Keystone's Key Events and Market Movers for Trading the Week of 8/5/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season continues with many second tier companies now reporting. Heavy-hitters on tap include the Mouse House (DIS), retailers such as KORS and RL, PCLN and TSLA, the latest momo stock. This week is light on economic data and the lazy hazy days of summer may begin. The terrorism talk and Egypt and Syria turmoil should impact oil prices. 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, only about 8 weeks away, but Congress and the Whitehouse go on vacation and recess until Labor Day.  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 out of session which is typically bullish for markets, however, markets are typically bearish when Congress is in session and that has resulted instead in new all-time highs for equities. The European debt crisis continues but is held at bay by BOE and ECB easy money talk. Cyprus is bankrupt. Greece remains in depression only able to survive as bailout money is fed to the country.  Portugal and Spain yields remain elevated. Italy remains challenged and the Berlesconi court decisions add twist and turns to this drama. 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, 9/5/13.  Draghi leaves rates unchanged on 8/1/13, 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.  When the Fed beats the dollar lower, however, this sends the euro higher. 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 and money markets to avoid collapse.  Copper and commodities are weak the last few months but stock move higher on central banker money.  China promises to keep growth rates high last week which creates upside in copper and commodities and helps push equities to new highs.  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. The terrorism threat this weekend has everyone in a tizzy. Egypt is in chaos causing crude oil prices to catapult higher. The army seeks to remove the Morsi-supporters from tent cities. Ramadan ends this week so violence may escalate. 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 elevated oil prices which sends gasoline prices higher, crimping retail spending and leading to lower consumer sentiment (although consumer sentiment is running at very high levels lately).  In addition, the Brazil social unrest continues although he Pope’s visit was successful.  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. 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 70% 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.  The Fed and BOJ easy money creates 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, however, for Monday, if the JJC stays under 39.02, and the SPX drops under 1701, Keybot will likely flip short. 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 14.25. The market bears will growl if VIX moves above 14.25.  A higher VIX, at these levels and higher, will create large intraday and day-to-day point swings in the broad indexes.  Market behavior is consistent with creating another top like May. Markets are typically bullish the first few days of the month due to new money entering but this affect should diminish from tomorrow on. On the esoteric side, the new moon is Tuesday 8/6/13 so markets would be expected to be weak from Monday into Tuesday and Wednesday.  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 negatively, but so far the peak solar cycle is a bust. Broad market topping and roll over action is anticipated as the weeks play out.  The epic and historic market action continues.

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·         Monday, 8/5/13: Congress adjourns for August recess ignoring the fiscal problems until after Labor Day. ISM Non-Mfg Index 10 AM. Markets are typically bearish through the new moon. New money flows into stocks to begin the month creating bullishness and this now dissipates. Earnings: APL, BMC, BSFT, CWCO, CUTR, FRP, HAYN, HMA, MHR, MDR, MR, OPK, ORBT, OSIR, QTWW, SVNT, SIGA, TLF, TNK, TELK, TNH, TSN, USEG, USU, VTUS, VGZ, VNO, ZIOP.

·         Tuesday, 8/6/13: International Trade 8:30 AM. JOLTS 10 AM. 3-Year Note Auction 1 PM. New moon. Earnings: AFFY, ALJ, ADM, AVNR, BID, BIO, CAR, CCC, CF, CKP, CTSH, CRTX, CVS, DCTH, DBD, D, DIS, EE, EMR, ENOC, EXPD, FSLR, FE, FST, FOSL, FBN, GLUU, HAR, HCN, ICE, ISIS, KORS, KWK, MRO, MED, MGM, NSPH, NUAN, OAK, OMX, ONTY, OREX, OXGN, PCRX, PZZA, PRGN, PH, SGA, SGNT, SD, SRE, SE, TAP, TRGT, THC, TDW, URS,  VSAT, XNPT, Z, ZTS.

·         Wednesday, 8/7/13: Ramadan ends so violence may increase in Northern Africa and the Middle East. Mortgage Applications 7 AM. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Consumer Credit 3 PM. Earnings: ADES, ANDE, AWK, AOL, BWC, ARRS, CECO, CG, CLDX, CLH, CDXS, DVN, DXM, DRYS, DUK, EGLE, ETP, EOG, FTK, FIO, GMCR, GRPN, HALO, HNSN, HFC, IEP, LORL, MFB, MWE, MMC, MELA, MOLX, OSUR, PACD, PVA, PRU, RIG, RL, RTK, SCTY, SZYM, SPPI, STEM, TSLA, VIP, WTR, YRCW.

