FirstAlert(tm) Daily 2/23: Stored Value

- Market Commentary -

February 23, 2010 (FinancialWire) (By Philip Holmes) — All eyes will be on the retail sector as we take in earnings news from Home Depot (NYSE: HD), Target (NYSE: TGT) and Macy’s (NYSE: M) on Tuesday. Also this week: word from the Fed, and a raft of new economic data. Will we see a flowering of jobless consumerism?

Investors will be looking for reassurance, particularly in the words of Fed Chairman Ben Bernanke and in the earnings statements of leading retailers.

Bernanke will be giving his semi-annual testimony to key congressional committees. Investors don’t want any more surprises. True, the Fed has signaled that there will be some tightening this year. An exit strategy. But many have interpreted this to mean that there would be less of the kind of extraordinary liquidity measures put in place to address the economic crisis.

The Feds move after Thursday’s bell to raise its discount rate, therefore, alarmed some market participants. Not too badly — as Friday’s market performance showed — but enough to prick up ears this week. Will we see a real move towards tightening, as in a raising of the benchmark Fed funds rate? Looked at one way, the discount rate rise can be seen as a measure of confidence in the recovery. But a corresponding move to tighten in a big way would be seen as a move to fight inflation.

Paul Krugman and his fellow salt-water Keynesians aren’t the only economists who fear that kind of move. They see it as a recovery-killer, and many market analysts – even those who are violently opposed to Krugman’s normal prescriptions – would agree.

We’ll also look at whether retailers are weathering the post-holiday slump well, and whether we see green shoots in spring. You can’t have much of a recovery if 2/3rds of the economy is still feeling blue. And there’s no better gauge of how that 2/3rds (consumer spending) is doing than by a broad look at the retail sector. We’ll be getting a big dose of that starting Tuesday.

Also on tap for this week: fresh data on consumer sentiment, new home sales and an update on Q4 economic growth in the U.S. economy.

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[Go to http://www.financialwire.net/?s=philip+holmes to see more commentaries by Philip Holmes.]

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The FirstAlert(tm) Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), Case-Shiller Home Price Index for December (9 a.m.), Consumer Confidence Index for February (10 a.m.), Treasury auctions 2-year notes (1 p.m.).

The FirstAlert(tm) Events Calendar showcases ACXM, DV, COCO, CECO at Credit Suisse Group Global Services Conference; ESE, CPST, SOL, STP at Piper Jaffray Clean Technology & Renewables Conference; HBI Investor Day; HOV, LEN, VMC, DHI at Wells Fargo/Wachovia Housing and Building Products Conference; MSFT, VMW, RAX, GOOG at Goldman Sachs Technology Conference; PRU, TRV, SFG, RNR at Bank of America Merrill Lynch Insurance Conference.

FirstAlert(tm) Website of the Day: http://www.addictinggames.com/

Quote of the Day: “Quotes from Mao, Castro, and Che Guevara… are as germane to our highly technological, computerized society as a stagecoach on a jet runway at Kennedy Airport.” Saul Alinsky

Today is: Iwo Jima Day.

Happy Birthday: Samuel Pepys, W.E.B. DuBois, Peter Fonda, Fred Biletnikoff, Johnny Winter, Patricia Richardson, Brad Whitford, Michael Dell, Dakota Fanning.

Today in History: Traditional date for the publication of the Gutenberg Bible in 1455, the first Western book printed from movable type. The Siege of the Alamo began in San Antonio, Texas, in 1836. President-elect Abraham Lincoln arrived secretly in Washington, DC, in 1861, after an assassination attempt in Baltimore, Maryland. Walter Winfield patented a game called “sphairistike” in 1874, now more commonly called lawn tennis. The French Riviera was hit by a large earthquake in 1887, killing around 2,000. Rudolf Diesel received a patent for the diesel engine in 1893. In 1903, Cuba leased Guantanamo Bay to the United States “in perpetuity.” In 1995, the Dow Jones Industrial Average gained 30.28 to close at 4,003.33, closing above 4,000 for the first time. Osama bin Laden published a fatwa in 1998 declaring jihad against all Jews and Crusaders.

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FirstAlert(tm) Daily 2/23: Stored Value

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