Last week brought the real start to June quarter earnings with some high-fliers including Netflix (NFLX) and Google (GOOGL), a breakthrough in the Greek soap opera of the last several weeks, the latest jawboning from Fed Chair Janet Yellen and, of course, some mixed economic data. Even though some of the news drivers of late will cool down, the reality is the news flow will remain fast and furious in the week ahead.
We've got some economic data on tap, but compared to the last few weeks it will be rather tame and focused on the back end of the week. Of the data we're poised to receive, the three reports that stand out to us are the May FHFA housing price index, June new home sales and July PMI Flash Manufacturing Index. One of our concerns has been and remains the affordability of housing, which was reinforced with Friday's revelation from the Bureau of Labor Statistics that real average hourly earnings fell 0.4% in June. Pretty hard to see an explosive housing market if the vast majority of people can't afford to buy.
The reason for including the July PMI Flash Manufacturing Index is that over the last several months we've seen at best soft industrial manufacturing data: industrial production, capacity utilization, new orders. Given the mixed second-quarter order book at industrial conglomerates General Electric (GE) and Honeywell (HON), we're looking to see if things reversed course in July. We're not holding our breath given the likelihood that geographies outside the U.S. continue to pick up new export orders, thanks in part to the still-strong U.S. dollar.
Piecing together our comments on housing affordability, the domestic industrial economy and the dollar, we fall more into the camp of UBS' (UBS) Art Cashin over the likelihood that we won't see a Fed rate increase this year. We realize that flies in the face of Yellen's comments this week, but we respectfully disagree with the Fed chief over the "improvement in the labor market" and would point to labor force participation and payroll to population found in the June employment report, let alone the decline in real wages reported on Friday, as examples that she's off her rocker on this. Then again, when hasn't the Fed been overly bullish? Yeah, like Uncle Art Cashin, we'll stick to reading the data.
Barring anything unforeseen, the vast majority of the news flow will be earnings related. Easy to see, with a more than fourfold increase in the number of companies reporting quarterly results. That's more than 650 companies, which means comparing a lot of results vs. expectations, dialing into and listening to a host of conference calls and putting all the pieces together as best you can. Versace offered his interpretation on what GE's June quarter revenue and order flow meant for companies like Xylem (XYL), Freightcar America (RAIL) and others. As each company reports -- be it a competitor, customer or supplier -- piecing the data together and connecting the dots can help you successfully navigate earnings season and avoid any major potholes on the investing highway.
It would be simply irresponsible for us to try to comment on the slate of 650 companies reporting this week. Instead, here's a short list of those we will be paying attention to:
-- Monday: We've heard a lot about rising egg prices, and Cal-Maine (CALM) should help set the situation straight. Is IBM (IBM) at an inflection point with its transition? How are order patterns and price points at homebuilder NVR (NVR)?
-- Tuesday: Apple's (AAPL) results will take center stage after the market close, followed by Chipotle (CMG) -- where are Hawkins' carnitas already? -- GoPro (GPRO) and Microsoft (MSFT). Investors in truck-related stocks will want to listen to Rush Enterprises' (RUSHA) results and outlook.
-- Wednesday: American Express (AXP), Boeing (BA), Cheesecake Factory (CAKE), for the slim at heart, and Qualcomm (QCOM) will be standouts.
-- Thursday: Amazon.com (AMZN), Caterpillar (CAT), Comcast (CMCSA), Dow Chemical (DOW), Hershey (HSY), McDonald's (MCD) and one of our favorite sources of caffeine, Starbucks (SBUX), as well as our favorite for working up a sweat, Under Armour (UA).
-- Friday: A number of auto-related companies including Johnson Controls (JCI), Moog (MOG.A) and Tenneco (TEN) should give some insight into build levels in the back half of 2015. We also have VF Corp. (VFC), a good barometer of consumer spending and one to watch following the weak June retail sales report.
Below is a more detailed look at the economic data in the week ahead. For a fuller list of corporate earnings that will be reported over the next five days, click here to view The Street's weekly earnings calendar. Enjoy the weekend and be sure to catch Lenore Hawkins Monday on America's Morning News and check back for our midweek 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.
Economic Calendar: July 20-24
22-Jul MBA Mortgage Index
22-Jul FHFA Housing Price Index
22-Jul Existing Home Sales
22-Jul Crude Inventories
23-Jul Initial Claims
23-Jul Continuing Claims
23-Jul Leading Indicators
23-Jul Natural Gas Inventories
23-Jul Kansas City Fed Manufacturing Index
24-Jul PMI Manufacturing Index Flash
24-Jul New Home Sales