Keystone's Key Events and Market Movers for Trading the Week of 8/12/13

Key Dates and Times for the Week Ahead:

·         Keystone’s Comments on the Upcoming Week:  Earnings season winds down with second tier companies reporting with a few notable exceptions. Global bellwether DE reports on Wednesday. The retail sector is the central focus this week with JWM, M, KSS, WMT and many other retailers reporting as well as Retail Sales data on Tuesday. If the consumer is starting to tighten the pocket book, the markets are going to be in trouble. Back-to-school sales are important since they also provide an early read on potential holiday spending.  Economic data is very important on Thursday and Friday. Housing Starts and Consumer Sentiment are key and will be market moving.  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 7 weeks away, but Congress and the President are on vacation until after 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, just like the current Fed policy, 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. Spain is in a housing crisis and at the same time holds much of Portugal’s bad paper. Italy remains challenged and the Berlesconi court decisions add twist and turns to this drama. France’s debt-to-GDP ratio is out-of-control and particularly worrisome for this highly Muslim-populated country. 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 on 9/22/13 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.  Weak copper and commodities surprisingly did not negatively impact U.S. equities over the last three months; instead, markets print new all-time highs due to the central banker QE easy money. China promises to keep growth rates high and economic data paints a rosier picture last week so copper, commodities, iron ore, coal and steel recover.  The ‘protectionism’ wars continue with nations targeting each other with tariffs, fees and legal action. The equity markets continue to ignore the geopolitical landscape but the oil market is paying attention. The terrorism threat one week ago did not play out. Egypt is in chaos causing crude oil prices to remain elevated. Ramadan has ended so violence across the Middle East and Northern Africa regions 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, which in turn should negatively impact retail spending. Protests also continue across Europe and in Brazil. Geopolitical risk is getting priced into the oil markets but is not properly priced into the equity markets.  Q2 earnings season is well 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 bearish, however, for Monday, semiconductors and volatility, SOX 473.36 and VIX 14.20, respectively, will dictate direction. Bears need to push the VIX above 14.20.  Bulls need to push the SOX above 473.36. One or the other side should win and markets will commit to that direction. Markets will maintain a sideways posture if SOX stays under 473.36 and VIX stays under 14.20. The central bankers create the market rally over the last few weeks. The lower volatility sends equities higher but volatility is showing signs of life again with the VIX moving above 13.  A higher VIX, at these levels and higher, will create large intraday and day-to-day point swings in the broad indexes.  Overall market behavior is consistent with creating another top like May.  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, 8/12/13: Treasury Budget 2 PM. Earnings: APP, ARTX, BJCT, CSUN, CXDC, DKS, DDS, HPOL, MUX, NAT, SINA, SVNT, SORL, SYY. Markets are typically up for Monday’s during OpEx week.

·         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: BRCD, CREE, INVE, JDSU, OCRX, RSOL, TINY, VAL.

·         Wednesday, 8/14/13: Mortgage Applications 7 AM. PPI 8:30 AM. Atlanta Fed Inflation Expectations 10 AM. Oil Inventories 10:30 AM. Fed’s Bullard speaks 3:15 PM. Earnings: ADK, AGRO, A, ASUR, CACI, CMRX, CSCO, CEP, DE, FXLS, HPTX, JKS, M, NTAP, NTES, OSIS, PF, QTWW, RENN.

·         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: AMAT, BGG, EL, KSS, JWN, PRGO, PNX, SOL, WMT.

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

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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:

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

·         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.