The second week of September will be one with very few scheduled catalysts. Just 21 companies have been confirmed to report, with Pall Corporation (NYSE:PLL) being the only representative of the S&P 500. The economic calendar is essentially barren until Friday, when August import price, retail sales, industrial production and industrial capacity utilization data will be released.
In addition, the second-quarter current account balance, July business inventories and the initial September University of Michigan consumer confidence survey results will be published.
There are two other events of note. Tuesday is September 11. (Our prayers continue to go out all of those who lost loved ones in the terrorist attacks.) A new video by Osama bin Laden is expected to be released as al-Qaeda leaders and sympathizers like to take advantage of the holiday to spread propaganda. Rosh Hashanah, the Jewish New Year, starts on Wednesday at sundown and lasts until Friday at sundown. Trading volume will mostly be impacted on Thursday since not all Jews observe the second day. L'shanah tovah.
The financial markets are going to remain focused on the Sep 18 Fed meeting. A rate cut seems very probable, especially given the August nonfarm payroll numbers, but the size of the rate cut and what will follow it, is a big unknown. Inflation hawks - such as Richmond Fed President Jeffrey Lacker (a non-voting member of the Federal Open Market Committee) - don't want a rate cut, prices and wages are still rising and the economy, despite the recent problems, continues to expand. Therefore, the Fed will have to choose between providing enough psychological help and maintaining price stability.
September is historically a rough month for stocks. Although there are problems in the credit markets, the sky is not falling. Investors should use the current uncertainty to look for quality companies with rising earnings estimates, while keeping Dramamine at their side.
Traders looking for potential earnings surprises will have to wait a week for the brokerage firms to report. Out of the 21 companies scheduled to report during the week of Sep 10 - 14, only five have market capitalizations in excess of $1 billion. More importantly, there are no definitive trends in earnings estimate revisions within this group of companies.