Tuesday

Earnings Announcements: AMAT

Wednesday

Economic Reports: Retail Sales

I’ve mentioned it before, but until Americans feel confident about the future of the economy, they won’t spend money. A slowing decline could show some hope that things are bottoming out. Tied into this report, and worth noting, is the large number of clothing retailers that are reporting this week (Macy’s, Nordstrom’s, JC Penney, Abercrombie and Fitch, Kohl’s, and American Apparel), and Wal-Mart’s earnings are announced on Thursday.

Earnings Announcements: FRE

Thursday

Economic Calendar: PPI, Core PPI

It looks as if inflation has been kept under control for at least another month. Both the PPI and Core PPI readings that are announced on Thursday are expected to show only the slightest increases since last month. We know inflation will start creeping in soon; it’s just a matter of when.

Earnings Announcements: WMT

Friday

Economic Reports: CPI, Core CPI, Industrial Production, Michigan Sentiment

As mentioned above, inflation has been held in check, and the CPI and Core CPI announcements that come out on Friday are expected to show little to no change since last month.

The Industrial Production report (and Capacity Utilization) for April are expected to show more sobering numbers. The manufacturing sector is going nowhere fast. Until these readings turn positive, any economic rally will be short lived.

Finally, the preliminary Michigan Sentiment report for May is released on Friday. Expectations are for a very small drop since last month. With the market moving up over the last few months, and the Fed stating that they see and end to the economic downturn by the end of the year, I think this report will surprise to the positive side. Nothing major, just a slight improvement.

Source:  A Big Week for Retailers, Will Inflation Be Held In Check?

This from the editors at Investment U:

In the news this morning, Trina Solar (NYSE: TSL) announced that fourth quarter revenues would beat expectations.

It’s an unexpected bit of data when many were starting to count the solar sector out – and not for good reason. After our last energy crisis, many alternative energy producers, like solar, were simply forgotten about when gas prices came back down.

With the average price per gallon at around $1.96, who could blame them if they expected the same thing to happen? But the interesting thing is that it hasn’t.

Trinity Solar follows news from Suntech Power (NYSE: STP), the world’s largest solar module producer, that it expects production to increase – almost 60%. That’s quite the opposite of a drop-off.

Granted, there are just as many solar losers, as winners. Canadian Solar (Nasdaq: CSIQ) reported negative numbers along with a number of others, from Applied Materials (Nasdaq: AMAT), JA Solar Holdings (Nasdaq: JASO) and GT Solar International (Nasdaq: SOLR).

But the fact that we are seeing resilience form the solar sector and companies holding their own, means that this time around might be a little different than last. And that’s a good signal for us to keep our eyes on solar.

Because any strength in this market is impressive, regardless of where it is.

Source: Sun Still Shines on Trina Solar (TSL)

When announced on Thursday the Trade Balance should show a smaller deficit, perhaps for no other reason than the recent strengthening of the dollar. Some of the shrinking is perhaps due to fewer imports lately due to the downturn in the economy. We aren’t buying as many cars and huge televisions right now, so imports have to be trailing off.

On Friday, the retail sales reports for October are released. I hate to sound like a broken record, but there is not much else to say other than they are expected to continue to show a decline. People are simply not shopping right now. Malls are empty, retailers are closing locations, and other than a Christmas miracle, things aren’t looking to rebound anytime soon. The one retailer that may have a chance keep thriving is WalMart. We will find out Thursday when they report earnings.

The other report of note this week is the Michigan Sentiment Index. Following suit, the report is likely to show a slight decline versus last month. If the report does show a decline, I think this will be the last decline we might see for awhile. Next month I think we will see a gain, for no other reason than optimism after the recent election. I don’t know how long it will last, but I think at least a one-month bounce is very likely.

Earnings:
Monday: AIG, SBUX
Wednesday: AMAT, NTAP
Thursday: WMT

Source: Retail Sales Front Dominate During A Relatively Quiet Week

This has had a negative effect on commodity prices. It has also brought considerable relief to consumers in the form of lower gas prices.

However, US exporters have watched their products become 10% more expensive in just two months.

Andrew Gordon says shorting US stocks with a heavy reliance on overseas sales is a great way to profit from US dollar strength. He lists the ten companies most vulnerable to further gains in the buck.

This from Investor’s Daily Edge:

There’s lots of ways to trade a strengthening dollar. One of the ways is to bet against the companies hurt by a dollar increasing in value.

Companies that rely on exports and overseas sales for a substantial portion of their total revenue would certainly qualify.

In a matter of a couple of months, their goods and services have become around 10 percent more expensive in overseas markets. Put another way, overseas customers are now paying a 10 percent premium on what they are now buying from U.S. companies.

It’s got to hurt sales and overseas sales revenue. And that is what some investors are counting on.

According to Bespoke Group, since mid-July, the 106 companies in the S&P 500 with more than 50 percent or their revenues coming from overseas markets have underperformed their benchmark index. Investors are selling and playing them short.

The ten with the highest international exposure are:

Philip Morris International (NYSE:PM) (100 percent exposure),

Newmont Mining (NYSE:NEM)(95 percent),

NVIDIA (NASDAQ:NVDA)(92 percent),

Advanced Micro Devices (NYSE:AMD) (88 percent),

Texas Instruments (NYSE:TXN) (87 percent),

Qualcomm (NASDAQ:QCOM) (87 percent),

Intel (NASDAQ:INTC) (84 percent),

Applied Materials (NASDAQ:AMAT) (84 percent),

AES Corp. (NYSE:AES) (81 percent),

Colgate Palmolive (NYSE:CL)(80 percent).

Just because their shares aren’t performing well right now doesn’t mean that all these companies will make smaller profits.But it does put pressure on margins, cash flow and the bottom line. In the above list, I still like Philip Morris. It’s done a good job of getting customers to trade up to its premium brands.

Source: The Curse of the Strong Dollar

This week is very busy with 14 reports in four days, and things really get going this morning with the release of the July Retail Sales figures. The market expects a rather large jump this month. In June, the growth was an anemic 0.10 percent, but the market expects a growth of 0.50 percent in July. I guess only in this current economic state can a half-percentage point growth be big news, but it is a gain none the less.

The Core CPI and CPI figures come out simultaneously on Thursday morning. While both are likely to continue showing increases, the increases are slowing down. Core CPI, which excludes food and energy costs, is expected to increase 0.20 percent in July, versus 0.30 percent in June. CPI, which takes food and energy into consideration, is expected to increase by 0.40 percent. This marks a considerable drop from June, when the increase in CPI was 1.1 percent. This could be attributed to a drop in fuel costs, which declined from the middle of July until the end of the month.

The preliminary Michigan Sentiment Index figures for August come out Friday and indications are for a higher confidence reading than July. This index could indicate that the economy is gaining some momentum. If consumers start feeling better about the economy and think things are beginning to turn around, they will likely start spending more money. And if the retail sales figures for July increase, this could indicate just such a thing. Add to that only a slight increase in CPI, and things could begin to offer a glimmer of hope at a turnaround. Only time will tell, but we could be seeing a light at the end of the tunnel.

Earnings:
Tuesday: AMAT, NVDA, UBS
Wednesday: M (Macy’s)
Thursday: WMT

Source: A Critical Week For The Market To Build Momentum