The Week Ahead: Employment Data Overload

All signs point to a near-term retest of January market lows. Last week started out benign enough, as the market rallied through Tuesday on signs that favorable resolution was in store for the bond insurers. In fact, MBIA (NYSE: MBI) received good news from Standard & Poor's and Moody’s on Monday and Tuesday, respectively. The rating agencies confirmed the insurer’s ability to cover its obligations with affirmation of the company’s triple-A rating.

Then on Wednesday, Ben Bernanke made his way to Capitol Hill for his semi-annual testimony to Congress. While towing the company line in reassuring the American public that the economy should keep growing, Ben made quiet mention that more than one small bank might go under as result of recent lending turmoil. As if the thought of our Benjamins being lost to bad bankers was not enough, the dollar kept sinking, and closed the week near $1.52 per euro.

Just as bond insurers lost steam, stagflation took over as the new brick in the wall of worry. Producer prices rose more than expected, driven by higher food and energy costs embedding themselves into the system. Durable goods orders showed a significant degree of decline, and consumption was measured barely keeping up with the rate of inflation.

Meanwhile, commodities gained even more capital support, and gold reached $975 per troy ounce. Oil broke new records this week also, but weakened on Friday while still ranging above $100 per Brent Crude barrel. With prices high despite troubling economic signs, market sentiment has shifted back to economic worry mode, and January’s lows look set to be retested.

The Week Ahead

Things will not get any easier this week, as the monthly onslaught of employment data reaches the newswires. On Wednesday, the Challenger Job-Cut Report will measure the month’s announced corporate layoffs. January’s report showed an increase of 69% over December, to a level of 74,986.

Still on Wednesday, the heavily followed ADP Employment Report is due for the month of February. ADP measures private employment, and serves as a prelude to the Labor Department’s Employment Situation Report. Its accuracy in doing so, however, is debatable. The Monster Employment Index, compiled by Monster Worldwide (Nasdaq: MNST), is due for Thursday release. It has grown in importance, as job listings have migrated from print to online medium. The index measures job availability, which should become scarcer in the months ahead.

The regular weekly initial jobless claims report on Thursday should attract plenty of attention, after new claim filings climbed to 373K last week. The employment week closes on Friday with the Labor Department’s Employment Situation Report. Expectations will already be set low, since last month’s data showed the first monthly decline in employment in four years. We expect unemployment to increase from 4.9% seen in the last report, to upward of 5.0% or more.

The week’s earnings schedule includes notable reports from: Monday – HSBC Holdings (NYSE: HBC), Petrobras (NYSE: PZE); Tuesday – Chico’s FAS (NYSE: CHS), Clearwire (Nasdaq: CLWR), National Bank of Greece (NYSE: NBG); Wednesday – Athenahealth (Nasdaq: ATHN), Costco (Nasdaq: COST), H&R Block (NYSE: HRB), PetSmart (Nasdaq: PETM), Saks (NYSE: SKS); Thursday – Joy Global (Nasdaq: JOYG), Korn Ferry (NYSE: KFY), National Semiconductor (NYSE: NSM); Friday – NovaGold Resources (AMEX: NG) and many more.