·         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: AGU, ATLS, CFN, CLNE, CDE, DV, ELX, FWLT, GERN, GXP, HL, LINE, MCP, MDRX, NRG, NVDA, PCLN, PGR, RNF, RGLD, SFUN.

·         Friday, 8/9/13:  Wholesale Trade 10 AM—market pivot point. Earnings: CECE, CPK, COGO, ECTE, HNSN, OSIS, SJT.

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·         Monday, 8/12/13: Treasury Budget 2 PM. Earnings:

·         Tuesday, 8/13/13: NFIB Small Business Optimism Index 7:30 AM. Import and Export Prices and Retail Sales 8:30 AM. Business Inventories 10 AM—market pivot point. Fed’s Lockhart speaks 12:45 PM. Markets are typically bullish from a Tuesday low to a Wednesday high for OpEx week. Earnings:

·         Wednesday, 8/14/13: Mortgage Applications 7 AM. Atlanta Fed Inflation Expectations 10 AM. Oil Inventories 10:30 AM. Earnings:

·         Thursday, 8/15/13: Jobless Claims, CPI and Empire State Mfg Survey 8:30 AM. TIC data 9 AM. Industrial Production 9:15 AM. Housing Market Index, E-Commerce Retail Sales and Philly Fed Survey 10 AM. Natty Gas Inventories 10:30 AM. Earnings:

·         Friday, 8/16/13: OpEx. Productivity and Costs and Housing Starts 8:30 AM. Consumer Sentiment 9:55 AM—market pivot point. Earnings:

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·         Monday, 8/19/13: Markets are typically bullish through the full moon. Earnings:

·         Tuesday, 8/20/13: Chicago Fed National Activity Index 8:30 AM. Full moon. Earnings:

·         Wednesday, 8/21/13: Mortgage Applications 7 AM. Existing Home Sales 10 AM—market pivot point. Oil Inventories 10:30 AM. FOMC Minutes 2 PM—market pivot point. Earnings:

·         Thursday, 8/22/13: PMI Manufacturing Indexes. Jobless Claims 8:30 AM. FHFA House Price Index 9 AM. Leading Indicators 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Kansas City Mfg Index 11 AM. 5-Year TIPS Auction 1 PM.  Earnings:

·         Friday, 8/23/13: New Home Sales 10 AM—market pivot point. Earnings:

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·         Monday, 8/26/13: Durable Goods Orders 8:30 AM.  Dallas fed Mfg Survey 10:30 AM. Earnings:

·         Tuesday, 8/27/13: Case-Shiller Home Price Index 9 AM. Consumer Confidence 10 AM—market pivot point. Richmond Fed Mfg Index 10 AM. 2-Year Note Auction 1 PM. Earnings:

·         Wednesday, 8/28/13: Mortgage Applications 7 AM. Pending Home Sales 10 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings:

·         Thursday, 8/29/13: Jackson Hole Fed Economic Symposium begins with a focus on Yellen. Corporate Profits, Jobless Claims and GDP 8:30 AM. Natty Gas Inventories 10:30 AM. 7-Year Note Auction 1 PM. Markets are typically bullish moving into a 3-day holiday weekend. Earnings:

·         Friday, 8/30/13: EOM.  Personal Income and Outlays 8:30 AM. Chicago PMI 9:45 AM—market pivot point. Consumer Sentiment 9:55 AM—market pivot point. Farm Prices 3 PM. Markets are typically bullish moving into a 3-day holiday weekend. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings:

·         Saturday, 8/31/13: Jackson Hole ends. Earnings:

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·         Monday, 9/2/13: Markets are Closed in Observance of the Labor Day holiday. China and Asia PMI’s.  European PMI’s. Earnings:

·         Tuesday, 9/3/13: Markets reopen for trading. Congress returns from August recess to address the fiscal problems within the next four weeks. Motor Vehicle Sales. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Earnings:

·         Wednesday, 9/4/13: Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. International Trade 8:30 AM. Oil Inventories 10:30 AM. Beige Book 2 PM—market pivot point. Markets are typically bearish through the new moon. Earnings:

·         Thursday, 9/5/13: Challenger Jobs Report 7:30 AM. Jobless Claims and Productivity and Costs 8:30 AM. ISM Non-Mfg Index and Factory Orders 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Oil Inventories 11:00 AM. New moon. Earnings:

·         Friday, 9/6/13: Monthly Jobs Report 8:30 AM—market pivot point. Earnings:

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·         Monday, 9/9/13: Consumer Credit 3 PM. Earnings:

·         Tuesday, 9/10/13: NFIB Small Business Optimism Index 7:30 AM. JOLTS Report 10 AM. 3-Year Note Auction 1 PM. Earnings:

