For the week of September 21st
tember 21st - Digestion Day
Potash lowers 2009 profit outlook
The market begins the week digesting the weekend's news tidbits. Last Friday, after the close, Potash (POT), the world's largest producer of potash, guided lower for its 2009 full year profit. The original forecast called for an earnings range of $4 to $5. However, the target is now $3.25 to $3.75. This is critical due to the heavy ownership by mutual funds and hedge funds. Expect the entire "Ag" space to come under pressure early Monday.
Also late Friday, the IMF approved the sale of 403.3 metric tons of gold. That translates into about 13 billion George Washingtons to lend to poorer nations. Maybe China buys the entire block. The G20 meeting begins in Pittsburgh on Thursday. Clearly, the Obama Administration is playing nice and sharing its toys with the rest of the kiddies in the global sandbox. The IMF, which is the world's third largest holder of gold behind the U.S. and Germany, possesses 3,217 tons of gold. This sale translates into selling an eighth of its holdings.
Tuesday-Wednesday September 22 & 23 - FOMC Meeting
Last week, Fed Chairman Ben Bernanke proclaimed that the recession is probably over. My take is that it ended somewhere around the 4th of July. Next up, the Fed meeting this week. Expect no change to the Fed Funds Rate. However, expect the FOMC to, at the very least, acknowledge that the economy has turned the corner and is steadily improving. Basically, the training wheels are off and the economy is pedaling on its own. Federal Reserve support of risky asset prices, as a buyer of last resort, will begin to dramatically slow to an eventual halt.
Thursday September 24 - Existing Home Sales
The housing market has stabilized from its dramatic decline over the past 12 months. Further improvement can be expected and supported on Thursday with Existing Home Sales and Friday with New Home Sales. I like to look at Existing for the better view on improvement. Last month's report showed an increase in July at an annual rate of 5.24 million homes. This month, the August numbers should show an increase to 5.35 million units, according to analysts surveyed by Reuters. Last month showed a 7.2% increase, month-on-month. This month, analysts expect a 2.1% jump, month-on-month. For me, the most important aspect of the Existing Home Sales report is INVENTORY. Remember how high that number was a few months back? 11.5 months of inventory. We are down to 9.4 months of inventory. A seven month supply is the target and we are getting very close.
Friday September 25 - Durable Good Orders
This is a BIGGIE, HUGE. August Durable Good Orders release. Analysts are looking for a 0.5% increase. Last month we jumped 4.9%. The improvement in the new order portion of the ISM will be supported by a good Durable Good Order figure, and will provide insight toward this quarter's GDP.
Lennar, KB Home, and RIMM Debt Sales
Tuesday $43 billion in two years
Wednesday $40 billion in five years
Thursday $29 billion in seven years