The Daily Dose: Looming Events

 | Apr 28, 2014 | 9:30 AM EDT
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Unfortunately, there will be no relief in the earnings or economic calendars this week. So I hope you have snagged a little rest over the weekend and are prepared to fight to protect those recent gains. Here are a couple things I am working through:

April Employment Report

There is no reason the headline figure should be under 200,000 -- don't be misled by the recent dour read on manufacturing that upset the market. Numerous companies have said on first-quarter earnings calls that demand has snapped back in April, while March was noticeably better than February. In geeky finance land, this usually is referred to as "accelerating business momentum."

I think the market wants, and needs, a strong employment report for April. Receiving one is unlikely to cause the Federal Reserve to move up its timetable for the end of quantitative easing, as hinted by damage-control initiatives from Fed chief Yellen and company following Yellen's widely publicized gaffe last month. A strengthening job market into the summer, and along with it rising wages, would go a long way toward countering the building concerns on demand amid rising inflationary pressures in key sectors of the economy (see: food).

Fed Statement

The employment report should really be issued on Wednesday, and the Fed meeting conclusion announced on Friday. Doesn't it seem backwards? Nevertheless, part of me wants to believe a low surprise factor into the Fed event will lead to a surprise. Actually, though, this should be a boring statement that voices slightly greater confidence in the post-weather impacted economy.

I will be keenly watching housing-related comments because, as outlined here last week -- and as confirmed last week, when bond guru Jeffrey Gundlach recommended shorting a housing ETF -- the housing market is struggling. Not many even realize it -- not the stock market, anyway -- although sector names remain under pressure.

On this topic, earnings from Lumber Liquidators (LL) are of particular interest after a disappointing roofing quarter and set of comments from Owens Corning (OC) and stepped-up marketing in the U.S. by Whirlpool (WHR) to clear inventory.


I'll really be surprised if Coach (COH) delivers a quarter that is favorably viewed by Wall Street as to the six-month outlook for the company. There's been too much discounting on the new arrivals that are, according to management, supposed to be aiding in the company's return to relevance among women.


Earnings from LinkedIn (LNKD) will be a nice tell on whether momentum stocks could fall into favor once again. At the moment, every magazine I read is hyping the virtue of owning slower growth, value-oriented names (which comes after this rotation had already been well under way).


Be on the lookout for an upgrade on Starbucks (SBUX), as the earnings call had an array of fascinating elements. Of importance to me was the sales lift from food, which is improving on a sequential basis.

Rapid Fire

Much could be said about Burger King's (BKW) focus on menu simplicity; its U.S. sales continue to outpace those of McDonald's (MCD). Watch this to learn the secrets behind Burger King's resurgence.

Apple (AAPL) plans to triple the number of retail stores in China over the next two years, according to CEO Tim Cook. At 10 total stores currently, that is a meaningful increase in the China retail-store operations. The reason for the boost is obvious: Apple wants to better control its own global destiny in wearable devices and likely in mobile payment.  

Former Burberry (BRBY) CEO Angela Ahrendts starts this week at Apple, and she is probably well aware of the company's ambitious store-count goal. That may be another reason she took the job. If she successfully triples the store base with elaborate exterior designs in three years, that may well solidify her place on the Mount Rushmore of retail execs alongside Wal-Mart (WMT) founder Sam Walton and Mickey Drexler, former Gap (GPS) CEO and current Chief Exec of J. Crew. Ahrendts clearly has her plate full right from the start. (Watch this to see what I expect from her.)



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