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The Week Of May 24

05/24/2010

Here it is, the final week of May.  This time next weekend America pulls back the curtain on another summer season. I expect that most Americans feel moderately better this year than they did during the final week of May 2009. The recession has ended, at least in the U.S., though I am not so sure about Japan and Europe. So those American consumers who are about to embrace the fun of summer bear a global responsibility somewhat similar to what the government of China bore during the Winter of Our Discontent in 2009. The global consumer with the biggest balance, the American consumer, will have to be the engine that powers global consumer spending.

Recent numbers suggest the resiliency of the American consumer is one of the bigger surprises of 2010. Empowered with historically low private sector borrowing costs, consumers have quickly transitioned from frugality to extravagance once again. This week we will be provided with several economic data points and consumer oriented earnings releases that will provide insight into whether this year's consumer spending positive trend will remain.

So, keep eyes focused on the following:

On the Earnings front, critical results from Tiffany, Costco and Toll Brothers.

Economic Data Points 
Monday May 24th - Existing Home Sales - expectations are for a month on month increase of 5.6%. 

Tuesday May 25th - S&P Case Shiller Home Price Index - this is an area of the economy that I do not expect to improve significantly for years to come. As the chart below depicts, so far I am correct, though I wish I wasn't.

S&P Case Shiller Composite 20 Home Price Index Not Seasonally Adjusted


Source: Bloomberg

Wednesday May 26th - Durable Goods Orders - expectations are for a 1.5% increase. Last month, this figured disappointed at a minus 1.2%.

Thursday May 27th - Initial Jobless Claims - Keep Friday June 5 in mind - the monthly Unemployment Report is once again upon us. Initial Jobless Claims may provide early insight toward that figure. Last week's Initial Jobless Claims was disappointing @ 471,000. Analysts are looking for a figure around 455,000 this week.
 

INITIAL JOBLESS CLAIMS

Source: Bloomberg 

Thursday May 27th - Personal Consumption - last month's figure was 3.6%. This month we need a number above that - analysts think we will get it - very slightly above at 3.7%.

Friday May 28th - University of Michigan - last month 73.3 was the number
. This month analysts are looking for 73.4.

Friday May 28th - Personal Income and Spending - Last month's 0.6% increase was the largest jump in consumer spending in five months. Analysts do not expect as robust a figure this month; expectations are placed at an increase of 0.3%.

UNIVERSITY OF MICHIGAN CONSUMER CONFIDENCE

Source: Bloomberg

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