Keystone's Key Events and Market Movers for Trading the Week of 3/4/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week: The economic data and earnings are absent early in the week but things pick up in the back half with the Beige Book Wednesday afternoon, ECB Rate Decision on Thursday morning and Monthly Jobs Report on Friday morning.  HOV earnings are important on Wednesday.  This means the global news carries more clout on Monday and Tuesday so look to Japan, China and Europe for any market moving events. The Sequestration is here and in force now.  The Continuing Resolution is on 3/27/13, only 23 days away, then the Debt Ceiling limit comes into play again mid-May, less than three months out. Traders are no longer concerned of any market downside occurring due to these political deadlines. The politicians solved the Fiscal Cliff and the Debt Ceiling deadlines with can-kicking and this will simply continue on indefinitely, so there is no reason to price in any market downside moving forward.  Of course, if a stumble occurs, it would impact markets more greatly due to this complacency. Congress  will be in the news which is a market negative. The European debt crisis news directly dictates global market direction.  Spain protests are growing.  As the euro goes, so goes the equity markets although the lower euro last week did not bring the equities markets lower.  Italy election drama is ongoing. Italy will take the month of March to form a coalition government. Watch the Italy 10-year yield to see if it blows out, or not. Spain is delaying their bailout request so the ECB’s OMT bond-buying program cannot be unleashed in full force, although simply having the OMT in place has greatly calmed Europe.  Spain is reluctant to give up sovereignty and accept conditionality. European countries are denying that money is moving out of banks but denial is always the first sign of serious trouble ahead.  Italy wants Spain to request a bailout since the ECB bond-buying will immediately improve Italy’s debt situation. Look for a strong market bounce and rally if Spain requests a bailout. European riots and violence continue. Cyprus will need a bailout by April. Merkel wants Greece to stay in the euro until her election in September but will not care afterwards. The next ECB Rate Decision and Press Conference is this week, Thursday, 3/7/13.  Draghi is reluctantly moving dovish as Weidmann plays the hawk role.  Traders will be anticipating a cut by Draghi at some point forward.  Europe is standing by watching their manufacturing and export industries worsen while the U.S. and Japan devalues their currencies. If the European economy continues to falter, and the automobile sales are dropping significantly, and Germany dropping off, Draghi will have to cut to weaken the euro and help the Eurozone grow out of the debt mess, so thiw Thursday may provide fireworks.  The China hard versus soft landing saga continues. Watch for further China easing measures such as lowering rates or triple R’s, which will bounce copper, commodities and equity markets. As copper and commodities go, so goes the markets but the equities markets moved higher last week as oil, copper and commodities collapsed.  China correctly worries about the new commodities inflation and asset bubbles that will be created by their easy money policies (Chairman Bernanke incorrectly defends QE saying it does not create asset bubbles). New leaders President Xi Jinping and Premier Li Keqiang will supply economic targets in March. China professes a 7.8% growth rate but no one asks how this is possible when their number one customer, Europe, is in recession and depression, the U.S. is flat, and uninhabited cities litter the China countryside, waiting for the urban shift to a domestic-led economy. China demographics are a mess due to the multi-decade one-child policy now causing a lack of workers to fuel economic health and the income figures show that the rural Chinese are making more money than the urban dwellers providing no incentive to move to the cities. China retail sales are lagging and manufacturing data shows a standstill. CAT, YUM, and DE, three key China bellwethers, are unenthusiastic moving forward but JOY is more upbeat. The Australia disinflationary and deflationary scenario must be studied closely moving forward. The equity markets continue to ignore the geopolitical landscape. Syria is out of control with refugee’s now threatening collapse of neighboring nations. Egypt remains in chaos.  The sharp rise in Brent oil verifies the concern over Northern Africa and the Middle East. At the same time, WTIC oil drops on over supply issues remaining as well as a weakening global economy so the crude to Brent spread remains high.  Use Brent oil as a proxy for the Middle East turmoil. If Brent is above 112, it signals that tensions are rising. Calm is returning under 112.  As oil goes, so goes the markets but oil dropped like a stone and equities moved higher last week. WTIC oil dropped to test support at 90.  The earnings season continues with second tier companies now on tap. Companies are meeting lowered estimates although the percentage beats are slightly under the typical 70 to 75% expected. Top line revenues continue to be challenged. The HOV earnings will provide a gauge on the housing recovery this week.  Several retailers are also important.  Tech (COMPQ) and small caps (RUT) lagged the broad indexes last week continuing to place in question the continued upward move in stocks.  The VIX is moving higher and more upside is anticipated. Continued market topping and roll over action is anticipated for the broad indexes as the days and weeks play out. Q1 is anticipated to be a significant market topping area.

·         Monday, 3/4/12:  The Sequester Continues; watch defense stocks and States such as Virginia. No economic data today.  Fed’s Yellen speaks 8 AM.  Volcker speaks 11:45 AM. Fed’s Powell speaks 1:15 PM.  Earnings: ARNA, BYD, GNOM, DYN, FTEK, KERX, KWR, LORL, MCOX, NATR, PLUG, SABA, SHFL, STP, SYNM, THO, RIG, UNB, VECO, YGE.

