Economic Indicators for the week of Oct. 18th, 2010 (UPDATE)

Below is a list of the Economic Indicators to be released this week, along with what the expectations are for each indicator. In addition I have posted Corporations which will be releasing their earnings data for the past quarter. I will update each economic indicator here during the week as the data is released. I will not be updating the earnings information.


UPDATE: 6:25am PST

Industrial Production for September was down -0.2%, while expectations were for an increase of +0.2%. Also, Capacity Utilization for September was 74.7%, while expectations were for 74.8%. These are not in the right direction if you were looking for support of a recovery. Hmmm, that must mean the market will go up today, not down, since the market does opposite of what the economic data. suggests.

Stock Market outlook to year end.

I thought it was time I updated my charts on the progress of the Dow and the S&P 500, as it has been a while since I had. Above, are 3 year charts of both of these Indexes. You will notice that we clearly broke above the 3 year red downtrend line and are now in no man's land, between the Blue and the red line. We do have resistance on both of these charts noted by the Blue lines, which in my view will keep us restricted until well after the end of year into earnings season in January. These Blue lines show where there was previous support in a declining trend, which now are new resistance levels in an uptrending market. If you are of the belief that things are on the long way back up, then you should see a break above these Blue lines, after we see the 4th quarter earnings data reported through until about mid February, when 2/3 of the companies earnings will have been reported.

If on the other hand, you believe that we have run up too far, then during this same timeframe you should see the market stay below the Blue line and most likely fall below the red line.

The real question is this, will the stock market reflect the real economy of Main Street or will it continue to disconnect? I think it can disconnect for only so long as some brave soul will eventually say and be heard, The Emperor has no clothes!. In this case it would need to be the U.S. economy is going to take a good 5 to 10 years to recover and the stock market will be stuck flat, waiting for it to catch up to the hype reflected in stocks. Honestly, I have no clue what is going to happen as we see the next big wave of bubbles burst, Commercial Real Estate.

Coming week Stock Market: What to look for?

There is news coming out this week which most likely will move the market. Scheduled to be released are the following new items listed by potentially creating the most market impact:

Third Qtr GDP numbers - Thursday. (Analysts expect 3.1% GDP)
Weekly jobless Claims - Thursday.
Consumer Confidence for October - Tuesday
Durable Goods Orders for October - Tuesday

Many S&P companies will report this week and a partial list is noted below:

Verizon - on Monday
Corning - on Monday
Visa - on Tuesday
U.S. Steel - on Tuesday
Coca-Cola - on Wednesday
GlaxoSmithKline - on Wednesday
Exxon Mobile - on Thursday
Proctor & Gamble - on Thursday
Kellogg - on Thursday
Colgate-Palmolive - on Thursday
Deutsche Bank - on Thursday
Sony - on Friday
Panasonic - on Friday
Duke Energy - on Friday
Cummins Engine - on Friday
Chevron - on Friday

A little mentioned poll by CNN came out last week that I thought should have gotten more press but didn't because there are many advocates for keeping one's head in the sand so you can't see that the recovery isn't recovering as the Fed and Bernanke has said. You look at the data and tell me if you think it is going in the right direction. Here's the poll question:

People were asked if they agreed with this statement: "Economic conditions are very poor."

Here's the response over time they asked the question:

Oct. 42%
Aug. 35%
Jun. 41%
Mar. 48%
Dec. 66%

The poll was conducted by CNN's Opinion Research group and has a plus or minus 3% sampling error.

Looks to me that we have taken a step backwards with 42%.

And here's something on a personal note. If you have a First Aid kit for emergencies, make sure you buy this new product and add it to your kit. It's called "QuikClot and is made by Z-Medica. It is a Gauze which stops the bleeding on very bad wounds. The military uses it and it has helped saved many lives. Here's a link to their web site. I have no financial interest in the company or the product but you know if you have been reading here for a while that I am CERT trained and a first responder so this is placed here as a public service announcement. Thanks

Markets in limbo. UPDATE

The stock market still has not made its direction clear going forward. We are still in that narrow range that continues to butt up against the Resistance line of about 10,100. It is obvious that the data from 3Q companies which have reported earnings that it is a mixed bag. This morning MSFT reported and they exceeded earnings expectations. Analysts had expected $0.32/share and MSFT delivered $0.40/share in earnings. Their Revenue numbers were slightly better than last year but nevertheless must be recorded as better. at $12.93 Billion vs last year at $12.8 Billion. While not much of an increase it was still an increase of 1%.

While yesterday we saw a rise in all 3 indexes, the Dow volume was less than Wednesday's volume. In my comments yesterday I had said that the dollar was up in pre-market and that usually meant the market was going to go down. Well the dollar gain evaporated during the day and the dollar fell to a new low. In pre-market this morning the dollar is up again but only slightly and the Indexes are set for a gain at the open. We should see whether MSFT will drive the market higher. It should unless the Revenue gain of 1% wasn't enough of a motivator to buy stocks today. Of course they released their newest update of Windows yesterday and I haven't seen the consumer reviews on it. Hmmm, why would I, we own only Mac's. :)

I will be updating my charts over the weekend so come back and see what they look like in helping point the direction of the market going forward. Have a nice weekend too. Don't forget if you haven't voted in my Mini poll this month to add your opinion. Vote only once please in a month.

