• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / U.S. Equity

The Week Ahead: Will Housing Hurt?

We survived the Fed, but another earnings season is coming.
By CHRIS VERSACE AND LENORE HAWKINS Mar 22, 2015 | 05:00 PM EDT
Stocks quotes in this article: DOC, HCP, O, ARE, PM, ARII, TIF, MKC, CAG, COSI, SONC, LULU, RH, UA, NKE

In some respects, things have started to settle down in the stock market after this week's two-day Fed meeting. The outcome of that meeting was pretty much as we expected -- no action by the Fed this week, a softening of language given the current tone of the domestic economy, and sufficient wording that has pushed back rate-hike timing expectations to October. Our take on this is any eventual decision will remain data-dependent, with the wild card to watch being oil-induced deflation.

Even though the U.S. oil rig count fell again last week, its 15th straight weekly decline, we know in the coming months we will have even more surplus oil that will pressure prices, but exactly how far oil prices may fall remains to be seen. Naturally, we expect a bunch of doom-and-gloom-ers to come out of the woodwork making all sorts of prognostications ... and our hunting scope has already turned up a few of those varmints.

Our plan, and the one we recommend you stick to, is to remain vigilant and let the data talk to us/you in order to chart a sure-footed course in the coming months. So far, that strategy has served us well and there is no reason to think it won't continue to do so.

U.S. Dollar
StockCharts.com
View Chart » View in New Window »
Gold Prices
StockCharts.com
View Chart » View in New Window »

No doubt you've seen the fallout of the Fed's decision -- a quick whipsaw in Wednesday's market that finished the day up big, with the upward move continuing Thursday and into Friday as the U.S. dollar dipped and gold jumped higher -- not exactly a shock given the inverse relationship between the two. The bottom line is the stock market once again ran into the warm embrace of the Fed's low interest rate blanket, with all three major indices back in the green on a year-to-date basis.

As we discussed previously, higher-dividend-paying stocks, including REITS like Physicians Realty Trust (DOC), HCP (HCP), Realty Income (O) and Alexandria Real Estate Equities (ARE) and others, as well as high-paying non-REIT stocks such as Philip Morris International (PM) and American Railcar (ARII), to name a few, moved higher last week. No surprise as the low-to-no interest rate environment will be with us much longer than the Wall Street herd expected -- if only they listened to the data the way we do!

With the Fed news come and gone, the next inflection point for the market will be the quarterly earnings season that will be upon us in the next few weeks. The combination of weaker-than-expected economic data, the severe winter storms and Arctic cold, and Pacific port closure has already led to a reduction in earnings expectations, but the Donald Rumsfeld known unknown will be the degree of impact to be had by the strong dollar. Over the last few weeks, a growing list of companies has cited the dollar as the cause du jour of their ills, which was capped off by Tiffany (TIF) last week.

Current expectations now call for S&P 500 earnings to contract 3% in the March quarter and 2% during the first half of 2015. Tracing the data back, there has been a more than sizable swing in earnings expectations for the S&P 500 group of companies for the current quarter -- from +4% year over year at the start of the year to the current 3% contraction expectation. We suspect there will be more than a few surprises when that actual reporting begins, and this is where we issue a friendly warning to be on guard over the next two weeks for negative earnings pre-announcements.

Turning to the week ahead, we have more February housing data hitting, but following the "shocking news" that February housing starts were weaker than expected, we already suspect February existing-home sales will be rocky relative to expectations. Many will chalk it up to winter weather, and while that will be a factor, we can't forget the wage picture and mortgage originations weakness. Be it new or old, you still need a mortgage to buy your house -- at least most of us do.

Also ahead, there will be ample manufacturing data thanks to the March Flash readings from Markit Economics and the durable-goods orders report. The question to be answered from the Markit indicators is whether the vector and velocity for economic activity in China, the Eurozone and here at home stayed the course in March, or was there a shift in respective vectors or velocities? We also have the February CPI reading coming in, and we expect it will be rather similar to the PPI reading that showed continued price erosion.

Finally, while it won't be a big surprise late in the week, we will see the final revision for 4Q 2014 GDP -- remember, it was already revised down to 2.2% from 2.6%. Candidly, some may get all focused on this new GDP print, but to us it's the drop between the last quarter and the current one that matters more.

