On Tap this week (july 13-17)

Dow start = 8147

TUESDAY = Producer Price Index at 8:30am; PPI came in at 1.8% increase month-to-month. This was significantly higher than the 0.8% expectation but must be realized that this is due partly to jumping gas prices that have since alleviated. Nonetheless, still somewhat inflationary indicating... food contributed to the jump too unfortunately.

Retail Sales at 8:30am; These came in in-line with expectations of 0.5% increase month-to-month. Actual reading was a 0.6% increase. Gas and vehicle sales helped the bump here given summer driving and the inevitable final stop to the plummeting of auto sales. Again, not an impressive retails report.

Business Inventories at 10am; Business inventories declined more than expected (expectations of -0.8%) and came in with a reading of -1.0%. While inventory re-stocking show signs of manufactuing activity and economic growth, business inventory reduction could at least be good in the sense that businesses are working off spare inventory to get to a stable point in business. Thing is, shouldn't we kinda be at or around that point right about now...

WEDNESDAY = Empire State Manufacturing Index at 8:30am; Industrial Production at 9:15am

Empire State Mnftrg Index came in at a reading of -0.5 after last month's decline of -9.5 and an expectation of -4.5, indicating that the decline in manufacturing slowed significantly. New orders and shipments have GROWN and show positive hopes for a final stabilization of the fall downward.

Industrial Production declined -0.4% month-to-month. Capacity utilization is at a rate of 68%, the lowest in 50 approx 50 years. These results were in line with expectations for the most part (slight beating actually) and also showed a ceasing of the constant downward decline of the past 10 months.

THURSDAY = Initial jobless claims at 8:30am; Jobless claims came in better than expected at -522,000 but those numbers are not trustworthy. It is taken that seasonal and temporary auto-worker layoffs altered this outcome.

Philly Fed Index at 10am; The manufacturing gauge for the eastern/mid-atlantic coast came in at -7.5 when -5 was expected and last month's reading was -2.2. This reading shows the manufacturing ISN'T contracting less but that the decline is actually accelerating on a month-to-month comparison.

FRIDAY = Housing starts at 8:30am; Housing starts came in unexpectedly strong with a rate of 582,000 starts annually. This was above the 530,000 consensus expectation and represented the first back-to-back monthly increase in two years. Signs of a stabilized bottom? Very likely. This is the good news. The bad news is that short sales continue to account for a large percent (40+%) of current home sales. Moreover, the inventory of homes on the market is above traditional norms. So if sales continue to be weak or even decline, then adding new home starts isn't good.