The Week Ahead: A Tapped-Out Consumer

 | Feb 18, 2013 | 7:00 PM EST  | Comments
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Last week took the market on a bumpier ride than what we've seen thus far in 2013. In aggregate, the three major U.S. indices were little changed. Although the S&P 500 was up modestly last week, those five trading days marked the seventh straight week of gains for the index, while the Dow Jones Industrial Average experienced its second straight weekly loss. Despite the flip and flop for those two, the year-to-date returns for the three major averages capped up between 5% and 7% last week.

Masked by that year-to-date figure is a growing unease about the stock market. The most recent sentiment figures from the American Association of Individual Investors show that, over the last few weeks, the percentage of individual investors who are bullish has fallen to 42.3% as of Feb. 14, down from 52.3% Jan. 24. As you might suspect, that was offset by increases in the neutral and bearish individual investors. 

I believe the drivers behind that slip in bullishness include the march toward congressional budget sequestration, the rise in gasoline prices, higher taxes and continued pain from food prices. The "official data" from the Energy Information Administration says the average price for gas at the pump has climbed 11% nationally -- to $3.61 per gallon as of Feb. 11 -- though I can tell you firsthand that I paid $3.85 per gallon for regular gasthis morning to fill up my ride. While the Federal Reserve will strip out the impact of food and energy prices when it assess inflation, the reality is the average consumer feels growing wallet pain. 

That pain, in fact, was responsible for Wal-Mart's (WMTweakest start to February for several years -- numbers that followed a disappointing January. The retailer is set to report full quarterly results this week, and the commentary from management and its outlook will bear watching. Wal-Mart is not alone; even McDonald's (MCD) January comparisons were weak in the U.S., up a paltry 0.9%. 

Of late, each year has brought a positive start for the market, only for something to arise toward the end of the first quarter that deals a blow to the second quarter. This year, at least in my view, the culprits are looking like sequestration and a tapped-out U.S. consumer. 

We'll be getting information to confirm or at least test that view over the next few days. During the shortened trading week we'll hear from a number of consumer-facing companies, including Cedar Fair (FUN), Cinemark Holdings (CNK), Abercrombie & Fitch (ANF), Marriott International (MAR) and Host Hotels and Resorts (HST). The results and guidance, as well as the tone of those management teams -- upbeat or cautious -- will be telltale signs as to how the consumer is faring. 

We're also due to hear from a number of restaurant companies this week -- Red Robin Gourmet Burgers (RRGB), Del Frisco's (DFRG), Kona Grill (KONA), Denny's (DENN) and Tim Hortons (THI), to name a few. Gas prices are threatening to sap their top line, and rising food costs are poised to hit their margins, so it will be interesting to see how management teams plan to contend with these challenges. 

It's a big week for housing, as well. We'll receive several economic data points on that recovering market -- housing starts, existing-home sales and the National Association of Home Builders (NAHB) housing-market index. We'll also be hearing from a few homebuilders, like Toll Brothers (TOL), as well as a number of building-product companies, such as Armstrong World (AWI).

Lastly, several high-profile names over the last few weeks are also scheduled to report their results this week. I'm referring to Dell (DELL) -- whose going-private transaction is getting some push-back from investors -- and Herbalife (HLF), which has been dusted up in the verbal brawl between Pershing Square's Bill Packman and billionaire investor Carl Icahn. 

It may be a compressed trading week but, as you can see, it's going to be full of things to watch. Here's a more detailed list of what's on tap.

 

__________________

Economic Calendar

Feb. 19

  • National Association of Home Builders (NAHB) Housing Market Index (February)

____

Feb. 20

  • Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
  • Housing Starts and Building Permits (January)
  • Producer Price Index (January)
  • Federal Open Market Committee Minutes (Jan. 30)

____

Feb. 21

  • Weekly and Continuing Jobless Claims (Weekly)
  • Consumer Price Index (January)
  • Existing Home Sales (January)
  • Philly Fed Index (February)

 

_________________

Corporate Earnings

Feb. 19

  • Analog Devices (ADI)
  • Armstrong World Industries
  • Dell
  • Express Scripts (ESRX)
  • Cedar Fair
  • Genuine Parts (GPC)
  • Group 1 Automotive (GPI)
  • Kona Grill
  • Limelight Networks (LLNW)
  • Red Robin Gourmet Burgers
  • SINA (SINA)
  • Westinghouse Air Brake Tech (WAB)
  • Wolverine World Wide (WWW)

____

Feb. 20

  • Alvarion (ALVR)
  • Bob Evans Farms (BOBE)
  • CF Industries (CF)
  • Cinemark  
  • Crocs (CROX)
  • Denny's
  • Fluor (FLR)
  • Garmin (GRMN)
  • Herbalife
  • Leap Wireless (LEAP)
  • Lumber Liquidators (LL)
  • Marriott
  • Newfield Exploration (NFX)
  • Freightcar America (RAIL)
  • Rubicon Technology (RBCN)
  • Boston Beer (SAM)
  • SodaStream International (SODA)
  • Terex (TEX)
  • Toll Brothers
  • Tesla Motors (TSLA)

____

Feb. 21

  • American Railcar (ARII)
  • Curtis-Wright (CW)
  • Dana (DAN)
  • Del Frisco's Restaurant
  • Sourcefire (FIRE)
  • Hewlett-Packard (HPQ)
  • Hormel Foods (HRL)
  • Host Hotels & Resorts
  • IMAX (IMAX)
  • Internap Network Services (INAP)
  • Intuit (INTU)
  • Jack in the Box (JACK)
  • Nordstrom (JWN)
  • Libbey (LBY)
  • Maiden Holdings (MHLD)
  • Patterson (PDCO)
  • Safeway (SWY)
  • Taser (TASR)
  • Tim Hortons
  • Trinity Industries (TRN)
  • WebMD Health (WBMD)
  • Waste Connections (WCN)
  • Walter Industries (WLT)
  • Wal-Mart

____

Feb. 22

  • Agrium (AGU)
  • Abercrombie & Fitch
  • Bloomin' Brands (BLMN)
  • Flowserve (FLS)
  • Gardner Denver (GDI)
  • Mohawk Industries (MHK)

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