UPDATE: 8:30am PST

Burlington Northern Santa Fe railroad reported Quarterly freight revenues were $3.49 billion, which included a decrease in fuel surcharges of $725 million. This Compared to third-quarter 2008 freight revenues of $4.77 billion. You can see here is another company reporting lower Revenue than for the same period in 2008.

According to CNBC this morning, 60% of companies reporting 3Q results have shown higher revenues this period compared to 2008. The problem with that spin is that even if they reported only a $0.1 Million increase or less in revenue, it is counted in the 60% of companies with "higher" revenues. I am not impressed. Clearly the Burlington Northern Sante Fe railroad company, which does ship freight, is hurting and a better measure of the economy than many other companies.

More companies report 3Q results. Jobless claims rise. UPDATED

This morning the big news in reporting earnings came from McDonalds. They beat estimates for earnings per share by a few pennies, but did not get top line growth in Revenue. As a matter of fact, they said that informal dining out has dropped globally. Two other companies reported this morning, Merck and AT&T. Both of them also did not have top line Revenue growth. Without top line Revenue growth we are very vulnerable for a double dip recession. More companies to report today after the bell. Stay tuned on that front.

The Dow had difficulty again staying over the 10,000 level as it retreated to 9949 and the S&P 500 dropped back to 1081. Weekly Jobless Claims gained 11,000 to 531,000 from 520,000 last week. The four week moving average for jobless claims is at 532,250.

European markets are down again this morning and the dollar is up. The Dow Futures is up in pre-market but with the dollar up, I see the Dow headed down for the day. The S&P and the Nadaq are both down in premarket and should begin that way as well following the dollar's gain.

UPDATE: 7:20am PST

UPS reported lower earnings and lower top line Revenue than last year. 3M reports better earnings AND top line growth in revenue.

UPDATE: 2:00pm PST

Xerox says Sales fell 16 percent to $3.68 billion.

UPDATE: 3:30PM PST

JUNIPER Sales for the third quarter ended last month were $823.9 million compared to $946.9 million revenue booked in the year-ago period. That's another company not growing Sales from last years results.

U.S. Airways total revenues in the third quarter were down 16.6 percent versus the third quarter of 2008. And another company has less revenue than 2008.

Companies reporting earnings but not top line Revenue growth! We are still in a recession.

I have been watching the earnings reports come in this week and last and specifically looking at the revenue numbers of each company. Even though many companies are beating EPS (Earnings per Share) compared to last year, the real story is that most companies are reporting less Revenue this year than last year, say but a few. Th companies defying that trend are the Pharmaceuticals. Both Pfizer and Elli Lilly saw good gains in Revenue. Lilly reported this morning a 7% gain in top line Revenue as compared to last year.

Still don't think we need major heath care reform?!

Your Guide to Leading Economic Indicators announced this coming week

This will be a big week for the release of government data. Here is a summary day by day of the expected government data for the week on Housing, GDP, Consumer Confidence and other significant data, which measures the health of the economy. You'll want to check this post daily to see what data will be released for that day. To read the rest of the news on earnings expected this week click on the link at the end of this post thanks to Alexandra Twin, CNNMoney.com senior writer.

On the docket
Monday: December existing home sales are expected to have fallen to a 4.40 million unit annual rate from a 4.49 million unit rate in November.

The December index of leading economic indicators (LEI) is expected to have fallen 0.3% after falling 0.4% in November.

Tuesday: The January consumer confidence index from the Conference Board is expected to hold steady at an all-time low of 38.0, unchanged from December.

Also due Tuesday is the S&P/CaseShiller home index for November, expected to show steep declines.

Wednesday: The Federal Reserve concludes its two-day policy meeting with an announcement on interest rates due at around 2:15 p.m. ET. No change is expected in the fed funds rate: The central bank lowered interest rates to nearly zero in December and hinted it would keep them there for some time.

As always, the statement accompanying the decision will be critical, as it offers the Fed's assessment of the economy, now in its second year of a recession. (Full story)

Also on Wednesday, the World Economic Forum kicks off in Davos, Switzerland. It runs through Sunday.

Thursday: The December durable goods orders report is due before the start of trade. Orders are expected to have dropped 1.8% after dropping 1.5% in November.

December new home sales are due after the start of trading. Sales are expected to have fallen to a 400,000 annual unit rate from a 407,000 annual unit rate in November.

Friday: Fourth-quarter gross domestic product (GDP) is expected to have fallen by an annual rate of 5.2%, after falling by an annual rate of 0.5% in the third quarter. That would be the biggest quarterly decline in roughly 26 years.

The January Chicago PMI, a regional read on manufacturing, is expected to have fallen to 34.2 from 35.1 in December.

The University of Michigan releases its revised January consumer sentiment index, which is expected to hold steady at 61.9.

Here's the link to this week's earnings announcements.