In this series, we'll explore the data announcements and events that may impact the performance of bank stocks during the upcoming week.
The past two weeks have been very eventful for bank investors. Most got a great result from the boost many banks got after receiving high marks from the Fed's stress tests. This week, fear of the effects of a Cypriot economic reform and new lawsuit from Freddie Mac caused bank shares to drop. Let's take a look at what's going to be announced next week, what banks may be affected the most, and what you should look out for in the coming days.
- Cyprus -- Though it seemed like the Cypriot crisis might dominate the market landscape this week, investors have been able to overlook the European uncertainty and push the markets higher as the weekend approaches. But next week, if there is no resolution to Cyprus' troubles, we may feel the reverberations here in the U.S. Our banks are certainly vulnerable to any negative investor sentiment, especially Bank of America (NYSE:BAC), which continues to trade at very high volumes, making it extremely volatile.
- New home sales and Case-Shiller Price Index -- a measure of closed sales of newly constructed homes, this key piece of data will give bank investors a gauge on how much new mortgage business is available for banks. This also ties into last week's housing starts data that provides a gauge of the rate of new construction. The price index gives a signal to investors that the housing market is continuing to improve as home prices rise.
- MBA purchase applications -- a weekly look at the mortgage application activity from the Mortgage Banker's Association. A decline in mortgage applications can be a sign that the banks are not getting new business from the housing sector, but look for a correlation between this data point and the other housing-related data during the week. The last two weeks of data have revealed declines in applications, creating worries that mortgage kings Wells Fargo (NYSE:WFC) and JPMorgan (NYSE:JPM) may not have the same flow of new loans coming in as they did in late 2012.
- Pending Home Sales Index -- providing additional information on the status of the housing market, the pending home sales numbers are a great indication of how buyers are feeling about the market and the availability of credit.
- Jobless claims -- a weekly look at the new unemployment claims, the jobless report has been one of the main factors cited by analysts as to why the markets have been booming despite continued disagreement in Washington over the federal budget. With the labor market in the best condition we've seen in five years, it's no wonder investors are confident.
Friday -- markets are closed due to the Good Friday holiday
- Personal Income and Outlays -- This data will provide an update for personal income levels as well as expenditure rates. Why is this important to bank investors? Outlays include increases in savings, so even if a person doesn't increase his shopping habits but does up the amount put in his savings account, the banks are on the receiving end of that outlay -- increasing available capital for new loans and other revenue generating products.
Throughout the week, a number of prominent Federal Reserve members are giving speeches or talks on the current economic environment, monetary policy, and the financial crisis. Any nuggets of information gleaned from these talks could provide good insight into future Fed policy.
- New York Federal Reserve Bank President William Dudley will speak at the Economic Club of New York.
- Federal Reserve Chairman Ben Bernanke and IMF Chief Economist Olivier Blanchard discuss lessons learned from the financial crisis with Bank of England Gov. Mervyn King at the London School of Economics.
- Chicago Federal Reserve Bank President Charles Evans will provide a briefing in Chicago.
- Boston Federal Reserve Bank President Eric Rosengren speech on the outlook of the U.S. economy in Manchester, N.H.
- Cleveland Federal Reserve Bank President Sandra Pianalto will give a speech on managing monetary policy risks in Cleveland.
- Minneapolis Federal Reserve Bank President Narayana Kocherlakota will give a speech on improving the outlook of the U.S. economy with monetary policy in Edina, Minn.
As always, it's important to know what will affect your stocks as you move through the week. But as a Foolish investor who's in it for the long haul, you know that being informed means riding the waves caused by any of the announcements listed above may create. And as always, don't feel like you need to study every piece of information released in any given week -- pick and choose what you find most important. Fool on!