Last week we closed the books on 2013, opened them for 2014 and reset the clock for tracking our investment returns. While 2013 was a fantastic year -- the best in more than a decade -- the current one began with a whimper when it came to market performance, as all of the major stock market indices put declines.
I am tempted to say this transpired "on a year-to-date basis," but the reality is we've seen only two trading days in all of 2014, and we are coming off three phenomenal months in the stock market. Over that period, all three major indices rose nearly 10%. As a result, I do expect some volatility as we head into corporate earnings and come off some weaker data points. These include China's recent purchasing managers index (PMI) figures, last week's dip in the Baltic Dry Index and somewhat weaker-than-expected December auto sales.
Once again we will be facing the same questions we do each year around this time: Will economic growth be as strong as what some are forecasting? Will earnings growth measure up to Wall Street expectations?
Answering those questions, and answering them properly, means deciphering more metrics than what the three above-mentioned data points have to offer. Keep in mind that the weekend's snowstorm and deep cold is already spurring some analysts to steeply cut retail-sales estimates for the first quarter of 2014. Again, I say: We're only a handful of days into the quarter, so let's not get all Debbie Downer just yet. After all, before too long we will be drinking from the fire hose when it comes to economic data, corporate commentary and forecasts.
Monday morning, for instance, we'll get a snoot-full of data on service economies around the globe, courtesy of HSBC and Markit Economics. Even though this week will bring the start of corporate earnings for the December quarter -- Alcoa (AA), as usual, is set to kick off the formal start of earnings season Thursday -- many will be eyeing the December employment report that's due to hit the tape Friday. Now that we know the Federal Reserve has opted to taper its stimulative efforts by $10 billion a month, leaving $75 billion per month in place, the herd will be watching domestic economic data in an effort to determine when the central bank will further roll back its bond-buying.
What? You thought you heard the last of this? Sorry to say, it is only just beginning.
Back in earnings, Alcoa should indeed offer some insight into the automotive market and others for 2014. But, that company aside, a number of other earnings and guidance numbers this week will be worth your attention. For one, Greenbrier Cos. (GBX) will be the first railcar manufacturer to report its results for the quarter, and thus should provide insight into railcar demand and pricing. The commentary, be it good or bad, stands to elevate or weigh on shares of Trinity Industries (TRN), American Railcar (ARII) and Freightcar America (RAIL).
Away from that, Sonic's (SONC) earnings could serve to confirm trends in the fast-food industry, and in particular how the sector will be dealing with higher beef prices in 2014. In particular, the report should give us a peek into what we might hear from McDonald's (MCD), Burger King (BKC) and Wendy's (WEN).
Collectively, The Container Store (TSC), Bed Bath & Beyond (BBBY) and Family Dollar (FDO) will give us a sense of the consumer -- which areas where folks were spending money and which were shunned. Also of interest will be these management teams' outlooks for 2014. All in all, these three reports will offer some indication of what we can expect from Wal-Mart (WMT), Target (TGT) and others in the coming weeks.
Here's a more granular look at what's on tap in the week ahead:
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Economic Calendar
Monday, Jan. 6
- HSBC China Service Purchasing Managers Index (PMI)
- Markit Eurozone Composite PMI
- Markit U.S. Services PMI
- JPMorgan Global Composite PMI
- Factory Orders (November)
- Institute for Supply Management (ISM) Services (December)
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Tuesday, Jan. 7
- HSBC Emerging Markets Index
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Wednesday, Jan. 8
- Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
- ADP Employment Change (December)
- Federal Open Market Committee (FOMC) Minutes (Dec. 18)
- Consumer Credit (November)
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Thursday, Jan. 9
- Challenger Job Cuts Report (December)
- Initial and Continuing Jobless Claims (Weekly)
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Friday, Jan. 10
- Nonfarm Payrolls and Unemployment Rate (December)
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Earnings Calendar
Monday, Jan. 6
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Tuesday, Jan. 7
- Apollo Group (APOL)
- FranklinCovey (FC)
- IHS Inc. (IHS)
- Micron Technology (MU)
- The Container Store (TCS)
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Wednesday, Jan. 8
- Bed Bath & Beyond (BBBY)
- Family Dollar Store (FDO)
- Greenbrier Companies (GBX)
- Global Payments (GPM)
- Monsanto Co. (MON)
- Ruby Tuesday (RUBY)
- Constellation Brands (STZ)
- WD-40 Company (WDFC)
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Thursday, Jan. 9
- Alcoa Inc. (AA)
- Acuity Brands (AYI)
- Barracuda Networks (CUDA)
- Helen of Troy (HELE)
- Supervalu (SVU)
- Texas Industries (TXI)
- Audiovox Corp. (VOXX)
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Friday, Jan. 10
