Vital Signs for the Week of July 18


In an otherwise lazy hazy week of summer, all eyes will be on Federal Reserve Chairman Alan Greenspan. The Fed boss will go before Congress to give the central bank's semiannual monetary policy report. The chairman will in all likelihood provide another optimistic view of the economy.

It appears Greenspan has every reason to remain upbeat. The latest batch of economic data paints a nice picture. Economic activity remains healthy, with June retail sales jumping 1.5% and industrial production up 0.9% in the same period. What's more, the June inflation figures demonstrated little in the way of accelerating inflation pressures. Even though the June consumer price index missed the late June resurgence in gasoline prices, inflation on other fronts remained in check.

More good news is expected during the coming week. On the heels of a solid July Empire State manufacturing activity survey, the Philadelphia Federal Reserve Bank's regional factory activity survey is also expected to improve. The latest results point to a manufacturing sector rebounding from a second-quarter soft patch.

However, the Fed's recent concerns about a frothy housing market are not likely to be allayed by the June housing starts figures that come out on Tuesday or the National Association of Home Builder's July survey of homebuilders. And elevated oil prices remain a thorn in the side of the economy as well as a hot political issue.

That means after giving his perfunctory scripted speech, the Fed Chairman will have to field many pointed questions on the housing market, energy, and interest rates.

Here's the weekly economic calendar.

EARNINGS REPORTS

Monday, July 18

3M, Bank of America, Eaton, Hasbro, Mattel, Noble Corp., and more.

HOME BUILDERS SURVEY

Monday, July 18, 1 p.m. EDT

The National Association of Home Builders and Wells Fargo bank issue the monthly survey results for July. The report updates housing market conditions by measuring builders' assessments of current sales, buyer traffic through model homes, and expected demand. In June, the activity index hit 71, a new high for the year. The May index stood at 70, following an April reading of 67.

All the components improved in the June survey. The index tracking single-family home sales edged up to 77, from 76 in May. Expectations for sales in the coming six months climbed to 79, from 77 in the prior survey. The index for prospective buyer traffic was 54. In May, the reading was 53.

MEETING OF NOTE

Tuesday, July 19

U.S. President George W. Bush meets with Australia's Prime Minister John Howard at the White House in Washington, D.C.

EARNINGS REPORTS

Tuesday, July 19

American Standard, Amgen?AmSouth Bancorp? Boston Scientific, Ford Motor? Freeport-McMoRan, Genuine Parts, Gilead Sciences, Intel, Johnson & Johnson, KeyCorp, Lucent Technologies, Mellon Financial, Millipore, Motorola, Novellus Systems, PNC Financial Services Group, RadioShack, Safeco, Sovereign Bancorp, State Street, SunTrust, Teradyne, Wachovia, Wells Fargo, Yahoo!, and more.

ICSC-UBS STORE SALES

Tuesday, July 19, 7:45 a.m. EDT

This weekly tracking of retail sales, compiled by the International Council of Shopping Centers and UBS bank, will update buying activity for the week ending July 16. During the holiday week ended July 9, sales improved 0.1%. During the prior week, sales rose 0.5%, after a 0.6% drop during the week ended June 25.

NEW RESIDENTIAL CONSTRUCTION

Tuesday, July 19, 8:30 a.m. EDT

Housing starts probably improved a touch in June. The annual rate for the month is expected to be 2.05 million, according to the median forecast from Action Economics. Housing starts were unchanged at a pace of 2.01 million in May, after rising to 2.01 million in April, from a rate of 1.83 million in March.

Another plunge in mortgage rates and a modestly improving labor market are providing plenty of stimulus to keep the housing market going at a frenzied pace.

INSTINET REDBOOK RESEARCH STORE SALES

Tuesday, July 19, 8:55 a.m. EDT

This weekly measure of retail activity will report on sales for the second fiscal week of July, ended July 16. During the first week of July, sales were up 0.2%. In the entire month of June, sales grew 0.5% compared with May.

MEETING OF NOTE

Wednesday, July 20, 10 a.m. EDT

Federal Reserve Board Chairman Alan Greenspan gives his semiannual monetary policy announcement before the House Financial Services Committee in Washington, D.C.

EARNINGS REPORTS

Allstate, Altria Group, Ambac Financial Group, AT&T, Capital One Financial, CIT Group, Comerica, Convergys, Cooper Industries, Cooper Industries, E*Trade Financial, Eastman Kodak, eBay, General Dynamics, General Motors, Golden West Financial, Honeywell, Huntington Bancshares, IMS Health, J.P. Morgan Chase, Northern Trust, Patametric Technology, Pfizer, QLogic, Qualcomm, St. Jude Medical, Supervalu, Synovus Financial Torchmark, Unisys, United Technologies, Washington Mutual, Wyeth , and more.

MORTGAGE APPLICATIONS

Wednesday, July 20, 7 a.m. EDT

The Mortgage Bankers Association releases its numbers on mortgage applications for both home buying and refinancing for the week ending July 15. The purchase index fell back to 489 in the week ended July 8, from 520.8 in the previous week, and 477.4 in the week ended June 24. The four-week moving average climbed to 501.7, from 491.4 for the week ended June 24.

