Investors are mildly optimistic ahead of the retail sales report, the week’s most important data. A little over an hour before the opening bell futures are on the Dow are up 17 points to 10,645 and S&P 500 futures are trading 1.90 points higher at 1,143.50.
The US dollar is broadly stronger but commodities are mixed. WTI Crude oil is up 14 cents to $79.79 per barrel Spot Gold down $2.19 to $1,136.01.
Aside from data today, President Obama is expected to deliver details on the much talked about bank tax just before Noon, according to Bloomberg News.
“As many as 50 financial firms with assets greater than $50 billion each would be hit by a levy President Obama will announce today to help recoup taxpayer bailout money and trim the federal budget deficit,” Bloomberg reports, quoting an anonymous administration official. “The levy based on bank liabilities would be imposed starting June 30 and the administration estimates it will raise $90 billion over a minimum of 10 years.”
Key Events Today:
8:30 ― Retail sales for December are the key report this week. Following a robust 1.3% gain in November expectations are wide ranging from +0.3% to 1.2%, with the consensus at +0.4%. Exclude auto and the forecast is sliced in half.
Economists from BBVA note that the year will end with three straight months of growth. “Furthermore, sales levels will come in above those of the previous year for the second consecutive month, indicating that demand is recovering from its low levels in early 2009.”
Indeed, BTMU’s Ellen Zentner notes that “holiday same-store sales were up +1.5 percent in 2009 compared to a drop of -5.0 percent in 2008.” She added that “December same-store sales results revealed a last-minute surge of holiday shopping that helped chain stores pull off a decent holiday season rebound.”
8:30 ― Economists are expecting little change in initial Jobless Claims for the week ending Jan. 9. The consensus view is for 437k claims, 4k above the prior week’s level but 13k below the four-week average. Not until claims come in below 400k consistently will the survey be indicative of growth in the labor market overall but the trend has at least been in the right direction for several months now.
“On a four-week moving average basis, claims have now returned to their ‘pre-Lehman’ level of 450,000,” noted analysts from Nomura. “We believe claims could bounce higher this week due to their normal week-to-week volatility. However, the trend in this important indicator appears to be heading lower.”
Ellen Zentner from BTMU also said: “The downward trend in claims has been fairly consistent since March and it won't take long to get down to, and below, the 400K mark.”
10:00 ― Business Inventories are expected to increase by 0.2% in November, adding to the 0.2% advance in October which was the first positive sign in 14 months. A build-up in inventories will help GDP growth.
