Key U.S. Data Releases and Events

The earnings calendar next week will intensify further, with reports expected from quite a handful of market bellwethers such as IBM, Dupont, Boeing, and Caterpillar. Bank of America and Morgan Stanley will also report next week, as will a number of key regional banks.

Given the extremely weak economy in the first quarter of 2009—IHS Global Insight expects real GDP to decline by close to 6.5%, while industrial production already put a stunning 20% decline on the scoreboard, and there was downward pressure on most product prices—positive earnings surprises would indeed be miraculous in this type of environment.

Indeed, we expect the first quarter to close on a relatively soft note, as both existing and new home sales are expected to retract their gains from the preceding month, durable goods orders should slide down further, and the Conference Board's leading indicator is expected to decline.

Based on our early gleanings from the market, auto sales do not appear to be picking up momentum in April either. Thus, IHS Global Insight's own proprietary set of leading indicators still do not point to a solid inflection point in the business cycle over the next six months or so, just some moderation in the rate of contraction.

KEY U.S. DATA RELEASES THIS WEEK

Monday, April 20 – Conference Board Leading Indicator (Mar.)

• IHS Global Insight: -0.3%
• Consensus: -0.2%
• Last Actual: -0.4% (Feb.)

What to Look For

• The Conference Board Index of Leading Economic Indicators is expected to fall 0.3% in March.

Implications

All but two of the index's 10 components likely worsened during the month, most notably building permits, which tumbled 9.0% from February. Weaker vendor performance (i.e., quicker delivery times), and falling stock prices also subtracted from the headline number. An improving real money supply and a steep yield curve will partially offset and buffer the expected downward move.

Thursday, April 23 – Existing Home Sales (Mar.)

• IHS Global Insight: 4.52 Mil.
• Consensus: 4.65 Mil.
• Last Actual: 4.72 Mil. (Feb.)

What to Look For

• Existing home sales are expected to drop by 4.2%.

Implications

Two competing forces are driving existing home sales. Distressed sales (foreclosures and short sales) in three western states—California, Arizona, and Nevada—are driving sales up. Weak demand across most states is driving housing sales down. We expect weak demand to win March's tug-of-war between these two forces, and for sales to drop to 4.52-million units (annual rate). Although mortgage rates and prices have dropped to the point that affordability is better than it has been in decades, funding to buy a home is difficult to get.

Friday, April 24 – Durable Goods Orders (Mar.)

• IHS Global Insight: -2.2%
• Consensus: -1.5%
• Last Actual: +3.4% (Feb.)

What to Look For

• Durable goods orders should falter by another 2.2% in March.

Implications

The volatile factors that produce most of the monthly noise appear quiet this month: defense spending was very close to its recent average last month, aircraft orders are already very low (and unlikely to move much if Boeing orders are any guide), while motor vehicle orders should remain in the tank. The main reason to expect an overall decline is a likely reversal of last month's bounce in machinery orders.

Friday, April 24 – New Home Sales (Mar.)

• IHS Global Insight: 0.325 Mil.
• Consensus: 0.340 Mil.
• Last Actual: 0.337 Mil. (Feb.)

What to Look For

• We expect that new home sales dropped by 3.6% in March, to 325,000.

Implications

Based on March's single-family permits estimates, as well as seasonal factors that pushed up the February numbers, we foresee a pullback in new home sales during March. However, we also expect this market to hit bottom soon.