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Lots of Earnings, Plus GDPArticle Summary: Earnings season will be in full gear next week as more than 900 firms report, including 167, or more than a third of the firms in the SandP 500.
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Earnings Preview 4/23/10
Earnings season will be in full gear next week as more than 900 firms report, including 167, or more than a third of the firms in the SandP 500. The list of companies reporting reads [url=http://yourbro.com/blog/2013/04/03/a-foreign-invasion/#comment-26738]Understanding Dog Abuse - written by Gerry Ronson[/url] like a who's who list of U.S industry, including Dow Chemical (DOW), DuPont (DD), Texas Instruments (TXN), Procter and Gamble (PG), 3M (MMM), United Parcel Service (UPS), Chevron (CVX) and Exxon (XOM).
The economic data calendar will be light early in the week potentially market moving at the end of the week. We start out the week with the Consumer Confidence on Tuesday. The only numbers coming out on Wednesday are the crude inventory numbers, but we also have a Fed meeting. Thursday will only have the regular weekly data on jobless claims.
Friday things get interesting with the release of the first cut on the GDP for the first quarter, along with the other numbers in the same release, like the chain deflator, [url=http://www.diecastlinks.co.uk]hollister uk[/url] an imbedded measure of inflation and the Employment Cost Index. We also get the Chicago PMI and [url=http://www.davidhabchy.com]barbour outlet[/url] the University of Michigan Consumer Sentiment numbers.

Monday
- No economic data of any significance. The focus will be on the earnings reported that day.
Tuesday
- The Consumer Confidence Index is expected to have risen to 54.0 from 52.5 in March. That would be a good sign, although I am not big fan of the consumer confidence number since what consumers say they are going to do in these surveys does not actually match up all that well with their actual behavior. Still, in theory, consumer confidence is important in how willing people are to spend.
Wednesday
- Inventories of Crude Oil and products will be released. Last week they showed a smaller-than-expected increase of 1.89 million barrels. This should not move the whole market, but may influence energy prices and shares in the energy sector.
- The Federal Open Market Committee meets. Nobody expects them to change the Fed funds rate from its [url=http://www.riad-marrakesh.fr]www.riad-marrakesh.fr[/url] current range of between 0% and 0.25%. The focus will be on the language in the statement that will be parsed the way that people used to parse the pictures of the Russian leaders on top of Lenin's tomb during the days of the Soviet Union. The key thing to look for is if the phase "extraordinarily low levels for an extended period of time" stays in the statement. With the economy still weak -- but starting to gather some momentum, and no sign whatsoever of inflation -- I think it would be a mistake [url=http://www.teatrodeoro.com/hollisterde.php]www.teatrodeoro.com/hollisterde.php[/url] for the Fed to even think of tightening up at this time.
Thursday
- Weekly initial claims for unemployment insurance come out. They fell 24,000 in the last week, to 456,000. After a huge downtrend from mid-April through the end of 2009, initial claims have become very erratic so [url=http://www.diecastlinks.co.uk]hollister outlet[/url] far in 2010. Look for them to fall again next week. Longer term, we have made good progress, but not good enough. We probably need for weekly claims (and the four-week moving average of them) to get down to closer to 400,000 to signal that the economy is on-balance adding jobs. We are a lot closer now than we were last spring when they were running north of 640,000 on a consistent basis, but still have a ways to go.
- Continuing claims have also been in a steep downtrend of late. However, that is in part due to people simply exhausting their regular state benefits, which run out after 26 weeks. If one factors in the extended claims paid by the Federal government as part of the Stimulus Program, claims soared last week. Looking at just the regular continuing claims numbers is a serious mistake. They only include a little over half of the unemployed now given the unprecedentedly high duration of unemployment figures. Last week, regular continuing claims were 4.646 million, down 40,000 from the previous week. Extended claims (paid from Federal ARRA funds) were 5.494 million, a plunge of 479,500. That big decline was probably the result of [url=http://www.marrakech-hotel.fr]hollister france[/url] people falling off the rolls due to a hold-up in the Senate on extending the benefits, not because they all found new jobs. Make sure to look at both sets of numbers! Many of the press reports will not, but we will here at Zacks.
