Trading Radar: Retail Sales Growth Expected to Slow to Lowest Point in Four Years
This past week was very bare in terms of data releases; one of the two major releases was weekly jobless claims, which declined to 323,000 from last week's 327,000. It also dragged down the 4-week moving average of claims to 336,800. The other was March consumer credit, which declined to a seasonally adjusted $7.966 billion. Within consumer credit, revolving credit fell for the second straight month to $802 billion and nonrevolving credit had its second straight month of increases up to $1,960.4 billion.
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Looking ahead to next week, we have more consumption data on the calendar. On Monday, advance retail sales for April will be released. The monthly rate is expected to continue to decline to -0.4% from -0.3% the month prior, however the YoY rate should continue to fall below 2.8%, making it the worst annual gain since November 2009. Over the last 20 years, sub-2.8% YoY retail sales growth would be in the bottom quartile of historical trends. With regards to tax changes, keep in mind that it may take months for the full effects of higher taxes through the payroll tax cut expiration and Obamacare to fully pass through to consumers' spending habits. In April, auto sales seasonally adjusted on an annual basis fell to 14.88 million and have now fallen by 320,000 over the last five months.
Another economic datapoint to note is TIC flows of US assets. On Friday we received data from Japan that Japanese investors had been net buyers of foreign bonds for the second straight week. Japanese investors have been consistent net sellers throughout 2013. Last month for February's data, Caribbean accounts (read:hedge funds) were the largest net buyer of Treasuries, adding $14.9 billion. In 2013, Japanese investors have sold $14.1 billion of Treasuries and Chinese investors have added $2.5 billion. These two subsets are the largest owners of US Treasuries outside of the Federal Reserve.
Other notable economic datapoints for the week include housing starts and building permits. Last month building permits declined to 907,000 from 939,000. As such, housing starts should show a corresponding decline; demand for new mortgages remains robust even though refinance activity has slowed down noticeably.
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Lastly, we will begin to see May regional manufacturing surveys in the coming week from New York and Philadelphia, typically two of the more influential surveys. Manufacturing growth has continued to slow; goods-producing jobs declined by 9,000 in April's payrolls report. April manufacturing surveys showed a steep slowdown in manufacturing activity as well as the key new orders subindexes, but the consensus is that a recovery is expected into the months of May and June.
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On the global front, European growth will be released on Wednesday. Last week the EU lowered its 2013 growth forecasts for the eurozone to -0.4% growth from -0.1% growth.
Earnings seasons will be coming to a close this week. Thus far, 452 of the 500 companies in the S&P 500 (^INX) have reported earnings and 1,677 of the 1,928 in the Russell 2000 (INDEXRUSSELL:RUT) have reported. Notable reports from the week include Wal-Mart (WMT), JC Penney (JCP), Deere (DE), Macy's (NYSE:M), Cisco (CSCO), and Dick's Sporting Goods (DKS).
Monday, May 13
US Economics (Time Zone: EDT)
08:30 Advance Retail Sales – consensus -0.3%, prior -0.4%
08:30 Retail Sales Less Autos – consensus -0.1%, prior -0.4%
08:30 Retail Sales Ex Auto & Gas – consensus 0.3%, prior -0.1%
10:00 Business Inventories – consensus 0.3%, prior 0.1%
11:30 Treasury selling $29b 3-month bills, $24b 6-month bills
Global Economics (Time Zone: GMT)
01:30 AUD Home Loans
05:30 CNY Industrial Production YTD
05:30 CNY Retail Sales
07:15 CHF Retail Sales
22:45 NZD Retail Sales
Earnings
Before:
Supernus Pharmaceutical (SUPN)
After:
Stratasys (SSYS)
Tuesday, May 14
US Economics (Time Zone: EDT)
07:30 NFIB Small Business Optimism – consensus 90.5, prior 89.5
08:30 Import Price Index YoY – consensus -0.4%, prior -0.5%
11:00 Fed buying $2.75b-$3.5b notes in 7 to 10-year range
11:30 Treasury selling 4-week bills
Global Economics (Time Zone: GMT)
06:00 EUR German CPI
06:00 JPY Machine Tool Orders
09:00 EUR Eurozone Industrial Production
09:00 EUR Eurozone ZEW Survey
Earnings
After:
Agilent (A)
Eagle Materials (EXP)
Wednesday, May 15
US Economics (Time Zone: EDT)
07:00 MBA Mortgage Index
08:30 Empire Manufacturing – consensus 4.00, prior 3.05
08:30 Producer Price Index YoY – consensus 0.8%, prior 1.1%
08:30 PPI Ex Food & Energy YoY – consensus 1.7%, prior 1.7%
09:00 Total Net TIC Flows – prior $53.6B
09:00 Net Long-term TIC Flows – prior -$17.8B
09:15 Industrial Production – consensus -0.1%, prior 0.4%
09:15 Capacity Utilization – consensus 78.3%, prior 78.5%
09:15 Manufacturing Production – consensus 0.0%, prior -0.1%
10:00 NAHB Housing Market Index – consensus 43, prior 42
11:00 Fed buying $750m-$1b bonds in 11 to 19-year range
Global Economics (Time Zone: GMT)
05:00 JPY Consumer Confidence
05:30 EUR French GDP
06:00 EUR German GDP
08:00 EUR Italian GDP
08:30 GBP Employment Figures
09:00 CHF ZEW Survey (economic expectations)
09:00 EUR Overall Eurozone GDP
13:00 CAD Existing Home Sales
23:50 JPY GDP
Earnings
Before:
Deere (DE)
Macy's (M)
After:
Cisco (CSCO)
Dick's Sporting Goods (DKS)
Thursday, May 16
US Economics (Time Zone: EDT)
08:30 Initial Claims – consensus 352K, prior 323K
08:30 Continuing Claims – consensus 3060K, prior 3005K
08:30 Consumer Price Index YoY – consensus 1.4%, prior 1.5%
08:30 CPI Ex Food & Energy YoY – consensus 1.8%, prior 1.9%
08:30 Housing Starts – consensus 980K, prior 1036K
08:30 Building Permits – consensus 941K, prior 907K
10:00 Philadelphia Fed – consensus 2.8, prior 1.3
11:00 Fed purchasing $1.25b-$1.75b bonds in 23 to 30-year range
Global Economics (Time Zone: GMT)
04:30 JPY Industrial Production
09:00 EUR Eurozone CPI
23:50 JPY Machine Orders
Earnings
Before:
Kohl's (KSS)
After:
JCPenney (JCP)
Nordstrom (JWN)
Applied Materials (AMAT)
Brocade (BRCD)
Aruba Networks (ARUN)
Wal-Mart (WMT)
Autodesk (ADSK)
Friday, May 17
US Economics (Time Zone: EDT)
09:55 University of Michigan Confidence (1st estimate) – consensus 77.5, prior 76.4
10:00 Leading Indicators – consensus 0.2%, prior -0.1%
11:00 Fed buying $4.75b-$5.75b notes in 5 to 6-year sector
Global Economics (Time Zone: GMT)
01:30 CNY China Property Prices
12:30 CAD CPI
Earnings
No major earnings
Twitter: @MichaelSedacca
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