Keystone's Key Events and Market Movers for Trading the Week of 7/29/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season continues with a broad section of companies reporting and a focus on pharma, consumer staples and housing. The week ahead is full of drama including Consumer Confidence, GDP, ISM Mfg Index, the Monthly Jobs Report, month-end and a bevy of central banker QE pumping from the Fed, BOE and ECB. The week will be eventful.  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 8 weeks but they will take a vacation during August. 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. Listen for any saber-rattling this week ahead of the August recess now only days away which may spook markets. Congress is in session for one more week which is a negative for markets. The European debt crisis continues but is held at bay by BOE and ECB easy money QE talk and both will step up to the microphone this week. Cyprus is bankrupt, Greece remains in depression, Portugal yields are on the rise, Spain and Italy remain challenged, 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 recession and depression.  Europe must also compete with the race to debase (currency wars) ongoing around the world. A lower euro will send the dollar higher and short place negative pressure on commodities and equities.   The China hard versus soft landing saga continues. China is propping up the banking system to avoid collapse.  Copper and commodities have tumbled lower since February and took a dive last Friday as China announced a planned cut-back in all manufacturing activity.. Dr. Copper is a valuable market indicator but the Fed and BOJ central banker policies are distorting markets, masking price discovery and not allowing markets to properly correct. The ‘protectionism’ wars are underway as Europe, China, U.S. and Russia all threaten each other with tariffs. The equity markets continue to ignore the geopolitical landscape but the oil market is paying attention. Egypt is in chaos causing crude oil prices to catapult higher. Oil dropped last week but in light of the violence over the weekend, crude may become buoyant again. Syria is out of control with 100,000 dead from its bloody civil war. There are 4 million Syrian refugees. 10% of the Syrian people are now in Jordan. One in every 200 Syrians have died during the conflict over the last couple years. Countries bordering Syria cannot support this influx of people causing destabilization across the Middle East. The Turkey unrest continues.  Egypt, Turkey and Syria turmoil causes a big jump in oil prices which sends gasoline prices higher, crimping retail spending and leading to lower consumer sentiment.  In addition, the Brazil social unrest continues although he Pope’s visit is continuing without serious incident. A new global theme is taking hold that common citizens are fed up with the bailouts and preferential treatment for the wealthy while everyone else suffers. Protests across Europe continue with a flare-up in France. Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is underway with about 68% of the companies beating the lowered estimates. Top line revenue numbers remain flat or weak which does not reflect a strong economy as well as hinting that the structural unemployment problem will only worsen.  This season sees the lowest amount of positive earnings surprises in the last four years.  The most important earnings are highlighted in red below and other key earnings are in bold.  MRK and PFE will greatly affect the Dow and the pharma sector as well as setting the market mood. MA indicates the health of the consumer, or lack thereof. CLX and K provide input to the blue-chip consumer staple sector.  What will appear in the bowl of corn flakes Thursday morning? There are key housing sector stocks reporting such as MAS, MHK, and others that will directly indicate the strength of housing, or lack thereof. 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 over the last few weeks; the BOE and ECB clearly pumping equities on Independence Day and then the Fed pumping during the Congressional testimony one week ago.  The lower volatility sends markets higher.  Volatility is now under 13. The market bulls will cruise higher if VIX stays below 14.18. The market bears will growl if VIX moves above 14.18.  A higher VIX, at these levels and higher, will create large intraday and day-to-day point swings in the broad indexes. Semi’s are also key this week. Bulls will move equities higher if SOX stays above 470.70.  If SOX 470.70 fails, it will be a game changer and the broad markets will begin selling off in force.  The NYMO, CPC, CPCE, SPXA150R, SPX:VIX and other charts are consistent in signaling that markets are forming another top like May. On the esoteric side, the new moon is 8/6/13 so markets would be expected to be weak early next week.  The next Bradley turn is a major turn date on 10/8/13. Solar flare activity was increasing one month ago but is now benign again.  Solar activity is expected to increase this year 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, 7/29/13: Pending Home Sales 10 AM. Dallas Fed Mfg Survey 10:30 AM. Earnings: AMKR, APC, BMC, CALM, LNG, EMN, ENZN, FIRE, FLOW, GDI, GLRE, HIG, HLF, HTZ, JEC, L, MTW, MAS, NTRI, NU, KWR, ROP, SCLN, SPG, SOHU, SONS, USU, VECO, VRTX, WYNN, YRCW.

·         Tuesday, 7/30/13: FOMC meeting begins. S&P Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM. Earnings: AET, AFL, APU, AMGN, ACI, BXP, BYD, BWLD, CERS, GTLS, CBI, COH, CVLT, DDD, DSX, ETR, EZPW, FISV, FDP, GNRC, GNW, GDOT, GLW, HBI, HRS, HW, HEP, HDSN, IACI, JBLU, MAKO, MSO, MRK, NANO, NOV, NCR, OXY, ODP, OKE, PFE, QCOR, S, GT, TRMB, VRTS, WM, X.

·         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. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings: AGN, AMT, BALT, BAH, CBS, CNW, CTRP, CW, DWA, EGC, GRMN, GNK, HES, HCBK, H, IPI, KS, LVLT, MAR, MA, MET, MUR, NI, PSX, REV, SAM, SODA, SO, SLCA, VG, WFT, WFM, WMB, YELP.

·         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: ACOR, ACTV, AIG, APA, ARNA, ADP, AVP, BZH, BDX, BZ, CAH, CHK, CI, CLX, CME, COV, DYN, ED, HK, ITT, K, LNKD, MELI, MOD, MHK, MWW, MYL, NILE, NYT, NUS, ONNN, OPTR, PPC, PWR, SKUL, SWN, STEM, SFY, TLAB, TDC, TSO, TWC, VCLK, VPHM, WLT, WTW, XEL.

·         Friday, 8/2/13: Personal Income and Outlays and Monthly Jobs Report 8:30 AM.  Factory Orders 10 AM—market pivot point. Earnings: ANR, AXL, BPL, CVC, CBOE, CDW, CVX, ETN, IT, HST, IMGN, RUTH, SEE, UPL, VIAB.

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

·         Monday, 8/5/13: ISM Non-Mfg Index 10 AM. Markets are typically bearish through the new moon. Earnings:

·         Tuesday, 8/6/13: International Trade 8:30 AM. JOLTS 10 AM. 3-Year Auction 1 PM. New moon. 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 over the next 8 weeks but will be on vacation during August. 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. Yellen and Summers are the two front-runners but the Whitehouse said candidates are not selected as yet and the decision will not occur until the Fall. Equity bulls will be ecstatic if Yellen receives the nod because QE on steroids will occur.

·         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.