The average rate on a conventional 30-year fixed mortgage, according to HSH Associates, moved up to 5.81% during the week ended July 8. For the week ended July 1, the mortgage rate stood at 5.72%.

The MBA's refi index rose as well. In the period of July 8, the index fell to 2554.3, from 2788.2 during the week ended July 1, but remained above the 2529.2 level for the week ended June 24. The four-week moving average dropped to 2611.7, from 2715 for the period ended July 1.

EARNINGS REPORTS

Thursday, July 21

AmeriSourceBergen, Baxter International, Broadcom, Caterpillar, Coca-Cola, Compuware, Danaher, Delta Air Lines, Dover, Dow Jones & Company, Eli Lilly , EMC, Equifax, First Horizon National, Fiserv, Google, Guidant, Hershey, Illinois Tool Works, Ingersoll-Rand, International Game Technology, Johnson Controls, Leggett & Platt, MedImmune, Merck, Microsoft, New York Times, Nextel Communications, Nucor, Office Depot, PMC-Sierra, Providian Financial, Reebok, Robert Half International, Rohm and Haas, SBC Communications, Schering-Plough, Scientific-Atlanta, Sherwin-Williams, SLM Corp.? SunGard Data Systems, Textron, Union Pacific, United Parcel Service, V.F., Weyerhaeuser, Xilinx, Zions Bancorp, and more.

JOBLESS CLAIMS

Thursday, July 21, 8:30 a.m. EDT

First-time claims for jobless benefits for the week ended July 16 most likely eased to 328,000. The coming weekly numbers will be hard to interpret given the annual factory retooling by U.S. auto makers. Jobless claims moved up to 336,000, from an upwardly revised 320,000 in the week ended July 2, after easing to 311,000 in the prior week.

The four-week moving average was nearly unchanged at 320,800 for the week ended July 9, from 320,500 during the previous week. Continuing jobless claims for the week ended July 2 climbed back to 2.62 million, from 2.57 million in the previous week.

LEADING INDICATORS

Thursday, July 21, 10 a.m. EDT

The Conference Board's composite index of leading economic indicators is expected to have rebounded with a 0.5% gain for June. That's the consensus among economists polled by Action Economics.

The May index declined 0.5%, after revised figures showed no change for April. In March, the index dropped 0.6%. The May leading index was off 1.9% compared with the same period a year ago.

The expected increase in June should come in part from improving consumer sentiment. The University of Michigan's consumer sentiment index showed a healthy gain in June. The Conference Board uses the expected conditions component from the consumer sentiment survey.

The Federal Reserve's moves to raise its overnight fed funds rate along with falling long-term interest rates have been weighing on the Conference Board's index. The spread between short and long-term rates carries the most weight among the index constituents and a narrower spread negatively affects the index. In the July report, however, the contribution from monthly changes in the yield spread will be modified.

PHILADELPHIA FED SURVEY

Thursday, July 21, 12 p.m. EDT

The Philadelphia Federal Reserve Bank will issue its June survey of business conditions for the mid-Atlantic region. The median forecast of economists polled by Action Economics is for an index reading of 9. The June Philly Fed index sank to -2.2, the first negative reading since May of 2003.

In May of 2005, the index fell to 7.3, from 25.3 in April. At the same time, respondents expressed more optimism about the coming six months. The future expectations index was 30.6 in June, after slipping to 22.3 in May, from 27.5 in April.

The current conditions index for shipments, new orders, and unfilled orders all retreated in June. The unfilled orders index plummeted to -19 in June, from -0.1 in May and -3.8 in April. A negative reading implies that companies were whittling down on their backlogged orders. However, the new orders, unfilled orders, and shipments indexes for the coming six months all rose. The patterns seem to indicate that the region's manufacturers may be coming out of a soft patch of demand.

FOMC MINUTES

Thursday, July 21, 2 p.m. EDT

The Federal Reserve will release the minutes of the Open Market Committee meeting held on June 29 and 30. As of this year, the Fed is now releasing the minutes three weeks after its monetary policy meeting. Prior to the change, minutes were released with a six to eight week lag. Fed watchers will also be interested in the minutes to see what economic topics were discussed. One special issue raised during the two-day meeting was the housing market.

The Fed's June post-meeting press release showed a small change in the central bank's inflation assessment. The Fed omitted its May assertion: "Pressures on inflation have picked up in recent months and pricing power is more evident." Instead, the central bank said inflation pressures remained elevated but long-term inflation expectations remain "well contained." The shift seems to imply that inflation is not accelerating and that companies are not exhibiting the same degree of pricing power as they had earlier this year.

EARNINGS REPORTS

Friday, July 22

Becton, Dickinson and Co., Cummins, FPL Group, Halliburton, Kimberly Clark, Manor Care, Occidental Petroleum, Schlumberger, and more. By James Mehring


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