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Week Ahead: Economic Reports, Greek Bond Offering Loom
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CNBC Executive Editor
Snow-nomics
The snow factor could be an important component in much of the coming week's economic reports, according to Marc Zandi, chief economist at Moody's Economy.com. He expects the February employment report to show the loss of 75,000 non farm payrolls. Before the snow factor, he expected the number to be zero.
ISM manufacturing data, reported Monday, will also see an impact. Moody's Economy.com expects ISM to decline to 57.3 from 58.4 in January. Without the snow, it was expected to be 58.
The lack of shoppers in dealers' show rooms (from both snow and Toyota's troubles) was a negative for Tuesday's February car sales, which he expects fell to an annual rate of 10.3 million in February, from 10.8 million in January. Chain stores' monthly sales will also be affected, as will weekly jobless claims, both reported Thursday.
"It's going to be weak for February, but it's going to bounce back in March and April," he said. For that reason, Moody's Economy.com is not changing its first quarter GDP forecast for growth of 2.5 percent.
Other data expected in the coming week includes personal income and construction spending Monday; ADP employment, ISM nonmanufacturing and the Fed beige book Wednesday; productivity and costs; factory orders and pending homes sales Thursday, and consumer credit, reported Friday.
Whither Stocks
Quinlan said he thinks the market will continue to move higher despite the multiple issues bothering it. "Here and overseas, I think you're looking at very unsynchronized global economy which creates a lot of head winds, zigs and zags," said Quinlan
"U.S. investors and foreign investors are becoming more comfortable owning dollar assets," he said. Last year, $20 billion left the U.S. for foreign investments, particularly in Europe. "You're going to see less outflows this year among U.S. investors. You're going to see more money come out of Europe into the United States."
He expects the S&P 500 to reach 1250 to 1300 by year end, at the high end of strategists' forecasts.
Quinlan noted that China's moves to tighten lending in recent weeks is another factor that has been a concern to investors.
"With China tightening here, that always creates a knee jerk reaction of money running form the emerging markets," he said. He said the last time China tightened in the summer of 2005, emerging markets actually did well. The MSCI emerging markets index total return was 3.5 percent in the first three months, and 26 percent in 12 months.
On the plus side, Quinlan said U.S. corporate earnings should be a very positive story for stocks this year, after companies trimmed costs and top line growth reappears.
In the past week, both Citigroup and J.P. Morgan raised their 2010 forecast for earnings on the S&P 500. Goldman Sachs strategists, in a note Friday, said earnings will approach prior peak levels in 2011, and that's a key reason they have a bullish view on U.S. stocks.
Getting Technical
Scott Redler, who follows the market's short term technical moves, said the stock market in the coming week could be positioning for a push higher.
"Technically, next week's a very important week for the market, and my gut tells me it's going to be to the upside," he said.
Redler said the major indices are setting up a pattern, called a "wedge." For the S&P 500, the wedge would trigger a new directional move if the S&P closes in the 1110 to 1115 range. Typically, a a wedge forms after a big move, when the market consolidates, he said. It created the pattern after the S&P peaked at 1150 in January and then corrected to a low of 1044. Its current level is now in the middle of the pattern, a place from where there could be a volatile move in either direction.
Redler says he has a hunch that move will be higher, based on the recent technical strength of some important tech stocks like
Apple, Research in Motion, Baidu, Microsoft, Cisco and Intel. He said if it does move higher, the next target for the S&P would be 1130, and then a possible return to the January high of 1150.
What Else to Watch
Earnings reports are expected from El Paso, Dish Network and McDermott Monday; AutoZone, Staples [SPLS
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] and Hovnanian [HOV
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] Tuesday; Costco [COST
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], B.J.'s Wholesale, Foot Locker, Pet Smart and Royal Bank of Canada [RY
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] Wednesday; Anheuser-Busch Inbev [BUD
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] and Toronto Dominion [TD
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] Thursday, and WPP Group Friday.
Fed speakers in the coming week include Richmond Fed President Jeffrey Lacker, who speaks on regulatory reform in Washington Monday. Minneapolis Fed President Narayana Kocherlakota speaks Tuesday on the economic outlook, and Philadelphia Fed President Charles Plosser and Boston Fed President Eric Rosengren both speak in Philadelphia Wednesday on rebuilding capital markets. Also that day, Dallas Fed President Richard Fisher speaks in New York on globalization and the recovery, while Atlanta Fed President Dennis Lockhart speaks on the economic outlook at a separate event in New York.
On Thursday, St. Louis Fed President James Bullard speaks at St. Cloud University on the topic of "the Fed at a crossroads."
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Data is a real-time snapshot *Data is delayed at least 15 minutes