Friday
- We get the first of three looks at GDP growth in the first quarter. Consensus expectations are for growth of 3.5%, which is a healthy level but a big slowdown from the 5.6% growth posted in the fourth quarter. However, 2/3 of the growth in the fourth quarter came from a slower pace of inventory liquidation. We will probably still seem some inventory effects raising GDP growth in the first quarter, but not as much. Inventory-fueled growth is generally considered lower-quality growth than growth that comes from real final demand. Given recent revisions in the data, a surprise to the upside is more likely than a disappointment.
- Imbedded in the GDP report is the Chain Deflator -- a very broad and comprehensive measure of inflation. It is expected to rise to a 0.9% rate from 0.5% in the fourth quarter. However, that is still a very low inflation figure.
- The Employment Cost Index is expected to have risen by 0.5% in the first quarter, the same rate of increase as in the fourth quarter.
- The Chicago Purchasing Managers Index, sort of a regional preview of the ISM manufacturing data for the Midwest, is expected to increase to 60.0 from 58.8. Any reading over 50 [url=http://www.corsodiesperanto.it/hoganit.html]www.corsodiesperanto.it/hoganit.html[/url] indicates expansion, and 60 would be a very [url=http://park11.wakwak.com/~yda/cgi-bin/kokoa/keitaibbs/epad.cgi?mode=view&no=1106297&res=1&page=450]abercrombie milano Coping Wit[/url] healthy level, showing not only growth, but an acceleration in growth.
- The University of Michigan Consumer Sentiment index is expected to have increased to 71.8 in April from 69.5 in March. This index is similar to the Consumer Confidence numbers released earlier in the week. Theoretically it is a good thing, but I don't put too much weight on the numbers.
Potential Positive Surprises
Historically, the best indicators of firms likely to report positive surprises are a recent history of positive surprises and rising estimates going into the report. The Zacks Rank is also a good indicator of potential surprises. While normally firms that report better-than-expected earnings rise in reaction, which has not been the case so far this quarter. While pickings are getting slim, some of the companies that [url=http://www.tagverts.com/barbour.php]www.tagverts.com/barbour.php[/url] have these characteristics include:
Broadcom (BRCM) is expected to report EPS of $0.30, up from a loss of $0.17 per share a year ago. 1st time out, BRCM posted a positive surprise of 82.6% and over the last month the mean estimate for its first quarter earnings is up 0.36%. BRCM has a Zacks #1 Rank.
Rockwell Automation (ROK) is expected to post EPS of $0.51, up from $0.27 a year ago. Last time, ROK beat expectations by 54.3%, and over the last month analysts have shaved their estimates for the about to [url=http://www.corsodiesperanto.it/moncleroutlet/]www.corsodiesperanto.it/moncleroutlet/[/url] be reported quarter by 3.05%. ROK is also a Zacks #1 Ranked stock.
United Parcel Service (UPS) is expected to post EPS of $0.69, up from $0.54 a year ago. Last time out, the company beat expectations by 21.5%. Over the last month, estimates for the quarter are up 21.5%. UPS is a Zacks #1 Ranked stock.
Potential Negative Surprises
A.M. Castle (CAS) is expected to post a loss of $0.12 a share, versus EPS of $0.02 a year ago. Last time they reported 148.0% below expectations. For this Zacks #5 Ranked stock, analysts have cut the estimates for this quarter over the last month by 3.11%.
Kellogg (K) is expected to earn $0.94 a share this quarter, up from of $0.84 a year ago. They were 4.1% below expectations last time out. Analysts have cut the estimate for [url=http://www.hao24.cn?mod=spacecp&ac=blog&blogid=]peuterey sito ufficiale Handmade Quilt Care - Thin[/url] this quarter by 1.3% over the last month. The stock holds a Zacks [url=http://www.riad-marrakesh.fr]abercrombie pas cher[/url] #4 Rank.
Ecolab (ECL) is expected to earn $0.39, up from $0.33 a year ago. Last time [url=http://www.par5club.com/louboutin.php]www.par5club.com/louboutin.php[/url] out, this Zacks #4 Ranked stock disappointed by 1.8% and over the last month analysts have shaved their expectations for the quarter by 0.2%.