English: The New York Stock Exchange on Wall Street, New York City. Nederlands: De New York Stock Exchange op Wall Street, New York City. (Photo credit: Wikipedia)
The schedule for the week of October 7th includes:
- Monday: Consumer Credit, 3-Month Bill Auction, and 6-Month Bill Auction
- Tuesday: NFIB Small Business Optimism Index, International Trade, JOLTS, 3-Yr Note Auction, and Charles Plosser & Sandra Pianalto speak
- Wednesday: MBA Purchase Applications, Wholesale Trade, FOMC Minutes Charles, and 10-Yr Note Auction
- Thursday: Chain Store Sales, Jobless Claims, Import and Export Prices, 30-Yr Bond Auction, Treasury Budget, Fed Balance Sheet, and James Bullard speaks
- Friday: Producer Price Index, Retail Sales, Consumer Sentiment, Business Inventories, and consumer Sentiment
I spoke with Jonathan Corpina, Senior Managing Partner of Meridian Equity Partners and frequent CNBC commentator, on what he feels will be impactful to the market next week. Corpina will be watching a number of data points, including the overall market, 3rd quarter earnings, FOMC minutes, weekly jobless claims, retail sales, and consumer sentiment.
With the Federal Reserve Bank (the “Fed”), the budget battle, the debt ceiling vote, the government shutdown, and the huge level of uncertainty, Corpina is expecting the markets to go lower. He believes there could be a significant shakeout from the uncertainty facing the markets. At this point, the Fed has no reason to taper. Chairman Bernanke will hand the baton off to his successor, which is likely to be Vice Chairwoman Janet Yellen. With her dovish stance, Corpina is not anticipating any scale back of asset purchases until the 2nd quarter of 2014. The economic data that will come out from now to the end of the year will not support any tapering. The way the market has performed thus far, companies are expected to become more conservative with their strategies, risk budgets, projections, market capitalization and stock price. Thus, Corpina is not expecting a strong finish heading into the end of the year, but the equity markets are expected to hold on to gains.
3rd Quarter Earnings Season
Based on 2nd quarter earnings season, we had lots of hits and misses, beating on earnings per share (EPS) and losing on the revenue side. Corpina expects the 3rd quarter will continue to be filled with hits and misses. “We would need a really bad earnings season to impact this market,” he adds. Companies have gotten better at managing investors’ expectations by tempering their forecast, especially with companies with exposure in Europe and China.
FOMC Minutes & Weekly Jobless Claims
This week investors will get the minutes from the Fed’s last FOMC meeting. Fed watchers will be closely looking for hints as to when the agency plans to reduce its stimulus program. Although, Corpina said we are not going to hear anything new from the Fed. We will hear the same rhetoric, two sides of tapering. Corpina believes it is too soon for the data to turnaround and influence the central bank to scale back its asset purchase program. He is concerned that the employment numbers will not be accurately reflective of the situation in the country because of the government shutdown. The trend has been showing signs of improvements.
Retail Sales and Consumer Sentiment
Corpina believes these numbers go hand in hand and have been getting better through the recovery. However, this week’s numbers will also not be accurately reflective due to the government shutdown. From a retail sales point of view, the back to school retail sales numbers will be in this week’s data. Investors will be looking for higher sales, particularly heading into the Christmas holiday shopping season.
Final Word
Corpina said he is excited to see the pipeline of IPO’s hitting the capital market lately and he is hopeful some of these big name companies will debut on the New York Stock Exchange, the best auction market in the world.
