Tuesday kicks off busy week for economic data, which will be accompanied by several Fed speeches. Traders continue to be concerned with inflationary pressures, as is the Fed, and there remain worries about the strength of the consumer. Housing is a major problem for the economy and data on this sector will be released this week as well. Below is the calendar for the week:

Monday: None

Tuesday: ICSC-UBS Store Sales, Redbook, Retail Sales, Import and Export Prices, Business Inventories

Wednesday: MBA Mortgage Applications, EIA Petroleum Status, Consumer Price Index

Thursday: Jobless Claims, EIA Natural Gas Report, Empire State Mfg. Survey, Treasury International Capital, Industrial Production, Philly Fed Survey, Housing Market Index

Friday: Housing Starts, Consumer Sentiment

Retail sales in April fell 0.2 percent, a tenth worse than expected, but retail sales less autos rose 0.5 percent, 2-tenths better than expected. When autos and gasoline are excluded, sales rose a solid 0.6 percent. This news will be viewed positive by the markets; in fact it helped reverse negative futures this morning. With energy and food prices so elevated, the concern is that spending will falter, but this report shows that so far, the consumer continues to spend.

The ICSC-UBS report wasn''t as bullish as the retail sales release with same-store sales down 1.0 percent this past week. This put the year on year growth rate at a meager 0.5 percent, which is down from 2.3 percent in the prior week. The Redbook report was much stronger, showing a year on year gain of 2.0 percent. With consumers getting their tax rebate checks, retail sales should show some strength in the coming months.

Import prices rose 1.8 percent in April, putting the year on year gain at 15.4 percent. Prices continue to rise due to a weak dollar and high oil prices, but even non-petroleum import prices rose 1.1 percent. This puts the year on year gain at 6.2 percent, its worst reading since the late 80''s. Petroleum prices rose 4.4 percent during the month, putting its yearly gain at strong 57.2 percent. Unfortunately, gains in food and energy prices are going to continue putting upward pressure on inflation expectations.

Traders will get more data on prices tomorrow when the CPI is released. Expectations are for consumer prices to rise 0.3 percent overall and 0.2 percent at the core. Any reading stronger than anticipated could be a problem for the stock market, putting pressure on the Fed to fight pricing pressures by possibly raising rates sooner rather than later. However, economic weakness remains a concern and housing data this week should confirm this view. Housing starts are expected to fall further to a 17-year low of 945,000 annualized units.

Industrial production in April is expected to show a decline of 0.3 percent after showing gains in March. Regional manufacturing data should continue to show weakness as well with the Philly Fed Survey expected to show a reading of -20.0 in May after a reading of -24.9 in April. The Empire State Mfg. Survey is set to show a flat reading.

Oil prices will continue to get plenty of attention after hitting record highs last week. On Monday, prices fell on a decline in the value of the dollar, but this didn''t last long with crude up more than two dollars Tuesday. Crude is trading back above $126 a barrel despite the fact the IEA lowered its demand figures for 2008 to 86.8 million barrels a day. This puts year on year increases at 1.2 percent, obviously not enough to push crude prices off record highs.

Jody Osborne
Senior Staff Writer & Options Strategist

Optionetics.com ~ Your Options Education Site

• Email This Article
• View Full HTML
• Digg This
• Delicious
• Subscribe

Recent Articles by Jody Osborne, Optionetics.com

• November 20, 2009
  Closing Wrap-Up, Nov. 20
• November 20, 2009
  Morning Watch, Nov. 20
• November 19, 2009
  Closing Wrap-Up, Nov. 19
• November 19, 2009
  Real-World Trading: Flying to Profits with an Iron Condor, Part II
• November 19, 2009
  Morning Watch, Nov. 19