While this week will bring a noticeable decline in the number of earnings reports, we will still get important results from several retailers as well as several key economic numbers.
Investors and economists will use these data points to triangulate the speed of the current quarter's GDP relative to the 2.6% print for the December quarter. The consensus GDP forecast for the current quarter is for a slower economy at +2.0%, but we have started to see some economists trim their forecasts as more economic data rolls in. Because that data has fallen shy of expectations, it has led the Citibank Economic Surprise Index (CESI) to once again move into negative territory.
On the economic docket next week, we have December Construction Spending, ISM's February Non-Manufacturing Index reading, the latest consumer credit figures and the February reports on job creation and unemployment from ADP and the Bureau of Labor Statistics.
With Home Depot HD reporting relatively mild December weather, any pronounced shortfall in December Construction Spending will likely serve to confirm the economy is on a slower path. Much like with ISM's February Manufacturing Index we'll be looking into the Non-Manufacturing data to determine demand and inflation dynamics as well as the tone of the services economy.
On the jobs front, while we will be watching the numbers created, including any aberration owing to the recent federal government shutdown, it will be the wage and hours worked data that we'll be focusing on. Wage data will show signs of any inflationary pressures, while hours worked will indicate how much labor slack there is in the economy.
The consumer is in a tighter spot financially speaking, which was reflected in recent retail sales and personal spending data. Recognizing the role consumer spending plays in the overall speed of the U.S. economy, we will be scrutinizing the upcoming consumer credit data rather closely.
In addition to the hard data, we'll also get the Fed's latest Beige Book, which should provide a feel for how the regional economies are faring thus far in 2019.
Speaking of central bankers, next Wednesday will bring the results of the next European Central Bank meeting. Given the data depicted in the February IHS Markit reports, the probability is high the ECB will join the Fed in a more dovish tone.
While the velocity of earnings reports does indeed drop dramatically this week, there will still be several reports worth digging into, including one for Trifecta Stocks holding Ross Stores (ROST) . Other retailers, including Kohl's (KSS) , Target (TGT) , BJ's Wholesale (BJ) and Costco Wholesale (COST) will also issue their latest quarterly results.
Those reports combined with the ones last week, including solid results from TJX Companies (TJX) should offer a more complete look at consumer spending, and where that spending is occurring.
Outside of apparel and home, reports from United Natural Foods (UNFI) and National Beverage (FIZZ) should corroborate the accelerating shift toward food and beverages that are "better for us." In that vein, we'll be intrigued to see what International Flavors & Fragrances (IFF) has to say about the demand for its line of organic and natural solutions.
The same can be said with Kroger (KR) as well as its efforts to fend off Amazon (AMZN) and Walmart (WMT) . Tucked inside of Kroger's comments, we will be curious to see what the company says about digital grocery shopping and delivery.
On Kroger's last earnings conference call, Chairman and CEO Rodney McMullen shared the following, "We are aggressively investing to build digital platforms because they give our customers the ability to have anything, anytime, anywhere from Kroger, and because they're a catalyst to grow our business and improve margins in the future."
Now we will see what progress has been achieved over the last 90 or so days and what Kroger has to say about the late-Friday report that Amazon will launch its own chain of supermarkets.
This commentary is an excerpt from the Trifecta Stocks Roundup, a weekly feature sent to subscribers of Trifecta Stocks. 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.
