Scott V. Nystrom, Ph.D.

September 20 Market Week in Preview

In Earnings on September 20, 2010 at 10:38 am

All eyes will be on housing as homebuilders post earnings and housing-related economic reports are released this week. Investors will also be looking for signs of quantitative easing in monetary policy.

Market Preview

Asian markets are mixed today. Hong Kong’s Hang Seng index is flat. Japan’s Nikkei is closed for Monday and China’s Shanghai Shenzen dropped by 0.4 percent.

European shares are up this morning, with the German DAX rising 0.3 percent. Britain’s Footsie 100 is up by 1 percent in mid-day trading.

The S&P 500 index opened up 0.2 percent this morning.

Crude oil is slightly higher on Monday morning, trading just under $74 a barrel.

Spot gold jumped in Monday morning trading, hovering around $1,280 an ounce.

Economic Preview

On the economic front, the National Association of Home Builders released results from its monthly survey of members on Monday coming in at an index level of 13, flat from the August survey index reading of 13. Expectations were for an index level of 14 for September. The index is on a scale of zero to 100 with 50 meaning demand is average.

Housing starts for August will be released on Tuesday and is expected to come in at a 550,000 annualized rate, up from 546,000 for July.

Monetary policy will draw attention on Tuesday afternoon, as the Federal Reserve meets, issues a policy statement, and releases the minutes from its last meeting. The key interest rate target is expected to remain unchanged. Investors will scrutinize the statement for signs of further monetary policy easing.

On Thursday, existing home sales for August will be released with a consensus number of 4.05 million annualized home sales, a faster rate than the 3.83 million reported in July.

On Friday, durable goods order in August will be released. Economists are expecting a decline in orders of 1 percent from July to August.

New home sales for August will also be released on Friday. The consensus number is 290,000 annual new homes sold, a slight improvement over the July number of 276,000.

Earnings Preview

On the earnings front, home builder Lennar (LEN) posted 16 cents per share in quarterly earnings this morning. Analysts were expecting 5 cents. Shares were up almost 6 percent on the good news.

On Tuesday before the open, ConAgra (CAG) will release earnings. The consensus number is 39 cents per share.

Adobe Systems (ADBE) will report on Tuesday at the closing bell, with analysts expecting 49 cents per share in profits.

General Mills (GIS) is scheduled to report on Wednesday at the open, with the street looking for earnings per share of 63 cents.

Nike (NKE) will post earnings on Thursday, with the street looking for $1.00 earnings per share.

And on Friday, KB Home (KBH) will report earnings. Expectations are for a minus 15 cents per share.

Other companies expected to report earnings growth this week include Bed Bath & Beyond (BBBY), Carmax (KMX), Carnival (CCL), Darden (DRI), Red Hat (RHT), and Zales (ZLC).

Economic and Earnings Preview: Week of September 13

In Earnings on September 13, 2010 at 8:56 am

Bank stocks rise in Europe and Asia on the new Basel III agreement. Investors will be watching economic reports for clues on where stocks are headed this week.

Market Preview

Asian markets are higher today. Hong Kong’s Hang Seng index jumped 1.9 percent. Japan’s Nikkei 225 was up 0.9 percent and China’s Shanghai Shenzen rose by 1 percent.

European shares are doing well this morning, with the German DAX rising 1 percent. Britain’s Footsie 100 was up by 1.1 percent in mid-day trading.

U.S. S&P 500 index futures were up 0.9 percent in pre-market action.

Crude oil is higher on Monday morning, trading just above $77 a barrel.

Spot gold was flat in Tuesday morning trading, hovering around $1,242 an ounce.

Economic Preview

Economic reports will likely dominate investor attention this week given so few companies will be reporting earnings this week.

retail sales for August will be released on Tuesday and are expected to have increased by 0.2 percent, down from a 0.4 percent increase in July.

On Wednesday, industrial production will be released and is expected to have increased by 0.4 percent after a 1 percent increase in July. Capacity utilization will also be reported along with industrial production. Overall capacity utilization is expected to rise to 75 percent, roughly flat from July’s reading of 74.8 percent.

On Thursday, initial jobless claims will be released with expectations for 455,000 new unemployment claims for the week of September 11th.

Producer price index data will also come out on Thursday. Analysts are expecting August producer prices to have risen 0.3 percent.

Basel III Agreement

The Bank of International Settlements announced Basel III, with new capital requirements for international banking. The BIS will instruct banks to hold tier 1 capital equal to 7 percent of risk-bearing assets.  Critics are concerned that the more stringent capital requirements come too late and have too long a lead-in time.

Bank stocks in Europe and Asia were up the Basel III news and the Financial Sector SPDR ETF (XLF) was up 1.4 percent in premarket trading.

Earnings Preview

On the earnings front, fewer than 50 companies will be reporting this week.

Best Buy (BBY) will post earnings on Tuesday before the market opens. The company is expected to post 45 cents earnings per share.

The Kroger Company (KR) will also report on Tuesday before the market opens with analysts expecting 36 cents profit per share.

On Thursday before the open, FedEx (FDX) will release earnings. The consensus number is $1.24 per share.

Oracle (ORCL) will report on Thursday at the closing bell, with analysts expecting 36 cents per share in profits.

And Research in Motion (RIMM) is scheduled to report on Thursday at the close, with the street looking for earnings per share of $1.35.

Equity Futures Point to Lower Open

In Earnings on September 7, 2010 at 7:44 am

Futures point to a lower opening on Wall Street after a long Labor Day weekend. President Obama proposes tax cuts and increased transportation spending to boost the economy.

Market Preview

Asian markets are mixed today. Hong Kong’s Hang Seng index edged up 0.2 percent. Japan’s Nikkei 225 dropped 0.8 percent and China’s Shanghai Shenzen rose by 0.3 percent.

European shares are down this morning, with the German DAX falling 0.7 percent. Britain’s Footsie 100 was lower by 0.8 percent in mid-day trading.

U.S. S&P 500 index futures were down by 0.5 percent in pre-market action.

Crude oil is lower on Tuesday morning, trading just above $73 a barrel.

Spot gold was flat in Tuesday morning trading, hovering around $1,247 an ounce.

Economic Data

On the economic front, consumer credit outstanding for July will be released on Wednesday. Credit contracted in both May and June. Economists are expecting further credit contraction of a minus $3.5 billion.

On Thursday, initial jobless claims will be released with expectations for 470,000 new unemployment claims for the week of September 4th.

International trade figures will also come out on Thursday. The trade gap spiked to nearly $50 billion in June. Analysts are expecting the July trade deficit to come in at $46.8 billion.

President Proposes Tax Cut and New Spending

President Obama is expected to propose a 100 percent investment tax credit for business for 2010 and 2011 estimated to increase the budget deficit by $200 billion. He will also propose a $50 billion boost in spending on transportation. The President will roll out his proposals to stimulate the economy in a Cleveland, Ohio speech on Wednesday.

Earnings Forecasts Scaled Back

Despite a successful second quarter earnings season, earnings projections have been scaled back over the past three months. In April, forecasters were expecting profits to grow by 20 percent in 2011. More recently, they have dialed back next year’s earnings estimates to a 15 percent growth rate. Investors are concerned that earnings could be lowered further in the next few months if the economy continues to weaken.

Earnings Preview

It will be a slow week on the earnings front.

On Wednesday after the market closes, Navistar International (NAV) is expected to post $1.36 earnings per share.

Pep Boys (PBY) will also report on Wednesday after the close with analysts expecting 19 cents in profits per share.

And on Friday before the open, athletic apparel maker Lululemon Athletica (LULU) will release earnings. The consensus number is 24 cents per share.