The Greek’s Week Ahead provides market participants with a market-moving event planner for the week. We have designed it to prepare you for important news, information and happenings that are likely to impact your portfolio this week.
We have now experienced two weeks of stock decline, as concern about the economy and the dollar have overtaken concern for inflation. When the market was enthusiastic over the potential for an interest rate cut, we warned that choppy sideways trading was likely to be the norm until it became evident the market was either heading for recession, a soft landing or stagflation. The consensus today is negative, but we once again advise investors to stay calm as the direction of the economy has yet to be decided.
Dollar weakness poses a continuing threat, and is a long-term likelihood in a global marketplace where world economies are strengthening, consolidating and positioning counter to America in some instances. Foreign currencies in emerging markets should generally continue to strengthen, but at some point, the developed markets of the Euro and Yen will also likely face threat. We expect the Yen will be the second important currency to follow the dollar downward, as the Euro continues to find followers as a solid alternative to dollar investment in the medium term. However, we would own gold over all currencies, as we continue to see a serious danger for a widespread war originating in the Middle East. If this occurs, all currencies are at risk, all property value is at risk, all security value is at risk, and only the most basic of currencies, gold, and possibly water and critical food and energy commodities would find buyers.
IPOs coming to market this week include Aegean Marine Petroleum Network Inc., which is expected to offer 14.38 million shares at $12-14 through Bear Stearns. Also, Kohlberg Capital LLC is expected to offer 15.53 million shares at $14-16, through bankers Lehman Brothers and Merrill Lynch.
Monday kicks off conference season, as analysts and portfolio managers enjoy free lunches at the expense of investment banks, and become entranced by the dog and pony shows of various industries. Credit Suisse First Boston and UBS will host media industry conferences in New York City, where companies like Viacom, Disney, AT&T, Level 3, New York Times and Playboy are set to present.
REIT SL Green Realty is holding an investor conference in New York, while its pending acquisition of Reckson Associates continues to be threatened by a rival bid from corporate raider icon, Carl Icahn. At the same time, AIG is webcasting an overview of its domestic life-insurance and retirement-service operations.
In Washington, the Shadow Financial Regulatory Committee, which is made up of a group of professors, will meet at the American Enterprise Institute to critique the existing regulatory burden on public companies. Post Enron, Worldcom, and Sarbanes-Oxley, the Bush administration is hopeful it can bring regulation to a less than burdensome point for America’s corporations.
Reporting earnings on Monday are Comtech Telecom and Kroger Co.
Tuesday shifts the focus some from media stocks to semiconductor and electronics manufacturers, as the Lehman Brothers Global Technology Conference kicks off at the Fairmont Hotel in San Francisco.
In economic news, third quarter productivity data will be released at 8:30 AM EST. Bloomberg News’ survey of economists estimates a 0.4% rise versus a flat result in Q2. October Factory Orders are set for release at 10:00 AM, and the consensus sees a 4.2% decrease, as compared to a 2.1% rise in September.
A potentially interesting and lately very negatively toned earnings report is due from home builder Toll Brothers. TOL will report its fiscal fourth quarter, and analysts’ consensus sees EPS of $1.06, versus $1.84 last year. Also reporting earnings on Tuesday are Autozone Inc., Pall Corp., Sanderson Farms, Angelica Corp., Copart Inc., Financial Fed Corp., Novell, Photronics and Wind River Systems.
Wednesday brings a rather quiet time for news. Seismic data and other oil-exploration data processor Veritas DGC is expected to post quarterly growth in its fiscal Q1 report. Others reporting earnings Wednesday are Porsche AG, Blyth Inc., Quanex Corp., NCI Building Systems, Universal Tech Institute and Korn/Ferry International.
Metlife executives will address the New York insurer’s annual investor conference, and Mark McClellan, the former head of Medicare and the Food and Drug Administration, will speak at BMO Capital’s New York conference on drug and medical-device firms.
Thursday, October consumer credit data will reach the market at about 3:00 PM EST. The consensus of economists surveyed by Bloomberg sees growth of $4.1 billion versus a decrease of $1.2 billion in September. We view consumer credit critical to the economic picture, and will closely watch the direction of defaults and overall credit to gauge how lenders are impacting liquidity and how well capitalized consumers are for the holiday shopping season. In Europe, central bankers meet to discuss interest rates.
Small and mid-cap banks take center stage Thursday, as they discuss their outlook and the industry’s consolidation progress at a Ryan Beck conference in New York. A panel of FDA advisers starts a two-day meeting Thursday to discuss whether implanting drug-coated stents in heart arteries raises the risk of fatal blood clots. Recent studies by device makers coincidentally showed stents were safe. The shares of stent makers Johnson & Johnson and Boston Scientific are likely to be active during this period.
Reporting earnings on Thursday are Carreker Corp., Methode Electronics, Fleetwood Enterprise, Jos A. Bank, National Semiconductor, Atwood Oceanics Inc. and Esterline Tech Corp.
Friday keys economic data release this week, with the November Nonfarm Payroll report and unemployment data. Bloomberg’s consensus sees nonfarm payrolls indicating growth of 105,000, compared to growth of 92,000 in October. November unemployment is expected to measure at 4.5%, versus 4.4% in October. Any weakness in either number could send the market into a tailspin. Also set for release Friday is the University of Michigan’s December consumer sentiment metric, seen by consensus at 92.0, versus 92.1 in November. Vital Signs is the appropriately named only company reporting earnings on Friday. See the disclosure at our site home.