·         Wednesday, 9/11/13: Anniversary of 911. Mortgage Applications 7 AM. Wholesale Trade 10 AM—market pivot point. Oil Inventories 10:30 AM. 10-Year Note Auction 1 PM. Earnings:

·         Thursday, 9/12/13: Import and Export Prices and Jobless Claims 8:30 AM. Natty Gas Inventories 10:30 AM. 30-Year Bond Auction 1 PM. Treasury Budget 2 PM. Earnings:

·         Friday, 9/13/13: PPI and Retail Sales 8:30 AM.  Consumer Sentiment 9:55 AM—market pivot point.  Business Inventories 10 AM—market pivot point. Earnings:

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·         Monday, 9/16/13: Empire State Mfg Survey 8:30 AM.  Industrial Production 9:15 AM. Earnings:

·         Tuesday, 9/17/13: FOMC Meeting begins with traders listening for ‘QE tapering’. CPI 8:30 AM. TIC data 9 AM. Housing Market Index 10 AM. Markets are typically bullish from a Tuesday low to a Wednesday high for OpEx week. Markets are typically bullish through the full moon. Earnings:

·         Wednesday, 9/18/13: Mortgage Applications 7 AM. Housing Starts 10 AM—market pivot point. Oil Inventories 10:30 AM. FOMC Meeting Announcement and Forecasts 2 PM. Chairman Bernanke Press Conference 2:30 PM. Earnings:

·         Thursday, 9/19/13: Jobless Claims 8:30 AM. Philly Fed, Leading Indicators and Existing Home Sales 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Full moon. Earnings:

·         Friday, 9/20/13: OpEx-Quadruple Witching. Atlanta Fed Inflation Expectations 10 AM. Earnings:

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·         Sunday, 9/22/13: Germany reelects Merkel and now there is no longer a need to keep countries like Greece or Cyprus in the euro, or even Germany itself.

·         Monday, 9/23/13: Flash PMI’s. Chicago Fed National Activity Index 8:30 AM. Earnings:

·         Tuesday, 9/24/13: FHFA House Price Index and Case-Shiller Home Price Index 9 AM. Richmond Fed Mfg Index and Consumer Confidence 10 AM—market pivot point. 2-Year Note Auction 1 PM. Earnings:

·         Wednesday, 9/25/13: Mortgage Applications 7 AM. Durable Goods Orders 8:30 AM.  New Home Sales 10 AM. Oil Inventories 10:30 AM. 5-Year Note Auction 1 PM. Earnings:

·         Thursday, 9/26/13: Corporate Profits, Jobless Claims and GDP 8:30 AM. Pending Home Sales 10 AM. Natty Gas Inventories 10:30 AM. 7-Year Note Auction 1 PM. Earnings:

·         Friday, 9/27/13: Personal Income and Outlays 8:30 AM. Consumer Sentiment 9:55 AM—market pivot point. Farm Prices 3 PM. Earnings:

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·         Sunday, 9/29/13: The Debt Ceiling Limit and CR Continuing Resolution to fund the U.S. government deadlines occur.  Perhaps last minute antics occur today which is typical for the politicians. The Whitehouse scandals are distracting politicians from addressing the fiscal problems.

·         Monday, 9/30/13: EOM; EOQ3. Chicago PMI 9:45 AM—market pivot point. Dallas Fed Mfg Survey 10:30 AM. Markets are typically bullish from the last day of the month through the first four days of the new month. Earnings:

·         Tuesday, 10/1/13: Q4 begins. China and Asia PMI’s.  European PMI’s. Construction Spending and ISM Mfg Index 10 AM—market pivot point. Earnings:

·         Wednesday, 10/2/13: Mortgage Applications 7 AM. ADP Jobs Report 8:15 AM. Oil Inventories 10:30 AM. Earnings:

·         Thursday, 10/3/13: Challenger Job Report 7:30 AM. Jobless Claims 8:30 AM. ISM Non-Mfg Index and Factory Orders 10 AM—market pivot point. Natty Gas Inventories 10:30 AM. Earnings:

·         Friday, 10/4/13: Monthly Jobs Report 8:30 AM.  European bank stress tests will occur in Q4. Earnings:

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·         On Friday, 1/31/14: Chairman Bernanke’s term ends at the Fed. Yellen, Summers and Kohn are candidates. Yellen is the front runner, very dovish and will likely continue QE indefinitely which is happy news for stock market bulls.

·         On Friday, 2/7/14:  Winter Olympics begin in Sochi, Russia, through 2/23/14. Watch $RTSI and RSX.

·         In February/March: the new Fed Chairman testifies before Congress.

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