Sunday, July 30, 2006

Weekly look ahead

This week continues the crush of earnings reports, but also includes some significant numbers on income and spending. The best consumer spending numbers are out on Tuesday, but for income I think Friday's Hourly Earnings report is a much better barometer than Tuesday's Personal Income numbers, because the latter has been adjusted a lot by politically influenced commitees.

Monday, July 31st

  • Chicago PMI (Purchase Managers Index) for July reports at 10am EST. Expectation is for 56, down from 56.5. This number judges factory health in the upper Midwest, and has been strong due to good profits and business activity recently. Too strong, and people will worry about inflation.
  • Earnings reports: 75+
Tuesday, August 1st

  • Auto and Truck Sales for the week report at noon EST (two reports). Prior numbers were 5.3M, the street is expecting around 5.5M. I wouldn’t be surprised by a lower number based on anecdotal results from the Fed Beige book and generally slowing auto sales.
  • Personal Income and Personal Spending (two reports) released at 8:30am EST for June. The consensus expectation is that income will be up about 0.6% (versus 0.4% previous) and spending will be up about 0.4% (same as previous). This would seem to indicate consumers were saving more, which I find difficult to believe in this “stealth inflation” environment. If income goes up more than spending I would be inclined to look into how they calculate the numbers.
  • Construction Spending for June reports at 10am EST. This number actually dropped at last report although expectations are for 0.2-0.3% increase thanks in part to warmer weather. If this number comes in weaker the market will probably drop due to expectations that a weaker housing market will damp consumer spending.
  • Earnings reports: 165+
Wednesday, August 2nd

  • Weekly Crude inventories reports at 10:30am EST.
  • Earnings reports: 40+
Thursday, August 3rd

  • Initial jobless claims for the week report at 8:30am EST. Previous number was 298,000; expected number is 310,000. This number is in line with expectations for a long time now. Any deviation from the 300,000 range would be very notable.
  • Factory orders for June report at 10am EST. This could be a big deal. Prior number was 0.7% but for June I expect something in excess of 1%, perhaps even 1.5%, based on earnings and purchasing trends I see in the industrials.
  • Earnings reports: 40+
Friday, August 4th

  • Average Workweek and Hourly Earnings (2 reports) come out at 8:30am EST. The hourly earnings numbers are a better gauge than Tuesday’s Personal Income numbers because it doesn’t get messed with as much for political ends. If the Hourly earnings are up significantly (say 0.5%+) we are definitely in an inflationary warming. Average Workweek is more of an indicator how much the labor market will soon be heating up, most observers don’t expect it to have budged from last months 33.9 hours, which is a moderately high but sustainable number.
  • Nonfarm Payrolls and Unemployment Rate for July both also report at 8:30 am EST. This view of the jobs environment will only effect the market if something startling happens. The Unemployment rate has been pretty stable around 4.6% and is a lagging indicator behind the Thursday Jobless Claims number (typically). The Nonfarm payrolls number bounces around a fair amount. I don’t expect these two to cause much commotion.
  • Earnings reports wind down for the week with just a handful on Friday.

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