By Theresa Sheehan

PRINCETON (SMRA) – The week ahead is shortened by the M.L. King,
Jr. Day observance on Monday. Federal government offices will be closed,
as will the bond market. The data calendar is relatively light, and will
concentrate on data in the housing market and manufacturing sector.

This week sees the start of the traditional press blackout period
in advance of the January 25-26 FOMC meeting.

The data release schedule for the housing market is unusually
concentrated this coming week. It includes the reports on housing starts
as well as sales of existing homes, which are more normally separated by
a week or so.

The numbers lead off with the NAHB/Wells Fargo Housing Market Index
for January at 10:00 ET on Tuesday, which will set the tone for
expectations of conditions for construction and sales. The December
reading of 16 is likely to be maintained into January, and reflects
fairly stable conditions that have persisted over the prior six months.
In fact, outside of the brief upswing associated with the homebuyer tax
credit program back in April and May of 2010, the index has been little
changed over the past 12 months.

Data on housing starts and permits-issued for December at Wednesday
morning are likely to show that levels of single-family starts continued
near the mid-400,000 level. The multi-unit sector has been behind most
of the volatility in the headline number for total starts. Bitter cold
weather and snowstorms in parts of the country may have delayed some
starts and lower the number of permits issued for December.

The NAR data on sales of existing homes for December is set for
10:00 ET on Thursday. The NAR Pending Home Sales Index has been trending
higher, which suggests that home resales are also on the rise. Potential
buyers who have been on the fence may be responding to increases in
mortgage rates and declines in home prices. A higher mortgage rate could
reduce affordability in the future, and the lower price for a home may
seem like more of a bargain now.

The earliest monthly indicators for the manufacturing sector in
January are the New York Fed’s Empire State Survey at 8:30 ET Tuesday
and the Philadelphia Fed’s Business Outlook at 10:00 ET Thursday. After
the soft patch of the summer months in 2010, the overall direction of
manufacturing activity seems to have settled back into steady
expansionary trends.

The report on initial jobless claims for the week-ended January 15
at 8:30 ET Thursday will be for the survey comparison week of January
from December. Claims levels have been moving lower, and the underlying
trend appears to be nearing the 400,000 level. The data have been
somewhat volatile due to some mismatches in the adjustment factors and
levels that do not match the usual seasonal pattern.

The Conference Board’s Leading Economic Indicator for December at
mid-morning Thursday should increase for another month on positive
contributions from interest rates, stock prices, unemployment claims,
consumer confidence, building permits, new orders, money supply, and
contracts for plant and equipment expenditures

The Treasury International Capital System (TICS) data for November
at 9:00 ET Tuesday should reflect some flight to quality as markets
became increasingly nervous about sovereign debt in some European
countries.

Thursday, the Treasury will offer new 2-, 5-, and 7-year notes to
be auctioned in that order on Tuesday through Thursday of the following
week. These will all settle on January 31. The new 10-year TIPS will be
auctioned on Thursday and also settle on January 31.

The next refunding announcement is scheduled for Wednesday,
February 2. This will include new 3- and 10-year notes, and 30-year
bonds.

The Bank of Canada makes its routine policy statement Tuesday at
9:00 ET. For the remainder of January, the Bank of Japan Governors meet
over the course of two days — January 24-25. The Reserve Bank of New
Zealand announces its policy decision Thursday, January 27. The FOMC
holds a two-day meeting January 25-26.

At this FOMC meeting the next rotation of the voters on the
Committee takes place. The next voting District Bank Presidents are:
Charles Evans (Chicago), Charles Plosser (Philadelphia), Richard Fisher
(Dallas), and Narayana Kocherlakota (Minneapolis). William Dudley votes
for New York which has a permanent place in the rotation of voters.

The January 17 week is the press blackout period that will precede
the FOMC meeting. The public engagement calendar for Fed policymakers is
nearly empty. Only Philadelphia’s Plosser will make an appearance, and
that is Monday at an event in Santiago, Chile.

The pace of release of fourth quarter earnings data picks up in the
week. A number of major financial firms are on the calendar, as well as
some other industry giants and market favorites.

Monday, there are no reports on the calendar that would likely be
of first importance to markets.

Tuesday, the main reports are from Apple, Charles Schwab,
Citigroup, and Delta Air Lines.

Wednesday, the big names are eBay, Goldman Sachs, State Street, and
Wells Fargo.

Thursday, the eyecatching reports will probably be AMD, Fifth Third
Bancorp, Google, Morgan Stanley, Southwest Airlines, and Tyco
Electronics.

Friday, reports are expected from Air Products, Aigas, Bank of
America, BB&T Corporation, GE, and Schlumberger.

** Stone & McCarthy Research Associates **

[TOPICS: M$$FI$,M$U$$$,MAUDS$]