In this series, we'll explore the data announcements and events that may impact the performance of bank stocks during the upcoming week.
It's the beginning of earnings season for the banks, and with two already under our belts, it's important that bank investors keep an eye on the news for the next week. As we saw, record earnings weren't enough to propel the reporting banks higher -- so watch out for more declines in the days to come.
- Earnings -- Citigroup (NYSE:C) announces its first-quarter earnings Monday morning. Following on the heels of two record-high earnings reports from JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), Citi will be under a lot of scrutiny from shareholders. Though the record earnings didn't save the other two banks from falling Friday, largely because of investors looking for more quality along with the quantity of profits.
- Housing Market Index -- as the housing market continues its slow but steady recovery, bank investors should look for signs of increased activity. One of the biggest takeaways from this week's batch of earnings reports was a decrease in mortgage activity -- a lead generator of revenue for the banks. This index provides a glimpse of the prospective buyer trend, giving bank investors a feel for how much new business could be coming to the banks.
- Housing starts -- another sign of the rebounding housing market, housing starts give investors the data on how many new homes will be entering the market shortly. This provides a continued look at the stream of new mortgage loans that may be originated by the banks.
- Earnings -- Bank of America (NYSE:BAC) announces earnings for the first quarter. With plenty of pressure on the bank to show shareholders more progress, the news from JPM and Wells Fargo's earnings calls are not giving investors much confidence in what B of A will report. Continued pressure on net interest margins are expected, which creates increased stress on the banking sector's ability to generate more revenue.
- MBA purchase applications-- Last week saw a big improvement in mortgage applications, with a 5% increase overall. Refinancings were the main driver of the gain, but this is important news for the banks, which generate most of their revenue through loans and application fees. Bank investors should watch this week's numbers as a continued trend higher could signal returning business to the banks.
- Bank reserve settlement -- it's that time again. Every two weeks, the Federal Reserve requires banks to check in with their capital reserve balances. While some banks have no problem meeting their required threshold, others may have to scramble to gather up enough cash to meet the requirements -- leading to increases in inter-bank lending, which can influence movement in the Federal Funds Rate.
- Jobless claims -- the last few weeks have been all over the map in terms of the labor market data. Since the Easter holiday and varying spring break holidays can take a toll on the workforce's stability, investors should look for the data to even out. Last week saw a big decline in jobless claims, so most will want to see a continued drop -- but don't expect it to match the previous report's rate of decline.
- Consumer Confidence Index -- Data in the past week revealed some concerns among consumers about the state of the economy. Since there is uncertainty, many consumers will reduce their spending and stay away from big purchases, which could be financed through bank loans or credit cards. With more pressure on discretionary spending from taxes and forced furloughs for government workers, watch for consumer confidence to be down -- but not out.
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.
- Federal Reserve Gov. Elizabeth Duke will speak to the American Banking Association in Washington.
- Minneapolis Federal Reserve Bank President Narayana Kocherlakota speech to Market Technicians Association, Minneapolis, as well as participate in a series of speeches at the Levy Institute in New York.
- Federal Reserve Vice Chair Janet Yellen will lead a panel including Bank of England Gov. Mervyn King to discuss monetary policy at the IMF conference in Washington.
- Federal Reserve Gov. Jeremy Stein will participate in a panel discussing financing regulation at the IMF conference in Washington.
- St. Louis Federal Reserve Bank President James Bullard, Boston Federal Reserve Bank President Eric Rosengren, and Federal Reserve Gov. Sarah Bloom Raskin will all give speeches at the Levy Institute in New York.
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. 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!