Friday, July 9, 2010

Catalysts to Watch; Events to watch for the week of Mon Jul 12 $SPX

Catalysts to Watch

· Events to watch for the week of Mon Jul 12 – the big focus will be the kick-off to Q1 earnings season.  As usual, tech and banks dominate the early part of the earnings calendar (INTC Tues and GOOG Thurs while in bank land JPM is Thurs morning while BAC/C both hit on Fri) although AA is technically the first to report (they come Mon night).  Away from earnings, Congress comes back into session after taking a week off for Jul 4 w/two important items on the agenda:

  • 1) fin reg reform;
  • 2) unemployment benefit extension.  It seems like the votes exist to pass both these measures, although the timing of a Byrd replacement could complicate things (see below for more).
  • The semi equipment industry will be in focus w/the SEMICON West conf taking place and a couple earnings releases (NVLS and ASML).  On the int’l front, Greece is due to come to market next week w/its first debt issues since being bailed out by the EU while Japan has an important election on Jul 11.

· Q2 earnings season kicks off – preview of week 1 – as usual, the first part of earnings season is usually dominated by tech and banks, w/a few industrials thrown in.  For this season in particular, investors are grappling w/a lot more uncertainty than normal given the relatively light preannouncement season (Samsung and STT aside) and all the mixed economic data.  One of the themes from the May-end mini-earnings season (which was reported in June) was that companies are starting to ramp up their operating expense levels to take advantage of improving business conditions (something which resulted in op margin guidance being below St ests in certain cases).  Investors will be especially watching to see how companies guide for Q3 and ’10 (whether they maintain the relatively bullish tone from the Q1 calls or take advantage of the all the negativity to lower the bar).  For tech, NVLS starts things off Mon night, followed by INFY (Tues morning), INTC (Tues night), ASML (Wed morning), and GOOG/AMD (both Thurs night).  Financials start Thurs w/JPM (in the morning) and continue Fri (BoA and C both will be Fri morning).  For the banks, investors will be especially watching to see if credit continues to improve, whether banks continue to release reserves, and how IB revs fared (a lot of sell-side firms have taken down #s for the monoline IBs, like GS and MS, along w/the IB units of C and BoA, over the last several weeks).  For the industrials/materials, GE’s earnings will be the highlight Fri morning but investors will also be watching AA/CSX Mon night and Rio Tinto (technically a “business update”) Wed morning

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