It's looking like a shaky start for Monday, and I always intend my puns - there's more unease to Monday than just Chile's earthquake. News from the copper pit, China and Greece, and US economic data all threaten the very ground securities' valuations stand on.
Copper Shake Up
The 8.8 magnitude earthquake in Chile Saturday morning has left 700 dead so far, but it is also having a dramatic impact on financial markets. The price of the May-delivery copper contract gained as much as 20.3 cents in trading overseas Monday, or 6.2 percent, to $3.4870 a pound, marking the largest intraday advance since April. You see, Chile is the world's largest copper producer, and power disruption caused by the tremor forced Chilean copper miners Codelco and Anglo American Plc (OTC: OTCPK:AAUKF]) to halt operations at some mines. Codelco, the world's largest producer, responded to market action by stating it will meet its supply contracts.
The euro slipped against most major currencies ahead of today's meeting of European Union Monetary Affairs Commissioner Olli Rehn and Greek Prime Minister George Papandreou. They'll be talking finances, as you might imagine. The Germans seem to be getting antsy, given Greek street rioting and after a Greek official's accusation that the Nazis never repaid Greece for WWII pillaging. German lawmakers are apparently whispering that euro-area officials might work up a partial, 25 billion euro ($34 billion) bailout for Greece, which will need a bit more to get to the 53 billion euros it needs this year. I happen to think a bailout is exactly what's necessary here, as the Greek populace is not having anything to do with austerity measures, and never will. In fact, I venture to say the Greek government is at risk, and a domino effect across Europe threatens. The Germans cannot afford that, despite any export benefits they might find in the near-term.
According to three separate reports, only one of which came out of the biased and not always truthful Chinese government, China's manufacturing growth slowed in February. The data was not too concerning, considering China's week-long New Year's holiday fell during the month. However, the government index for export orders slipped to 50.3, from 53.2 in January, and that is concerning. Still, the data was too clouded by the holiday, and even the export number is questionable, given a survey result that indicated purchasing managers saw improved conditions from key trading partners. The market would likely prefer to see China's growth tempered a bit to keep the Asian giant from overheating and internal asset bubbles from building. The last thing the world needs is a China bust.
If the market is the best gauge, then it thus far approves of the shaky change occurring in Europe and China. The Hang Seng Index was up 1.99% and China's CSI 300 gained 1.3% at the hour of publishing, while Europe had yet to open.
The Personal Income & Outlays Report for January leads the week's data slate with its premarket release Monday. Our coverage of December's report can be found here. Economists predict Personal Income will show up 0.4% higher for January, matching December's rise. However, in December, we pointed out for you a nonrecurring event (see above link), so do not be surprised if the number falls short of economists' views. Still, any weakness will have to overcome the 0.6% gain in average weekly earnings through January.
Personal Spending was only up 0.2% in December, driven mostly by a modest 0.2% increase in Durable Goods purchases. Prices edged up 0.1% in December, based on the PCE Index, and the rise was the same when excluding volatile food and energy pricing. Prices are expected to flatten for January. Economists are looking for a 0.4% increase in personal outlays in January, based on decent retail sales results. However, very important new motor vehicle sales were down on a unit basis in January.
Last month, ISM's Manufacturing Index (January) jumped up several points and exceeded economists' views. In fact, ISM's data was full of good news. January's mark was the highest since August of 2004, and 13 of 18 industries were reporting growth, versus just nine the month before. The month marked the seventh consecutive period of manufacturing growth. Thanks to a strong New Orders tally, economists foresee the index holding much of its strength in February.
That said, last month's excessive jump has economists thinking the Index might ease to a more earthly mark of 57.5 (58.0 Barron's) in February, from 58.4 in January. That still marks strong growth though for manufacturing; however, critical questions remain about the sustainability of growth post inventory restocking.
Construction Spending is due for report at 10:00 a.m. Last month's report showed Construction Spending declined 1.2% in December, versus a similar 1.2% (revised) decline in November. Back then, economists were not in tune with the depth of construction struggle, as they had only forecast a 0.5% slide. Private Residential activity declined by 2.8%, and Multi-Family Construction dropped by 4.4%. Construction activity still came in better than the dismal prior year though, as the 9.9% shortfall from the prior year's December compared against the -12% miss in November.
As far as January's data goes, economists expect a smaller drop of 0.8% in construction spending. There's a little problem called the weather that perhaps economists overlooked; sometimes we wonder if they get out much, to be quite honest with you. I don't get out much either anymore, but I still manage a look-see out the window from time to time... and what I see is snow, and lots of it.
