The Week Ahead: A High Dose of Uncertainty

 | Mar 16, 2014 | 8:00 PM EDT  | Comments
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Stock quotes in this article:

kbh

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len

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orcl

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fdx

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adbe

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gis

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ges

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nke

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ua

Stocks were hit late last week by the news of slower-than-expected growth in China, as well as questions and uncertainty over what will come to pass between Russia and the Ukraine. Earlier today, the people of Crimea cast their votes in a contentious referendum on reuniting with Russia. Meanwhile, on Saturday Russia landed troops outside the Crimean peninsula and, for the first time, onto the Ukrainian mainland -- and many are watching for signs as to whether this will escalate that regional conflict.

For investors like you and me, this means uncertainty has ratcheted higher at a time when many companies are seeing their business impacted by a still-severe winter. Consumers, moreover, are about to feel the pinch of that weather as they pay their February electric and gas utility bills. As I mentioned earlier this week on Real Money Pro, I almost fell out of my chair when I opened mine -- but from an investment perspective, that's a good thing for utility companies.

Also sapping consumer dollars has been the upward trend in at-the-pump gas prices. Even though gas per gallon is still lower than year-ago levels, prices on average have climbed more than 6% over the last few weeks, per data from the Energy Information Administration. With prospects for continued economic growth on the way, odds are up for a seasonal climb in gas prices, which tend to peak in the July-to-September time frame. So, as you can imagine, I find it hard to be bullish on restaurant and retail stocks right now.

Turning to the week ahead, manufacturing and housing data will be in the limelight. We'll get regional manufacturing data via the Empire Manufacturing and Philadelphia Federal Reserve indices this week, and we'll also receive overall February industrial-production numbers. The regional reports will quite likely reflect the harsh winter weather. Of course, this is something we have come to expect by now: Among the earnings conference-call transcripts for S&P 500 companies between Jan. 1 and March 12, the term "weather" was mentioned at least once in 195 conference calls! That compares with 108 for the same time period in 2013.

The same weather-related impact is expected to hit the housing data we'll be getting this week. For my money, I'm expecting a weak figure for February housing starts, but I am looking to use any material weakness to pick off a housing play or two ahead of the spring selling season. How strong will that selling season be? It's a good question, and it's why I'll be tuning in to earnings reports from KB Home (KBH) and Lennar (LEN) this week. As I shared with Brittany Umar over at The Street TV, another angle for investors could be building-product companies.

With two weeks to go until the end of the quarter, reports from Oracle (ORCL), FedEx (FDX), and Adobe Systems (ADBE) will shed some light on what we can expect. General Mills (GIS) has already issued a weaker-than-expected outlook, and I suspect that is just the start of what we'll be hearing in that vein. As I recently wrote, cotton prices are likely to see greater declines ahead, and commentary for Guess? (GES) could confirm not only this trend but also illustrate the potential impact to margins.

The other notable company on tap this week is Nike (NKE) -- and, following good results from Under Armour (UA) and other fitness-apparel-and-shoe-related companies, Nike's results should be solid. But will that hold true for the company's China business? We'll find out later this week.

Here's a more detailed look at what's on tap in the week ahead.

__________________

Economic Calendar

Monday, March 17

  • Empire State Manufacturing Index (March)
  • Net Long-term TIC Flows (January)
  • Industrial Production (February)
  • Capacity Utilization (February)
  • National Association of Home Builders (NAHB) Housing Index (March)

____

Tuesday, March 18

  • Housing Starts (February)
  • Building Permits (February)
  • Consumer Price Index (CPI) (February)

____

Wednesday, March 19

  • Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
  • Crude Inventories (Weekly)
  • Federal Open Market Committee (FOMC) Interest Rate Decision

____

Thursday, March 20

  • Initial and Continuing Jobless Claims (Weekly)
  • Existing Home Sales (February)
  • Philadelphia Fed Index (March)
  • Leading Indicators (February)
  • Natural Gas Inventories (Weekly)

____

Friday, March 20

  • No major economic releases

________________

Earnings Calendar

Monday, March 17

  • DTS Inc. (DTSI)
  • Harvest Natural Resources (HNR)
  • LMI Aerospace (LMIA)
  • Nature's Sunshine Products (NATR)

____

Tuesday, March 18

  • Adobe Systems (ADBE)
  • DSW Inc. (DSW)
  • Hertz Global Holdings (HTZ)
  • Oracle Corp. (ORCL)
  • Pacific Sunwear of California (PSUN)

____

Wednesday, March 18

  • Actuant Corp. (ATU)
  • Elbit Systems (ESLT)
  • FedEx Corp. (FDX)
  • Guess?, Inc. (GES)
  • General Mills (GIS)
  • Jabil Circuit (JBL)
  • KB Home (KBH)
  • Vera Bradley (VRA)

____

Thursday, March 19

  • Books-A-Million (BAMM)
  • ConAgra Foods (CAG)
  • Lennar Corp. (LEN)
  • Herman Miller (MLHR)
  • Nike (NKE)
  • Scholastic Corp. (SCHL)
  • Shoe Carnival (SCVL)
  • TIBCO Software (TIBX)

____

Friday, March 20

  • Darden Restaurants (DRI)
  • Tiffany & Co. (TIF)

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