·         Tuesday, 3/5/13: National People’s Congress convenes.  China President Xi Jinping and Premier Li Keqiang are now in control and the ten-year transition of power is finished. China now sets inflation and budget targets moving forward. China is pushing a domestic-led economy moving forward. The growth projections are important and will be judged against the 7.8% growth rate in 2012. ISM Non-Mfg Index 10 AM. Earnings: AVAV, CKP, CEP, INFI, JKS, SWHC, MELA, ORBT, PAY, ZIPR.

·         Wednesday, 3/6/13: BOJ meets for Shirakawa’s last meeting; the money pumping and yen weakening will continue. Mortgage Applications 7 AM—is the trend up or flat? (2/13/13 down; 2/20/13 down; 2/27/13 down; 3/6/13?) ADP Employment Report at 8:15 AM provides insight into the Friday jobs number. Factory Orders 10 AM—look for a market stutter step. Oil Inventories 10:30 AM. Beige Book 2 PM—look for a market pivot point. Earnings: ACAD, ALJ, AEO, BIG, COKE, DRYS, HOV, MFB, MLR, MYRG, OSIR, SIGA, SPLS, MYN, VIP, WSM.

·         Thursday, 3/7/13: BOE Rate Decision 7:00 AM EST. ECB Rate Decision 7:45 AM EST and Press Conference 8:30 AM. Chain Store Sales.  Challenger Job Report 7:30 AM. Jobless Claims, Productivity and Costs and International Trade 8:30 AM. Natty Gas Inventories 10:30 AM.  Consumer Credit 3 PM. Earnings: CECE, CPK, CIEN, COO, CYTX, EPL, FGP, HRB, JRCC, KR, MED, P, SQNM, SKUL, SFD, WDAY.

·         Friday, 3/8/13: Monthly Jobs Report 8:30 AM.  Wholesale Trade 10 AM—look for a market stutter step.  Earnings: ANN, BKE, FL, FSYS, MEMS, OREX, PPHM, ZUMZ.

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

·         Sunday, 3/10/13: Daylight Savings Time begins.

·         Monday, 3/11/13: New moon.

·         Tuesday, 3/12/13:

·         Wednesday, 3/13/13: Retail Sales 8:30 AM. Business Inventories 10 AM.

·         Thursday, 3/14/13: Current Account, Jobless Claims and PPI 8:30 AM.

·         Friday, 3/15/13: CPI and Empire State Mfg Index 8:30 AM.  TIC data 9 AM. Industrial Production 9:15 AM.  Consumer Sentiment 9:55 AM.

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

·         Monday, 3/18/13:

·         Tuesday, 3/19/13: Housing Starts 8:30 AM.

·         Wednesday, 3/20/13: First Day of Spring.  FOMC Meeting Announcement 12:30 PM.  FOMC Forecasts 2 PM.  Chairman Bernanke Press Conference 2:15 PM. Markets will pivot at 12:30 PM and 2:15 PM.

·         Thursday, 3/21/13: Jobless Claims 8:30 AM. PMI Mfg Flash PMI 8:58 AM.  FHFA House Price Index 9 AM. Existing Home Sales and Philly Fed 10 AM—look for a market pivot point.

·         Friday, 3/22/13:

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

·         Sunday, 3/24/13: Palm Sunday.

·         Monday, 3/25/13:

·         Tuesday, 3/26/13: Passover. Durable Goods Orders 8:30 AM. S&P Case-Shiller House Price Index 9 AM.  Richmond Fed Mfg Index, New Home Sales and Consumer Confidence 10 AM.

·         Wednesday, 3/27/13: Continuing Resolution (CR) is required to fund the government, otherwise the government will shut down. Full moon.

·         Thursday, 3/28/13: EOM. EOQ1.  Corporate Profits, Jobless Claims and GDP 8:30 AM. Chicago PMI 9:45 AM.

·         Friday, 3/29/13: Good Friday. U.S. Markets Are Closed until Monday. Personal Income and Outlays 8:30 AM.  Consumer Sentiment 9:55 AM.

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

·         Sunday, 3/31/13: Easter Sunday.

·         Monday, 4/1/13: Construction Spending and ISM Mfg Index 10 AM.

·         Tuesday, 4/2/13: Factory Orders 10 AM.

·         Wednesday, 4/3/13: ADP Employment Report 8:15 AM. ISM Non-Mfg Index 10 AM. BOJ meets with new members and the money pumping and yen weakening continues.

·         Thursday, 4/4/13: Jobless Claims 8:30 AM.

·         Friday, 4/5/13: Monthly Jobs Report 8:30 AM.  International Trade 8:30 AM. Consumer Credit 3 PM.

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

·         Sunday, 5/19/13:  16.4 trillion Debt Ceiling limit is hit.

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

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

·         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.