The Week Ahead: A Banner Year Wraps Up

 | Dec 29, 2013 | 8:00 PM EST  | Comments
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Stock quotes in this article:

iff

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el

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coty

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ipar

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perf

With last week's Christmas holiday, it was a time of vacation, family and loved ones for many. Yet, amid all that, equities continued their march toward the end of 2013. In fact, the U.S. stock market is now on track to deliver the best year of returns since 1995. With two trading days left to go in 2013, the Dow Jones Industrial Average is up more than 25% year to date, and the S&P 500 and the Nasdaq Composite have gained more than 29% and 37%, respectively.

So clearly it's been a strong year for the stock market. But, if we look at figures for many hedge funds, we see the average fund significantly lagged the major indices in 2013 through November, per the HFRI monthly indices. Again, that's the average, and I am willing to bet there were more than a few that significantly outperformed the indices and more than few than fell behind -- way behind. It's likely this latter scenario was particularly true for funds with a short bias.

As I warned last week, quiet times like these -- when trading desks are thin and volume is light -- are when we have to be on guard for a stinker of news from a company trying to slip it past us while we're ostensibly not looking. Keep your eyes peeled Monday and Tuesday, especially, when we'll get only a few economic data points – pending-home-sales data for November and the Chicago purchasing managers index.

The U.S. stock markets are closed for Wednesday -- New Year's Day -- but on Thursday we're due to get the monthly onslaught of PMI data from Markit Economics and HSBC. For these indicators, while the headline figures will be of interest, I'll be far more closely watching the underlying orders, backlog, employment and pricing data. We'll then close out the week with December auto-and-truck sales, which have been strong in 2013 owing to favorable financing and the need to replace an aging fleet on the U.S. roads. We're also seeing an uptick outside of the U.S. on the auto-and-truck front, which bodes well for suppliers and original equipment manufacturers alike.

With regard to expected corporate earnings and news flow, it's shaping up to be another quiet week. Many companies are closed for the holiday week, but some will nonetheless be issuing their quarterly results this week. Of that handful, the two that I'll be watching will be L'Oreal, given the insight the results will offer into International Flavors & Fragrances (IFF), Estee Lauder (EL), and Coty (COTY). We'll get further insight on these companies, as well as on Inter Parfums (IPAR), when Perfumania (PERF) issues it quarterly earnings this week.

While I haven't seen any companies try to squeak by one of those stinker news items as of yet, with the New Year's holiday falling midweek, we have another few days during which we'll need to be extra vigilant -- or simply let the pros at Real Money do it for you.

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Economic Calendar

Monday, Dec. 30

  • Pending Home Sales (November)

____

Tuesday, Dec. 31

  • Case-Shiller 20 City Index (October)
  • Chicago Purchasing Managers Index (PMI)

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Wednesday, Jan. 1

  • [U.S. stocks market closed]

____

Thursday, Jan. 2

  • HSBC China Manufacturing PMI
  • Markit Eurozone Manufacturing PMI
  • Markit U.S. Manufacturing PMI
  • JPMorgan Global Manufacturing PMI
  • Initial and Continuing Jobless Claims (Weekly)
  • Construction Spending (November)
  • Institute for Supply Management (ISM) Index (December)
  • Natural Gas and Crude Inventories (Weekly)

____

Friday, Jan. 3

  • Auto and Truck Sales (December)

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Earnings Calendar

Monday, Dec. 30

  • Avid Technology (AVID)
  • Cal-Maine Foods (CALM)
  • L'Oreal

____

Tuesday, Dec. 31

  • Fiat
  • InterContinental Hotels (IHG)
  • Perfumania (PERF)

____

Wednesday, Jan. 1

  • [U.S. stocks market closed]

____

Thursday, Jan. 2

  • Progress Software (PRGS)
  • Resources Connection (RECN)

____

Friday, Jan. 3

  • Landec (LNDC)
  • Lindsay Manufacturing (LNN)
  • Piedmont Natural Gas (PNY)

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