The U.S. economy appears to be in moderately healthy shape early into the third quarter and earnings are mostly positive. The past week started out positively on the Portugal bailout of its major bank but stocks quickly fell on escalation concerns in Russia and Ukraine. Russian bans on imports sent stocks lower on Thursday but reversed course sharply to end the week as rumors of a solution surfaced.
The rollercoaster in equities this past week provided some spotty spikes in option volatility but it eventually slid into the close on Friday. The CBOE Volatility Index (VIX) fell over 7% for the week. The ‘Fear Gauge’ is firmly above the $15 level but any further upside move for stocks will quickly put a damper on our euphoria of increased option premium. Hopefully the news-driven markets will continue to provide more opportunities
The week ahead has a variety of key releases after a week of minimal news. The two that stand out are manufacturing and the consumer sector, which has shown moderate renewed strength—especially with improvement in jobless claims. The proof will be in the pudding with retail sales for July which are released Wednesday. Markets may also move on Friday’s consumer sentiment report. Also, though not expected, a high PPI figure could raise worries about early Fed tightening. The bottom line is that the economy has largely recovered from first quarter weakness and not just in the second quarter but also early third quarter. The Fed may need to marginally move ahead its policy rate plans according to many economists.

Major Earnings for the Upcoming Week:

Monday:

A.M. –DF, GOGO, PCLN, SYY

P.M. – AMBC, APP, CZR, NUAN, RAX, VTR

Tuesday:

A.M. – CTIB, TW, VAL

P.M.- CREE, FOSL, FTD, JDSU, KING, SYNC

Wednesday:

A.M. – CSIQ, DE, KATE, M, PF, SNE

P.M. – BGG, CSCO, NTAP, RMAX, SLW

Thursday:

A.M. – MANU, PRGO, PDO, RRGB, WMT

P.M. – A, ADSK, AMAT, CEP, DDS, JCP, JWN

Friday:

A.M. – EL

Economic Releases (8/11 – 8/15):

Monday:

N/A

Tuesday:

6:30 am CT – NFIB Small Business Optimism Index

6:45 am CT – GS Store Sales

8:45 am CT– JOLTS

12:00 pm CT – 3-Year Note Auction Results

1:00 pm CT – Treasury Budget

Wednesday:

6:00 am CT – MBA Purchase Applications

7:30 am CT – Retail Sales

8:05 am CT – Fed’s Dudley Speaks

8:20 am CT – Fed’s Rosengren Speaks

9:00 am CT – Business Inventories

9:30 am CT – Oil Inventories

12:00 pm CT – 10-Year Note Auction Results

Thursday:

7:30 am CT– Weekly Jobless Claims

7:30 am CT– Import & Export Prices

9:30 am CT – Natural Gas Inventories

12:00 pm CT – 30-Year Bond Auction Results

Friday:

7:30 am CT – PPI

7:30 am CT – Empire State Mfg. Survey

8:00 am CT – Treasury Intl. Capital

8:15 am CT– Industrial Production

8:55 am CT– Consumer Sentiment

9:45 am CT – Fed’s Kocherlakota Speaks

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