The week ahead may be a shortened one from a trading perspective thanks to the Memorial Day holiday, but it is jam packed over the four days from an economic data perspective. As for earnings, even though the second-quarter season is a little long in the tooth, there are still roughly 130 companies expected to report.
Here's what we'll be watching.
On the economic front, we've got the usual end-of-the-month, start-of-the-month data on tap. This includes the April Personal Income & Spending Report as well as the April PCE Prices Index, a must-watch item for the Federal Reserve when it comes to inflation.
On the Personal Income & Spending side, we've been concerned about escalating debt levels that are eating away at consumer disposable income and in this report we'll be looking to see if the downward trend in savings has continued. We'll also be examining if spending has continued to run above total income and disposable income. If so, it likely means more debt on consumer balance sheets -- not a good thing as it looks like the Fed is poised to boost rates in the coming months.
Rounding out the April data next week will be the Construction Spending Report.
In terms of May data, it begins with the ADP Employment Change Report and ends with the May Employment Report. While we'll be focusing on job creation in both, we'll also be checking out wages, particularly year-over-year wage growth as it will tie back to our comments, above, about debt and consumer spending. Sprinkled in between we'll get the May Auto & Truck sales data as well as the Chicago PMI reading for the month of May.
Making next week a little extra special on the data front, is the next iteration of the Fed's Beige Book, the anecdotal economic commentary roundup from all the Fed banks. We will also get the second estimate for the March quarter's GDP, which was initially computed to be 2.3%. Candidly, that's a rear-window view, and we're more inclined to focus on the forthcoming data in June and early July as that will help solidify the estimate on GDP in the current quarter.
Turning to notable earnings to watch next week, among those 130 companies we'll be focusing on the following:
-- Box (BOX) for insights on its cloud business and what they may mean for Amazon Web Services;
-- Costco Wholesale (COST) .
This commentary is an excerpt from the Trifecta Stocks Weekly Roundup sent to subscribers on Friday, May 25. Click here to learn more about this portfolio, trading ideas and market commentary product.
-- Bob Lang and Chris Versace are co-portfolio managers of Trifecta Stocks.