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Trading Radar: Prepare for Third Quarter Earnings Next Week!

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

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The market's action this week was dominated by headlines about the government shutdown and the impending debt ceiling debate. That is not likely to change next week. Into the weekend, Republicans will likely take a softer approach to funding certain parts of the government. Thus far, much of the blame for the failure to pass a buddget has been placed on the GOP.

Retail sales are due out on Friday. During September, auto sales, gasoline prices, and same-store sales all declined significantly, which should lead to a drop in the monthly sales figures. The one upside? New iPhones (NASDAQ:AAPL) was launched during the month and these sales could balance out some of the negativity. Producer prices are due out on Thursday and forecast to fall to a very low 0.6% year-over-year rate from a 1.4% gain in August.

The Treasury will auction 3-, 10-, and 30-year bonds next week. Treasury traders are on edge because nonfarm payrolls were not released in the prior week and it could upset the apple cart if they are released the same day as an auction in the coming week. This would create more volatility than normal as positions would need to be squared.

Once the government reopens, the payroll report should be able to be released within the following two days.

The minutes from the FOMC's September meeting will be released on Wednesday. Recent speeches by FOMC members have showed more disagreement among committee members than normal. The decision to not taper was largely influenced by the results of September's Beige Book. Reports from lenders through July and August showed that consumer lending had slowed precipitously, forcing the FOMC to take a more aggressive approach to calming interest rates.

Earnings season will finally get going on Tuesday. Is Alcoa's (NYSE:AA) earnings report as significant as it once was now that it has been removed from the Dow Jones Industrial (INDEXDJX:.DJI)? Regardless, third quarter earnings will be kicked off by consumer-oriented Family Dollar (NYSE:FDO) and Costco (NASDAQ:COST). Finishing off the week are banks JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC). Fixed income trading slowed dramatically during the third quarter according to news reports from Jefferies, Deutsche Bank (NYSE:DB), Citigroup (NYSE:C), and UBS (NYSE:UBS). This likely weighed negatively on JPMorgan in particular. In addition, Wells Fargo earnings were likely negatively impacted by a sharp slowdown in mortgage lending during the quarter. Hopefully the decline in activity during the quarter is balanced out by the large drop in mortgage rates during the last two weeks

Monday, October 7

US Economics (Time Zone: EDT)

3:00 Consumer Credit – consensus $12b, prior $10.437b
11:00 Fed to purchase $2.75b-$3.5b notes in 7 to 10-year range
11:30 Treasury selling $35b 3-month bills, $30b 6-month bills

Global Economics (Time Zone: GMT)

05:00 JPY Leading Index
08:30 EUR Eurozone Sentix Investor Confidence
23:50 JPY Trade Balance

Earnings

No major earnings

Tuesday, October 8

US Economics (Time Zone: EDT)

07:30 NFIB Small Business Optimism – consensus 94, prior 94
08:30 Trade Balance – consensus -$39.3b, prior -$39.1b
10:00 IBD/TIPP Economic Optimism – consensus 44.5, prior 46.0
10:00 JOLTs Job Openings – prior 3689
11:00 Fed to purchase $1.25b-$1.75b bonds in 23 to 30-year range
11:30 Treasury selling 4-week bills
1:00 Treasury selling $30b 3-year notes

Fedspeak

12:25pm Pianalto speaks on economy in Pittsburgh
12:30pm Plosser speaks on economy and monetary policy in Pennsylvania

Global Economics (Time Zone: GMT)

00:30 AUD NAB Business Conditions
01:45 CNY HSBC/Markit Services PMI
05:45 CHF Unemployment Rate
06:00 EUR German Trade Balance
07:15 CHF CPI
07:15 CHF Retail Sales
10:00 EUR German Factory Orders
12:15 CAD Housing Starts

Earnings

After:
Alcoa (AA)
Yum! Brands (YUM)

Wednesday, October 9

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Applications
10:00 Wholesale Inventories MoM – consensus 0.3%, prior 0.1%
2:00 FOMC Minutes from Sep 18 meeting
1:00 Treasury selling $21b 10-year notes (2nd reopening)

Fedspeak

12:00pm Evans speaking on monetary policy in Washington

Global Economics (Time Zone: GMT)

06:00 JPY Machine Tool Orders
08:30 GBP Industrial and Manufacturing Production
08:30 GBP Trade Balance
10:00 EUR German Industrial Production
14:00 GBP NIESR Sep GDP Estimate
5:30am Germany to sells EU4b 5-year notes
10:00pm Draghi speaking at MIT

Earnings

Before:
Family Dollar (FDO)
Costco (COST)
Fastenal (FAST)

Thursday, October 10

US Economics (Time Zone: EDT)

08:30 Initial Jobless Claims - consensus 310k, prior 308k
08:30 Continuing Claims – consensus 2863K, prior 2925K
08:30 Import Price Index MoM – consensus 0.2%, prior 0.0% - prior YoY rate -0.4%
11:00 Fed to purchase $1b-$1.5b TIPS in 5 to 30-year range
1:00 Treasury selling $13b 30-year bonds (2nd reopening)

Fedspeak

9:45am Bullard speaks on monetary policy in St. Louis
1:45pm Tarullo speaks on regulation in Washington
2:30pm Williams speaks on economy in Idaho

Global Economics (Time Zone: GMT)

JPY Japanese Investors Buying of Foreign Stocks/Bonds
CNY New Yuan Loans
00:30 AUD Employment Change
05:00 JPY Consumer Confidence
11:00 GBP Bank of England Rate Decision
12:30 CAD Home Price Index
11:45am BoJ Kuroda speaking at Council on Foreign Relations in NY
4:00pm BoJ Kuroda speaking at Bretton Woods event in Washington
4:20pm Draghi speaking in NY

Earnings

Before:
Lindsay (LNN)
After:
Micron Tech (MU)
Safeway (SWY)

Friday, October 11

US Economics (Time Zone: EDT)

08:30 Producer Price Index YoY – consensus 0.6%, prior 1.4%
08:30 PPI Ex Food & Energy YoY – consensus 1.2%, prior 1.1%
08:30 Retail Sales – consensus 0.1%, prior 0.2%
08:30 Retail Sales ex Auto – consensus 0.4%, prior 0.1%
08:30 Retail Sales ex Auto & Gas – consensus 0.5%, prior 0.1%
09:55 University of Michigan Confidence Statement – consensus 76.0, prior 77.5
10:00 Business Inventories – consensus 0.3%, prior 0.4%
11:00 Fed to purchase $1.25b-$1.75b bonds in 23 to 30-year range

Fedspeak

11:00am Powell speaks on monetary policy in Washington

Global Economics (Time Zone: GMT)

06:00 EUR German CPI (final estimate)
12:30 CAD Employment Change

Earnings

Before:
JPMorgan (JPM)
Wells Fargo (WFC)

Twitter: @MichaelSedacca

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