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Jobs data in focus, American Apparel on death watch for the week ahead


The U.S. men’s soccer team enters the single elimination round of the World Cup against Belgium next Tuesday. But this isn't the only American brand facing a make or break week in the days ahead.

Embattled retailer American Apparel (APP) could be on death-watch as well, thanks to a British company calling in a $10 million debt. The call follows a vote to oust the company’s controversial founder and CEO.

“There was a covenant in [the loan agreement] that, if the CEO Dov Charney got replaced or got ousted, as is the case in American Apparel, they could call their debt in,” explains Jeff Macke. “Well, they did and they gave a July 4th deadline, which seems kind of spiteful and selfish.”

Macke says if American Apparel fails to make the payment, that will trigger more debt calls, and the company can’t survive that. “They’ve got some $200 million in debt sitting out there, and they’re more or less going paycheck to paycheck,” he says. “American Apparel could be ceasing to exist by as early as next week.”

Ahead of American Apparel’s July 4th deadline for survival, investors will be squarely focused on the July 3rd jobs report, which took on a new level of import after the surprisingly weak Q1 GDP report released this week. GDP came in down 2.9% for the first three months of the year, the weakest quarter since the recession.

“[The jobs number] is still a relatively big deal. People are starting to take down their second quarter numbers,” says Yahoo Finance Senior Columnist Michael Santoli. “I do think the data next week is going to tell us exactly how much they have to come down.”

While overall economic growth disappointed in the first quarter, there is a dichotomy in the economy, according to Santoli. “The rule has been: The industrial side of the economy continues to do great. ISM probably looks good. Auto sales have been a bright spot. That stuff probably looks good,” he says. “The question is the personal consumption side of things, which jobs has some window on.”

Yahoo Finance Editor-in-Chief Aaron Task says the personal consumption side is seeing its own divide right now, with personal spending falling while consumer confidence rose. That, he says, can’t continue for long.

But the dark horse market mover for the week may be something Americans are not too focused on, what with the American drama, holiday and jobs report on the docket.

“I actually think what goes on in Europe could be the sleeper for what actually matters to markets," Santoli says. “It’s a really packed week with European economic data; every country gives its PMI factory data;,a lot of ECB speakers and an ECB meeting.”

What do you think will be the story of the week? Tweet us at @DailyTick

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