The Daily Dose: Exciting but Scary

 | Mar 31, 2014 | 10:00 AM EDT  | Comments
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Stock quotes in this article:

wmt

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cat

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joy

In compiling my list of events for this week, which consists of economic and company happenings, the feeling that the walls were closing in reigned supreme.

Every few months, usually at the beginning of the new four-week period, the market gets dealt a tsunami of catalytic events to digest. The sheer volume of facts, figures, and subsequent real-time opinions is enough to fry the brains of seasoned veterans. I know what it does to the faux pro given the frantic sounding emails received from retail clients.

Make no mistake: this week will set the tone for trading at least until the third week of April when earnings releases pick up in earnest. To see the market sell-off leading into this information convergence that theoretically should demonstrate improvement for the U.S. economy from its winter chill is mildly disturbing.

The contrary view is that institutions dumped momentum names such as Tesla, Facebook and Twitter -- while refusing to buy the financials following positive news flow (dividend/buyback plans) to freak out the suckers -- only to use this week to buy on weakness.

Here are a couple quick takes on where my head is at entering this crazy week:

Chicago PMI-March/Dallas Fed-March/ISM Services-March/ISM Manufacturing: The core of the recent durable goods orders report was soft, so all of these indicators at best hint at a healthy rebound month on month as to confirm the 200,000 March non-farm payrolls estimate we are staring at beforehand. At this point, we need to see strong beats on government data (not consumer confidence surveys) to feed the notion the economy is accelerating quick as to overcome higher interest rates.

China PMI: Emerging market stocks bounced back last week, but likely disappointment on a fresh round of China data could bring renewed selling pressure. Watching Caterpillar (CAT) and Joy Global (JOY), which have been relatively outperforming.

 

 Source: Yahoo Finance

Janet Yellen: The Federal Reserve Chairwoman will give a late evening speech today. I am curious on how she recovers from her well-documented gaffe two weeks ago (and the market's reaction, it has to have confidence in what she says due to efforts to lead policy with forward guidance), especially as widely --watched Fed Governor Bullard (non-voting member this year) speaks on Wednesday.

March Non-Farm Payrolls: I believe the market wants to see a 200,000+ number roll off the assembly line. Anything less than 150,000 would leave the market concerned on the one-two punch of a steadfast Fed (tapering) and a less-than- expected spring thaw in economic activity.

Red Flags Continue at Wal-Mart

Barron's called attention to a significant amount of recent insider selling by Wal-Mart (WMT) U.S. President Bill Simon. Considering this activity has come intra quarter, after a disappointing holiday season, and amidst a new CEO, it's a major red flag on the performance of the division. Two thoughts to consolidate this development:

  • As I continue to stress, Wal-Mart U.S. is having a sour quarter that may be on the verge of falling shy of lowered same-store sales expectations (made equally worse as year earlier comparisons are easy).
  • There could be rumors circulating internally that new leadership is being pondered at Wal-Mart U.S. A new leader would likely try to reset the business, which would cause some short-term financial pain.

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