The Week Ahead: Market Will Take What It's Dealt

An interesting mix of economic data is set for release this week, but the market seems capable of handling anything at this point.

Entering recession, and with unemployment rising and consumer stresses intense, there’s concern about the consumer credit situation. On Monday, the monthly change in consumer credit will be reported. Perhaps a sign of tightening lending standards, or borrowers’ limited-out status, consumer credit is only seen increasing by $5.3 billion in February, compared to a rise of $6.9 billion in January.

Last week’s same-store sales report from the International Council of Shopping Centers showed growth of just 0.5% year-to-year. That marked a drop in growth rate from the week before level of 1.0%, and may portend a pending decrease in sales.

The Federal Open Market Committee will release its meeting minutes from its March get-together, within which it cut the fed funds rate by 75 basis points. There were a whole lot of other important actions the Fed took that same week, and so the minutes should make for interesting reading, if not a good cure for insomnia.

On Thursday, retailers will begin reporting monthly chain store sales for March, and this provides an opportunity for retailers to adjust their earnings guidance to the analyst community. Thus, you may see retail shares decline in the week ahead, as all indications are that recent sales are tailing off.

For those of you concerned about the euro/dollar exchange rate, the European Central Bank is set to meet on Thursday, after which it will announce its latest decision on interest rates. Dollar enthusiasts should hope the ECB acts upon recent euro zone leadership concerns, and cut rates. However, recent business confidence readings from important European national markets offer no reason for the ECB to back off of its hawkish concerns. The ECB has not moved on rates this year.

Because of the weakening dollar, and softening overall domestic demand for goods, including imports, the trade deficit has narrowed this year. We expect that trend to continue with the International Trade Report for February. Bloomberg’s consensus sees the trade deficit narrowing to $57.5 billion, from $58.2 billion in January.

Friday’s Import/Export Prices Report is expected to show inflation and higher oil prices drove a 1.8% import price increase in March. The University of Michigan’s preliminary Consumer Sentiment Index for April is expected to measure 68.0, down from 70.5 in March.

Earnings season official kicks off this week with the earnings report of Alcoa (NYSE: AA) on Monday. The remainder of the week’s schedule includes: Monday – China Petroleum & Chemical (NYSE: SNP), China Telecom (NYSE: CHA); Tuesday – Layne Christensen (Nasdaq: LAYN), Sealy (NYSE: ZZ); Wednesday – Bed, Bath & Beyond (Nasdaq: BBBY), Circuit City (NYSE: CC); Thursday – Genentech (NYSE: DNA), Rite Aid (NYSE: RAD); Friday – Fastenal (Nasdaq: FAST), General Electric (NYSE: GE) and more.