Thus, February's activity ought not be strong either, considering how significant the Northeast market is and the fact that 49 states saw snow on the ground at one point in February (a rare event). What's got economists looking for a lesser drop is January's Housing Starts, which were up 2.8% in January.
Bigger Fish to Fry
Jeff Skilling was once the biggest fraudster in America, but boy he's since been surpassed by a pack of mules. Skilling is like the speed horse in a mile and a half race, and he's been dogged in the stretch. The man of Enron fame gets another chance at it Monday, where he will be appealing his fraud conviction before the Supreme Court. Considering how many mortgage brokers, ponzi schemers, CEOs and soon rating agency astutes are filling the tank these days, Skillings' miniscule crime that only injured his employees and investors seems like a misdemeanor in comparison to the latest group's damage to all earth dwellers.
South Korean and Indian markets will be closed, but Monday's earnings report slate in the States includes 21st Century Holding (Nasdaq: TCHC), 51Job Inc. (Nasdaq: JOBS), A Sonic Aerospace (OTC: ASNCF.PK), ABM Industries (NYSE: ABM), Abraxis BioScience (Nasdaq: ABII), AeroCentury (AMEX: ACY), AirMedia Group (Nasdaq: AMCN), Aker ASA (Nasdaq: AKER), Alaska Communications (Nasdaq: ALSK), Allied Capital (NYSE: ALD), Allied Motion Technologies (Nasdaq: AMOT), Allis-Chalmers Energy (NYSE: ALY), Allos Therapeutics (Nasdaq: ALTH), Almost Family (Nasdaq: AFAM), Altra Holdings (Nasdaq: AIMC), America Service Group (Nasdaq: ASGR), America's Car-Mart (Nasdaq: CRMT), American Capital (Nasdaq: ACAS), American Electric Technologies (Nasdaq: AETI), American Physicians Service (Nasdaq: AMPH), American Railcar Industries (Nasdaq: ARII), American Software (OTC: AMSWA), Ampal-American Israel (Nasdaq: AMPL), Analogic (Nasdaq: ALOG), Anika Therapeutics (Nasdaq: ANIK), AnnTaylor Stores (NYSE: ANN), Appliance Recycling Centers (Nasdaq: ARCI), Ares Capital (Nasdaq: ARCC), ArQule (Nasdaq: ARQL), Artesian Resources (OTC: ARTNA), Art's-Way Manufacturing (Nasdaq: ARTW), Atlantic Tel-Network (Nasdaq: ATNI), Atlas Pipeline Holdings (NYSE: AHD), AutoZone (NYSE: AZO), Ballard Power (Nasdaq: BLDP), Big Lots (NYSE: BIG), Bio-Reference Laboratories (Nasdaq: BRLI), BioScrip (Nasdaq: BIOS), Blount Int'l (NYSE: BLT), Bluefly (Nasdaq: BFLY), BP Prudhoe Bay RT (NYSE: BPT), BPZ Resources (NYSE: BPZ), Breitburn Energy Partners (Nasdaq: BBEP), Brookdale Senior Living (NYSE: BKD), Brown Shoe Co. (NYSE: BWS), Bruker Corp. (Nasdaq: BRKR), Calavo Growers (Nasdaq: CVGW), Camtek (Nasdaq: CAMT), Carrizo Oil & Gas (Nasdaq: CRZO), Casella Waste Systems (Nasdaq: CWST), Cedar Shopping Centers (NYSE: CDR), Cellcom Israel (NYSE: CEL), Celsion (Nasdaq: CLSN), Centerstate Banks of Fl (Nasdaq: CSFL), Central European Distribution (Nasdaq: CEDC), Chelsea Therapeutics (Nasdaq: CHTP), China Medical Technologies (Nasdaq: CMED), China Security & Surveillance (NYSE: CSR), Churchill Downs (Nasdaq: CHDN), Ciena (Nasdaq: CIEN), CKX Inc. (Nasdaq: CKXE), Clean Energy Fuels (Nasdaq: CLNE), Clear Channel Outdoor (NYSE: CCO), CMS Energy (NYSE: CMS), Cohen & Co. (Nasdaq: COHN), Coldwater Creek (Nasdaq: CWTR), Columbia Laboratories (Nasdaq: CBRX), CombinatoRx (Nasdaq: CRXX), Compania Cervecerias Unidas S.A. (NYSE: CCU), Conseco (NYSE: CNO), Copernic (Nasdaq: CNIC), Cornell Corrections Cos. (NYSE: CRN), CPFL Energia (NYSE: CPL), CRM Holdings (Nasdaq: CRMH), Crosstex Energy (Nasdaq: XTXI), Crown Media (Nasdaq: CRWN), Culp (NYSE: CFI), Cytori Therapeutics (Nasdaq: CYTX), Darling Int'l (NYSE: DAR), Decorator Industries (AMEX: DII), Delcath Systems (Nasdaq: DCTH), Delek US Holdings (NYSE: DK), Delta Petroleum (Nasdaq: DPTR), Deswell Industries (Nasdaq: DSWL), Dialysis Corp. of America (Nasdaq: DCAI), Dress Barn (Nasdaq: DBRN), Dune Energy (NYSE: DNE), Dynamic Materials (Nasdaq: BOOM), Dynamics Research (Nasdaq: DRCO), Dynavax (Nasdaq: DVAX), Dynex Capital (NYSE: DX), Eagle Bulk Shipping (Nasdaq: EGLE), Echostar (Nasdaq: SATS), Edgewater Technology (Nasdaq: EDGW), Edison Int'l (NYSE: EIX), Einstein Noah Restaurant (Nasdaq: BAGL), Electro-Optical Sciences (Nasdaq: MELA), Emergent Group (AMEX: LZR), EMS Technologies (Nasdaq: ELMG), Energy Recovery (Nasdaq: ERII), Enstar Group (Nasdaq: ESGR), Enterprise GP Holdings (NYSE: EPE), Ferro (NYSE: FOE), First Industrial Realty Trust (NYSE: FR), First United (Nasdaq: FUNC), First West Virginia Bancorp (AMEX: FWV), Foot Locker (NYSE: FL), FPIC Insurance (Nasdaq: FPIC), Franklin Electric (Nasdaq: FELE), Frozen Food Express (Nasdaq: FFEX), FTI Consulting (NYSE: FCN), Fuel Systems Solutions (Nasdaq: FSYS), Fuel Tech (Nasdaq: FTEK), Geokinetics (AMEX: GOK), Gerber Scientific (NYSE: GRB), Giant Interactive (NYSE: GA), Global Ship Lease (NYSE: GSL), GP Strategies (NYSE: GPX), Greatbatch (NYSE: GB), GTSI Corp. (Nasdaq: GTSI), Gulf Island Fabrication (Nasdaq: GIFI), Gushan Environmental (NYSE: GU), H&E Equipment Services (Nasdaq: HEES), H&R Block (NYSE: HRB), Harbinger Group (NYSE: HRG), Harvest Natural Resources (NYSE: HNR), Health Fitness (AMEX: FIT), HealthTronics (Nasdaq: HTRN), Home Diagnostics (Nasdaq: HDIX), Home Inns & Hotels Management (Nasdaq: HMIN), Horsehead Holding (Nasdaq: ZINC), Hospitality Properties Trust (NYSE: HPT), HSBC Finance (NYSE: HTB), HSBC Holdings (NYSE: HBC), HSN Inc. (Nasdaq: HSNI), Hudson Technologies (Nasdaq: HDSN), Hughes Communications (Nasdaq: HUGH), Hurray Holding (Nasdaq: HRAY), I.D. Systems (Nasdaq: IDSY), Icahn Enterprises (NYSE: IEP), Inspire Pharmaceuticals (Nasdaq: ISPH), Insulet Corp. (Nasdaq: PODD), Integra Bank (Nasdaq: IBNK), Integra LifeSciences (Nasdaq: IART), InterDigital (Nasdaq: IDCC), Intrepid Potash (NYSE: IPI), Invesco Mortgage (NYSE: IVR), INX, Inc. (Nasdaq: INXI), IPC The Hospitalist (Nasdaq: IPCM), Isle of Capri Casinos (Nasdaq: ISLE), Kenneth Cole (NYSE: KCP), KKR Financial (NYSE: KFN), Kopin (Nasdaq: KOPN), La Jolla Pharmaceutical (Nasdaq: LJPC), Lakes Entertainment (Nasdaq: LACO), LeapFrog Enterprises (NYSE: LF), Legacy Reserves (Nasdaq: LGCY), LeMaitre Vascular (Nasdaq: LMAT), Luxottica (NYSE: LUX), Mac-Gray (NYSE: TUC), Maguire Properties (NYSE: MPG), Maidenform Brands (NYSE: MFB), MarkWest Energy Partners (NYSE: MWE), Martek (Nasdaq: MATK), Martin Midstream (Nasdaq: MMLP), MasTec (NYSE: MTZ), MBIA (NYSE: MBI), McCormick & Schmick's Seafood Restaurants (Nasdaq: MSSR), Mercantile Bancorp (AMEX: MBR), Micromet (Nasdaq: MITI), Microvision (Nasdaq: MVIS), Midas (NYSE: MDS), MiddleBrook Pharmaceuticals (Nasdaq: MBRK), Middleby (Nasdaq: MIDD), Mindray Medical (NYSE: MR), MOCON (Nasdaq: MOCO), MVC Capital (NYSE: MVC), National Bank of Greece (NYSE: NBG), National CineMedia (Nasdaq: NCMI), National HealthCare (AMEX: NHC), Natural Gas Services (NYSE: NGS), Navisite (Nasdaq: NAVI), Nelnet (NYSE: NNI), Netezza (NYSE: NZ), Nexstar Broadcasting (Nasdaq: NXST), NMT Medical (Nasdaq: NMTI), Nortel Networks (OTC: NRTLQ.PK), Nymagic (NYSE: NYM), OceanFreight (Nasdaq: OCNF), On2 Tech (AMEX: ONT), One Liberty Properties (NYSE: OLP), Optelecom-NKF (Nasdaq: OPTC), Orion Marine (NYSE: ORN), Overseas Shipholding (NYSE: OSG), Par Pharma (NYSE: PRX), Penwest Pharma (Nasdaq: PPCO), Perfect World (Nasdaq: PWRD), Perficient (Nasdaq: PRFT), Permian Basin (NYSE: PBT), Petroleum Development (Nasdaq: PETD), PetSmart (Nasdaq: PETM), Philippine Long Distance (NYSE: PHI), PICO Holdings (Nasdaq: PICO), Pinnacle Airlines (Nasdaq: PNCL), PLATO Learning (Nasdaq: TUTR), Public Storage (NYSE: PSA), Quicksilver Gas Services (NYSE: KGS), Quicksilver Resources (NYSE: KWK), Regency Energy Partners (Nasdaq: RGNC), REX Energy (Nasdaq: REXX), RHI Entertainment (Nasdaq: RHIE), Roma Financial (Nasdaq: ROMA), Rosetta Resources (Nasdaq: ROSE), Rowan Cos. (NYSE: RDC), Sabine Royalty Trust (NYSE: SBR), San Juan Basin Royalty (NYSE: SJT), Santarus (Nasdaq: SNTS), Sapiens (Nasdaq: SPNS), Satcon Technology (Nasdaq: SATC), Seaboard (AMEX: SEB), Seaspan (NYSE: SSW), SIGA Technologies (Nasdaq: SIGA), Sigma Designs (Nasdaq: SIGM), Silverleaf Resorts (Nasdaq: SVLF), Smith Micro Software (Nasdaq: SMSI), Spark Networks (AMEX: LOV), Spartech (NYSE: SEH), SRI Surgical (Nasdaq: STRC), Standard Motor (NYSE: SMP), Sun Hydraulics (Nasdaq: SNHY), Sunrise Senior Living (NYSE: SRZ), SuperGen (Nasdaq: SUPG), Superior Well Services (Nasdaq: SWSI), SXC Health Solutions (Nasdaq: SXCI), Sykes Enterprises (Nasdaq: SYKE), Systemax (NYSE: SYX), T-3 Energy Services (Nasdaq: TTES), Tandy Leather Factory (AMEX: TLF), Targa Resources (Nasdaq: NGLS), Tasty Baking (Nasdaq: TSTY), Tech Data (Nasdaq: TECD), Tele Norte Leste Participacoes (NYSE: TNE), Thomas Group (Nasdaq: TGIS), Threshold Pharma (Nasdaq: THLD), TIVO Inc. (Nasdaq: TIVO), TNS, Inc. (NYSE: TNS), Toll Brothers (NYSE: TOL), Tomkins Plc. (NYSE: TKS), Tootsie Roll (NYSE: TR), Tower Group (Nasdaq: TWGP), Town Sports Int'l (Nasdaq: CLUB), Trans World Entertainment (Nasdaq: TWMC), TravelCenters of America (NYSE: TA), Trimeris (Nasdaq: TRMS), Trina Solar (NYSE: TSL), Trinity Biotech (Nasdaq: TRIB), UFP Technologies (Nasdaq: UFPT), Union Drilling (Nasdaq: UDRL), US Concrete (Nasdaq: RMIX), USA Mobility (Nasdaq: USMO), UTEK Corp. (AMEX: UTK), Vector Group (NYSE: VGR), Venoco (NYSE: VQ), VeriFone Holdings (NYSE: PAY), Verso Paper (NYSE: VRS), Village Supermarket (Nasdaq: VLGEA), VisionChina Media (Nasdaq: VISN), VocalTec Communications (Nasdaq: VOCL) and Wonder Auto Technology (Nasdaq: WATG).
Disclosure: No positions