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

Tomorrow morning the Factory Orders report for November is released, and things might get better. The report is expected to show a decline, but not as large of a decline as the previous month. Whether or not this means that factories are starting to get more orders on a consistent basis remains to be seen, but anytime a decline is shrinking, it seems like a small victory.

The final report I wanted to touch on this week is the December Non-Farm Payrolls report. This will be the final report for 2008, and will allow us to look at the overall loss for the year. As it stands, the country has lost just over 1.3 million jobs this year. The expected loss for December is another 475k jobs, which will put us over 1.8 million jobs lost for the year. The scary thing is that the job losses have increased every month for the last four months, so December may be worse than expected. I remember back in mid-summer when some of us were wondering if we would see one million jobs lost this year. Now we are looking to nearly double that amount.

Earnings:
Wed: BBBY, MON

Thurs: BLK, MER

Source: Employment Data Dominates Calendar, Earnings Season Starts Again

With the economic calendar being so light, I thought I would take some time to give you my thoughts on what I see happening in the markets over the next 12 months.

• As I mentioned in my piece on Dec. 17, I think the market will do well in 2009. There are just way too many coincidences lining up to lead me to believe otherwise. I still think there will be periods of decline, but overall, the market should close 2009 significantly higher.
• The banking industry will undergo historic consolidation. Like it or not, some of the $700 billion from the bailout will be used to buy up smaller banks. As larger banks scramble to right the ship, the deposit base of hundreds of smaller banks will be too hard to ignore
• The hedge-fund industry as we know it will cease to exist. Much like the investment-banking industry, the business model will come to an end. Regulators will be forced to rein in the industry as investors complain about mounting losses.
• The housing industry bottoms out during the first quarter or so, and then new regulations enacted by President Obama buoy the market. Foreclosures trail off as banks are finally willing to adjust loan balances to reflect market prices.
• Green investing finally gets the push it needs. Even as gas prices drop, people finally realize that long-term solutions are needed. “Green” stocks are one of the hottest sectors this year.
• GM and Chrysler are forced by the government to merge.

Source: Light Economic Calendar Allows For My Thoughts On 2009

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