index (June) - exp 0.5%, prior 0.5%

Global Economics (Time Zone: GMT)

01:30 CNY June Property Prices
12:30 CAD CPI


General Electric (GE)
Kansas City Southern (KSU)
Bank of NY Mellon (BNY)
Honeywell (HON)

Twitter: @MichaelSedacca

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