Keystone's Key Events and Market Movers for Trading the Week of 7/15/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season is underway in force this week with many heavy-hitters on tap. The bulls are cruising along and seasonality is on their side this week since bullishness would be expected for OpEx week as well as through Chairman Bernanke’s Congressional testimony. Retail Sales will immediately set the tone for Monday trading as well as any news out of China or Portugal.  Wednesday will be eventful with Housing Starts, Chairman Bernanke and the Beige Book. The Sequestration budget cuts create concern over a second half slowdown this year. The Debt Ceiling limit and CR (Continuing Resolution to fund the government) deadlines occur in September. Politicians must solve the U.S. fiscal mess within the next 9 weeks, reminiscent of summer 2011, which did not end so well. The Whitehouse scandals and Obamacare problems are distracting politicians from addressing the fiscal mess. Traders are not concerned since the politicians will always kick the can down the road and vote in favor of pumping the stock market higher but any stumble would impact markets very negatively. Congress is in session which is a negative for markets. The European debt crisis continues but is held at bay by BOE and ECB easy money QE talk. The Portugal 10-year yield jumped as high as 7.85% signaling trouble ahead. Cyprus is bankrupt, Greece will need additional funding this month, Spain and Italy remain challenged, Portugal is in turmoil and France’s debt-to-GDP ratio is particularly worrisome. The ECB’s OMT bond-buying program, not fully accessed as yet, creates faux stability. Merkel (Germany) does not want any nation to exit the euro before her re-election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is Thursday, 8/1/13.  Draghi leaves rates unchanged 7/4/13 and 6/6/13 after a one-quarter point cut to 0.5% on 5/2/13. The euro dropped like a stone due to Draghi’s dovish talk on 7/4/13.  A lower euro is needed to help the European manufacturing, export and automobile sectors and pull the continent out of the quagmire of recession and depression.  Europe must also compete with the race to debase (currency wars) ongoing around the world.  The China hard versus soft landing saga continues. China is propping up the banking system on the verge of a Lehman-type event which will create havoc in global equity markets. Copper and commodities have tumbled lower since February. Dr. Copper is a valuable market indicator but the Fed and BOJ central banker policies are distorting markets and masking price discovery. The ‘protectionism’ wars are underway as Europe and China impose tariffs on one another. The equity markets continue to ignore the geopolitical landscape. Egypt is in chaos on the verge of civil war. Syria is out of control with 100,000 dead from their bloody civil war. There are 4 million Syrian refugees and 10% of the Syrian people are now in Jordan. One in every 200 Syrians have now died. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. The Turkey unrest continues.  Egypt, Turkey and Syria unrest causes a big jump in oil prices so gasoline price will be on the rise this summer which typically hurts consumer spending and confidence. In addition, the Brazil social unrest continues with the new global theme that common citizens are fed up with the bailouts and preferential treatment for the wealthy while everyone else suffers.  Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is underway with a large cross section of blue chips companies on tap.  Bank earnings continue with C on Monday, GS on Tuesday, BAC on Wednesday, more banks on Thursday and global bellwether GE on Friday. The shipping, trucking and rail stocks are important in light of the bombshell negative UPS news last week.  The rail earnings will impact coal stocks. Tech big shots include IBM, GOOG, Mr. Softy and INTC.  Companies have lowered estimates during confessional season so the bar is easy to step over. Watch to see if the theme of companies meeting EPS but missing on top line revenue continues since this behavior cannot go on forever. Either the economy picks up providing increased sales, or, companies will start a new round of layoffs across the board to reflect ever-slowing sales. AA and WFC reported top line numbers only in line with estimates. The Fed and BOJ easy money created asset bubbles in dividend stocks, healthcare, staples, utilities, telecoms, REIT’s, MLP’s, high-yield instruments, home builders and blue chips in general. The interest rate sensitive sectors such as utilities, REIT’s, homebuilders and telecom will sell off if Treasury yields rise. Keybot the Quant trading algorithm remains bullish. The central bankers create the market rally the last few weeks, pounding volatility lower.  Volatility is now under 14. The market bulls will cruise higher if VIX stays below 14.27. The market bears will growl if VIX moves above 14.27.  A higher VIX creates the large intraday and day-to-day point swings in the broad indexes. The NYMO, SPXA150R, SPX:VIX and other charts continue to signal that markets are forming another significant top. On the seasonality beat, bulls have an advantage this week since Tuesday to Wednesday is typically bullish during OpEx week and also markets are usually bullish through Chairman Bernanke’s Congressional Testimony.  On the esoteric side, the full moon is one week away, next Monday, and markets would be expected to be bullish from Friday into early next week. It is all going the bull’s way these days.  The next Bradley turn is another major turn date on 10/8/13. Solar flare activity is increasing and may affect electronics, communications and markets as the year moves along. Broad market topping and roll over action is anticipated as the weeks play out.  The epic and historic market action continues.

----------------------------------------------------------------------

·         Monday, 7/15/13: China data. Empire State Mfg Survey and Retail Sales 8:30 AM. Business Inventories 10 AM—market pivot point. Earnings: AEP, AMTD, BTU-coal, CPHD, CTAS-uniforms, C-bank, ETFC, GDI, HTLD, JBHT-trucking, MTB, MAN-jobs, OSTK, STLY, TER, TZOO, WERN-trucking, WYNN, XLNX.

