MorningWord 8/9/13: Summer trading is here. On a week that was relatively devoid of any meaningful news, and with the bulk of Q2 earnings in the rear-view mirror, traders may start to focus on macro issues again as the next real identifiable market catalyst will be the FOMC’s Sept meeting starting on the 17th. Next week we may get a little tit for tat on the Fed Speak front as Atlanta Fed Pres Dennis Lockart is speaking on Aug 13th at 12:45pm and then St. Louis Fed Pres Bullard speaks the following day at 1:20pm. Lockhart has recently stated that the Fed could start tapering bond purchases as soon as September, while Bullard has suggested that the Fed will need to see more positive data before a taper in the second half of 2013. I bring these 2 events up not that I suspect either to be market moving, unless one or both do an about-face on their prior stances.
On the single stock front, YUM is expected to report July sales on Monday where China will be of specific focus as they get about half of their sales from the country, a region that has been plagued by mishaps on top of the backdrop of a slowing economy. In early July, investors were optimistic when YUM reported June sales in China were only down 19% compared to the 21% expected and the stock, while under-performing the broad market is now within 1% of its 52 week highs.
CSCO reports their fiscal Q4 results on Wednesday Aug 14th after the close and this report, and the commentary from CEO John Chambers as to the health of demand for technology products the world over is likely to have the broadest implications to the markets next week. Despite the healthy moves of AAPL and FB since their quarterly reports last month, most large cap tech stocks did not make a new high with the SPX last week, and many like IBM, INTC, MSFT, GOOG &AMZN have actually declined. The options market is implying a one day move for CSCO of ~6.5% vs the 4 qtr avg move of ~7%. I would add that CSCO was upgraded from a SELL to a HOLD this morning as the analyst suggests the the improving trends visible in the results of peers does not support a SELL rating.
WMT reports their Q2 results on Thursday morning prior to the open and while the stock is not generally a big mover, their guidance could have significant importance after the string of retail disappointments and specifically COST’s weaker than expected July sales.
SO there you have it, that’s what we will be focused on next week.