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Trading Radar: Forget Economic Data -- Next Week Is All About the Fed


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

Another week, another set of new highs in the S&P 500 (INDEXSP:.INX). All in all, economic data came out as a scratch; there were an equal amount of positive and negative reports. Retail sales posted larger-than-expected gains, up 0.7% month-over-month after backing out gas-related purchases (which increase and decrease along with fluctuations in gas prices) and up 3.7% year-over-year. The headline number was up 0.1%. Consumer and producer price indexes continued to tumble. April year-over-year growth in consumer prices was only up 1.1% while producer prices only grew 0.6% year-over-year. Both were significantly below estimates. Falling producer prices and lower inventories have been showing up in manufacturing surveys and company conference calls, so we must begin to ask: How far must prices fall before they become attractive to manufacturers?

Looking ahead to next week, it won't be the economic data that dominates the news, but rather the monetary policy news. On Wednesday, Fed Chairman Ben Bernanke will give testimony to the Congressional Joint Economic Committee at 10 a.m. EDT. While Bernanke has never been one to give away much information at a Congressional testimony, he will likely talk about falling inflation (that is, whether or not the FOMC is worried about it) and how fiscal policy is restraining growth.

More importantly, the minutes of the May FOMC meeting will be released on Wednesday at 2 p.m. EDT. After the February meeting, a number of Fed officials discussed tapering in their speeches and similar wording was found in the minutes released three weeks later. Once this idea hit the mainstream, it caused a brief sell-off in stocks, and it would not surprise me if we see a similar reaction this time given that Bernanke is unlikely to say anything groundbreaking at his testimony. Similar to February's minutes, nearly every Fed official has mentioned in a speech that they favor a tapering of asset purchases this year, so it was likely a topic of discussion. Also, the topic of excessive risk-taking in certain asset classes and disinflation have become common threads in recent speeches, so they will likely be in the minutes as well.

Also in monetary policy news, on Wednesday is the Bank of Japan's monetary policy decision. Similar to Bernanke's efforts to enhance central bank communication, the new BoJ governor Kuroda will give a press conference following the decision. It is unlikely that the BoJ makes any groundbreaking statements.

One regional manufacturing survey is scheduled for the week ahead: Kansas City. The index is expected to remain unchanged at -5, signaling contractionary activity in that sector's manufacturing growth. Two home sales subsets are also on the schedule. With the large subset of housing data last week, it is likely that home sales could miss slightly to the downside. Lastly, April durable goods orders will be released on Friday with expectations of a 1.6% growth from March. Given the negative manufacturing surveys and retail sales figures we received for April, the 0.5% expectations of durable goods ex-transports growth seems optimistic.

The global calendar is actually on the lighter side. Outside of the Bank of Japan, Thursday is the largest day. China and the eurozone will release manufacturing PMI indexes. Also on Thursday, the UK will release the first estimate of first quarter GDP.

Earnings will be mostly centered around retailers. Home Depot (NYSE:HD), Dick's Sporting Goods (NYSE:DKS), Best Buy (NYSE:BBY), Target (NYSE:TGT), Gap (NYSE:GPS), Sears Holdings (NASDAQ:SHLD), Abercrombie & Fitch (NYSE:ANF), and Ross Stores (NASDAQ:ROST) are on the calendar. Other earnings releases include Pandora (NYSE:P), (NYSE:CRM), and Hewlett-Packard (NYSE:HPQ).

Monday, May 20

US Economics (Time Zone: EDT)

08:30 Chicago Fed National Activity Index – prior -0.23
11:00 Fed buying $1.25b-$1.75b notes in 23 to 30-year range
11:30 Treasury selling $29b 3-month bills, $24b 6-month bills

Global Economics (Time Zone: GMT)

06:00 JPY Machine Tool Orders


No major earnings

Tuesday, May 21

US Economics (Time Zone: EDT)

No major economic data
11:00 Fed buying $2.75b-$3.5b notes in 7 to 10-year range
11:30 Treasury selling 4-week bills

11:30 Bullard speaks on monetary policy in Frankfurt
1:00 Dudley speaking in New York

Global Economics (Time Zone: GMT)

01:30 Reserve Bank of Australia Minutes
03:00 NZD Credit Card Spending
04:30 JPY All Industry Activity
06:00 EUR German PPI
08:30 GBP PPI
08:30 GBP CPI


AutoZone (AZO)
Home Depot (HD)
Dick's Sporting Goods (DKS)
Best Buy (BBY)
NetApp (NTAP)

Wednesday, May 22

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Index
10:00 Existing Home Sales – consensus 4.99M, prior 4.92M
2:00 FOMC Minutes May meeting
11:00 Fed buying $1.25b - $1.75b bonds in 23 to 30-year range

10:00 Bernanke speaks in front of Joint Economic Committee

Global Economics (Time Zone: GMT)

JPY Bank of Japan Rate Decision
06:30 JPY BoJ Kuroda Press Conference
08:30 GBP BoE Minutes from May Meeting
08:30 GBP Public Finances 08:30 GBP Retail Sales
10:30 Germany selling EU5b in 10-year notes


Target (TGT)
Lowe's (LOW)
Toll Brothers (TOL)
Staples (SPLS)
American Eagle Outfitters (AEO)
Hewlett-Packard (HPQ)
Workday (WDAY)

Thursday, May 23

US Economics (Time Zone: EDT)

08:30 Initial Claims – consensus 346K, prior 360K
08:30 Continuing Claims – consensus 3060K, prior 3005K
08:58 Markit US Preliminary PMI – consensus 52.0
09:00 House Price Index MoM March – consensus 0.8%, prior 0.7%
10:00 New Home Sales – consensus 425K, prior 417K
11:00 Kansas City Fed Manufacturing – consensus -5, prior -5
11:00 Fed purchasing $3b-$3.75b bonds in 6 to 7-year range

6:05am Bullard speaks on monetary policy in London

Global Economics (Time Zone: GMT)

01:45 CNY HSBC Flash Manufacturing PMI
07:30 EUR German Manufacturing PMI
08:00 EUR Eurozone Manufacturing PMI
08:00 EUR Eurozone Services PMI
08:30 GBP GDP
14:00 EUR Eurozone Consumer Confidence
9:30 Spain selling 3, 5, and 13-year notes

7:30 Draghi speaking in London


Advance Auto Parts (AAP)
Sears Holdings (SHLD)
Apollo Investment (AINV)
Ralph Lauren (RL)
Gap (GPS)
Ross Stores (ROST) (CRM)
Pandora (P)

Dollar Tree (DLTR)
GameStop (GME)

Friday, May 24

US Economics (Time Zone: EDT)

08:30 Durable Goods Orders – consensus 1.7%, prior -5.8%
08:30 Durable Goods ex Transports – consensus 0.5%, prior -1.5%
08:30 Cap Goods Orders Nondef Ex Air – consensus 0.5%, prior 0.9%
08:30 Cap Goods Nondef Ex Air – prior 0.5%
11:00 Fed buying $4.75b-$5.75b notes in 5 to 6-year sector

Global Economics (Time Zone: GMT)

01:35 CNY MNI Business Sentiment Indicator (May)
08:00 EUR German IFO Economic Expectations
08:30 GBP BBA Loans for Home Purchases


Foot Locker (FL)
Abercrombie & Fitch (ANF)

Twitter: @MichaelSedacca

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