·         Tuesday, 7/16/13: Consumer Price Index (CPI) 8:30 AM. TIC data 9 AM.  Industrial Production 9:15 AM. Housing Market Index 10 AM. Fed’s George speaks 2:15 PM. Markets are typically bullish from a Tuesday low to a Wednesday high during OpEx week. Markets are typically bullish from the day before Chairman Bernanke’s Congressional Testimony through the day after (today through Friday). Earnings: CSX-rails, GS-bank, JNJ, MOS, KO, YHOO.

·         Wednesday, 7/17/13: Mortgage Applications 7 AM. Housing Starts 8:30 AM. Chairman Bernanke speaks 10 AM (House testimony). Oil Inventories 10:30 AM. Beige Book 2 PM—market pivot point. Earnings: ABT, ALB, BAC-bank, BK-bank, CLB, EBAY, EPB, GHL, INTC, IBM, KMR, MAT, NE, PNC-bank, SLM, STJ, SVU, TXT, USB-bank, GWW.

·         Thursday, 7/18/13: Jobless Claims 8:30 AM. Chairman Bernanke speaks 10 AM (Senate testimony). Philly Fed Survey and Leading Indicators 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. 10-Year TIPS Auction 1 PM. Earnings: AMD, APH, ATHN, AN, BAX, BBT, BLK, BX, COF, CE, DHR, DOV, FCS, GMT-rails, GOOG, ISRG, JCI, KEY, MSFT, NUE-steel, PM, DGX, SWY, SHW-paint, SWKS, SYK, UNP-rails, UNH-healthcare, VZ-telecom.

·         Friday, 7/19/13: OpEx.  Markets are typically bullish through the full moon (Monday). Earnings: BMI, BHI, COL, FHN, GE-bellwether, HON, IR, IPG, LH, NCR, ORB, SLB, STT, STI, VFC.

----------------------------------------------------------------------

·         Monday, 7/22/13: Chicago Fed Activity Index 8:30 AM. Existing Home Sales 10 AM—market pivot point. Full moon. Earnings:

·         Tuesday, 7/23/13: FHFA House Price Index 9 AM. Richmond Fed Mfg Index 10 AM. 2-Year Note Auction 1 PM. Earnings:

·         Wednesday, 7/24/13: Flash PMI’s. Mortgage Applications 7 AM. New Home Sales 10 AM—market pivot point. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings: BA.

·         Thursday, 7/25/13: Jobless Claims and Durable Goods Orders 8:30 AM. Natty Gas Inventories 10:30 AM. Kansas City Fed 11 AM. 7-Year Note Auction 1 PM. Earnings:

·         Friday, 7/26/13:  Consumer Sentiment 9:55 AM. Earnings:

·          

-----------------------------------------------------------------------

·         Monday, 7/29/13: Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings:

·         Tuesday, 7/30/13: FOMC meeting begins. S&P Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM. Earnings:

·         Wednesday, 7/31/13: EOM. Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. Employment Cost Index and GDP 8:30 AM.  Treasury Refunding Announcement 9 AM. Chicago PMI 9:45 AM. Oil Inventories 10:30 AM. FOMC Meeting Announcement 2 PM. Farm Prices 3 PM. Earnings:

·         Thursday, 8/1/13: BOE rate decision.  ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM. Motor Vehicle Sales. Challenger Job-Cut Report 7:30 AM. Jobless Claims 8:30 AM. PMI Indexes. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Earnings:

·         Friday, 8/2/13: Personal Income and Outlays and Monthly Jobs Report 8:30 AM.  Factory Orders 10 AM—market pivot point. Earnings:

-------------------------------------------------------------------------

·         Monday, 8/5/13: ISM Non-Mfg Index 10 AM. Earnings:

·         Tuesday, 8/6/13: International Trade 8:30 AM. JOLTS 10 AM. 3-Year Auction 1 PM. Earnings:

·         Wednesday, 8/7/13: Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Consumer Credit 3 PM. Earnings:

·         Thursday, 8/8/13: Chain Store Sales. Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Earnings:

·         Friday, 8/9/13:  Wholesale Trade 10 AM. Earnings:

            ---------------------------------------------------------------------------

·         In September:  The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur.  Politicians must develop solutions during July and August reminiscent of 2011 which did not end well. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.

·         In September:  Merkel (Germany) seeks re-election and will not want Greece or other nations to exit the euro before the election, but will not care afterwards.  Perhaps Greece or other nations, and/or Germany will exit the euro in the future.

·         In Q4 2013:  European bank stress tests will occur.

----------------------------  2014  ----------------------------------

·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed, unless there is news during Q4 2013 that he will stay on. Will Yellen, even more dovish and likely wanting to see QE on steroids, take the reins? Equity bulls will be happy if Yellen receives the nod but bears will be happy if Yellen is not selected.

·         Friday, 2/7/14:  Winter Olympics begin in Sochi, Russia, through 2/232/14. Watch $RTSI and RSX.

·         In March 2014: ESM is officially ‘fully operational’. The banking union schedule has been delayed from January 2013 to January 2014 and now to March 2014.