In terms of corporate earnings, with less than a handful of trading days left in the quarter, we're really hitting the bottom of the barrel, but there are still several reports investors should keep their eyes on. One of our favorite Dividend Dynamo stocks, spice and marinade company McCormick (MKC), will be reporting, and we'll be right there to see how spicy it is. Keeping with food, ConAgra (CAG) and Cosi (COSI) as well as Sonic (SONC) are also on tap.

Two of the more closely watched names are Lululemon (LULU) and Restoration Hardware (RH). The shifting consumer preference to "athleisure" has been a boon to Under Armour (UA) and Nike (NKE), with both of them and others looking to attack LULU's style. Even Carrie Underwood is the spokeswoman for a new line of yoga-inspired clothes. Even though these companies stand to benefit from falling input costs (cotton and other), we'll be listening to comments on the increasingly intense competitive playing field.

Below is a more detailed look at what's coming in the week ahead. Be sure to check back midweek for our column, in which we will dish on the first half of the trading week and other key matters and thoughts, as well as how to play it all. 

TheStreet's March Madness Open House has begun! Get an all-access pass now to see everything TheStreet has to offer. http://bit.ly/1F46KSr

Economic Calendar: Monday, March 23 - Friday, March 27
23-Mar Existing Home Sales
24-Mar Markit Flash Japan Manufacturing PMI
24-Mar HSBC Flash China Manufacturing PMI
24-Mar Markit Flash France Composite PMI
24-Mar Markit Flash Germany Composite PMI
24-Mar Markit Flash Eurozone Composite PMI
24-Mar Markit Flash US Manufacturing PMI
24-Mar CPI
24-Mar Core CPI
24-Mar FHFA Housing Price Index
24-Mar New Home Sales
25-Mar MBA Mortgage Index
25-Mar Durable Orders
25-Mar Durable Goods ¿ex transportation
25-Mar Crude Inventories
26-Mar Initial Claims
26-Mar Continuing Claims
26-Mar Natural Gas Inventories
27-Mar GDP - Third Estimate
27-Mar GDP Deflator - Third Estimate
27-Mar Michigan Sentiment - Final
Earnings Calendar: Monday, March 23 - Friday, March 27
Monday, March 23
CHRS Charming Shoppe
GPRK Geopark Ltd
LUB Luby's Inc


Tuesday, March 24
CBK Christopher&bnk
DGLY Digital Ally In
GIII G-iii Apparel
HDS Hd Supply Hldgs
MKC Mccormick & Co
SONC Sonic Corp


Wednesday, March 25
APOL Apollo Group
ASND Ascend Comm Inc
DXLG Destination Xl
FIVE Five Below Inc
LNN Lindsay Corp
PAYX Paychex Inc
PSUN Pac Sunwear Cal
RHT Red Hat Inc
SCS Steelcase Inc


Thursday, March 26
ACN Accenture Plc
AEHR Aehr Test Sys
CAG Conagra Foods
COSI Cosi Inc
FRED Freds Inc
GME Gamestop Corp
INPH Interphase
LULU Lululemon Athlt
PVH Pvh Corp
RH Restoration Hdw
SCHL Scholastic Corp
SIG Signet Jewelers
WGO Winnebago


Friday, March 27
BBRY Blackberry Ltd
FINL Finish Line-cla
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Versace and Hawkins had no positions in the stocks mentioned, but The Thematic Growth Portfolio managed by Versace is long CAG, HCP and NKE.

TAGS: Investing | U.S. Equity

More from U.S. Equity

Let's Update 3 Recent Trades on Meta, Gold and Bumble

Ed Ponsi
Aug 12, 2022 7:00 AM EDT

It's clean-up time.

Poorly Positioned Skeptics Fuel a 'Rampage of Buying'

James "Rev Shark" DePorre
Aug 11, 2022 11:11 AM EDT

This is an extremely tough market for new entries, but that is exactly why it keeps running.

As Charts Improve, Market Data Turn Cautionary

Guy Ortmann
Aug 11, 2022 10:16 AM EDT

After assessing the charts and indicators, here's how we see things going forward.

El Toro Returns, A Wednesday Full of Wow, The Technical Setup, Disney Reports

Stephen Guilfoyle
Aug 11, 2022 7:32 AM EDT

All hail the new bull. Same as the old bull? Not a chance.

2 Attractive Setups I'm Watching as CPI Takes Traders By Surprise

James "Rev Shark" DePorre
Aug 10, 2022 11:16 AM EDT

This is a tough market to chase, but charts should continue to develop

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login