Earnings Announcements: BKS, FL, GME

Monday

Earnings Announcement: LOW

Tuesday

Economic Reports: Building Permits, Housing Starts

Expectations are for both of these reports to show a modest improvement versus the previous month. With the deteriorating housing market, I don’t think these reports will meet expectations. Until the existing inventory is whittled down, these reports should show a drop in permits and starts. Of course, I have been wrong before, but I can’t imagine any builder wanting to add more inventory to the drastic oversupply right now.

Earnings Announcements: HD, HPQ

Wednesday

Economic Reports: FOMC Minutes

The market will scour these minutes for any indication of the Fed’s future course on interest rates. With inflation a growing concern, this becomes an even more important ‘heads up’ for possible moves.

Earnings Announcements: TGT, SKS, LTD

Thursday

Economic Calendar: Philadelphia Fed

This report will give some insight into the manufacturing sector in the tri-state area. Is it possible the report will show some good news? Perhaps. The report is expected to show a reading of -18, which is a marked improvement from last month’s reading of -24.4. The report is moving in the right direction, which means less contraction in the manufacturing sector.
Source: Housing Back In The News, More Retailers Report Earnings

Consumer confidence on the other hand, is getting drastically worse. The anticipated reading of 54 would be the third-lowest reading of the year, and a 10 percent drop from last month. The expected drop this month would reverse the recent trend of increased readings. We still wouldn’t be near our lowest reading of the year which occurred in June (50.4), but looking back over the last 12 months, it is quite startling to see that the October 2007 reading was 95.6.

The advanced GDP figure for Q3 is announced Thursday, and it looks like we will be seeing a contraction compared to last quarter. This advanced reading is likely to show a 0.10 percent decline, but with all the revisions it goes through before we get the final GDP number, I would expect it to become a larger decline by the time the final number is announced down the road.

The Personal Spending report for September comes out on Friday, and just in time for a frightful Halloween, we are expected to show a negative number. Without consumers opening up the wallets and spending money, I don’t see how we are going to pull out of this market. Perhaps a second round of economic stimulus checks will prop up this number in the next few months if the plan comes to pass. If not, outside of a Christmas miracle, this number could get much worse before it gets better.

The big event of the week is the FOMC Policy Statement on Wednesday. Depending on what the Fed decides to do, it could either provide a short-term bounce for the market, or send it tumbling further down to re-test the lows of 2002-2003.  Probabilities are all over the board with cuts from 25 basis points to 75 basis points looking like a very real possibility.

Earnings Calendar:
Monday: VZ
Tuesday: CEPH
Wednesday: GRMN, KFT, PG
Thursday: XOM, JAVA
Friday: CVX

Source: Halloween Isn’t The Only Scary Thing This Week