This week's Chain Store sales report looks to confirm the anecdotal evidence seen at Home Depot, Linen 'n Things, Talbots and others. Also, this week's decision by the ECB might offer insight into the durability of any dollar rally.

Chain store sales should offer no surprise when they disappoint later this week, in our estimation. Linen 'n Things went bankrupt last week, and Home Depot announced the closing of some stores, offering more anecdotal evidence into the trouble ahead for retail. Some would argue that the tax rebate will help, and we agree, but we see only a one quarter benefit. The trouble is longer-term than that, especially if energy and food costs remain so troublesome for Americans, and credit so tight.

The Greek has singled out this week's ECB announcement and press conference as the most important event of the week. What the ECB does and says this week has the potential to move the dollar, commodities and stocks. Eurozone regulators are inflation manic at the moment, but they are also well aware of the competitive position of American goods in Europe, and that potential impact to European manufacturing. The consensus sees no move ahead for the ECB and the BOE, but we expect not soon after the Fed turns hawkish or neutral, the ECB will want to hike rates as well to contain inflation upward of 3%. So, dollar enthusiasts should be aware that a rally would most likely be a short-lived event (less than a year).

The market closed higher last week and for April, as stronger footing was established by a better than expected Employment Situation Report on Friday. The report indicated that 20,000 jobs were lost, which was better than the 75,000 economists expected, according to Bloomberg’s survey. Also, the unemployment rate fell to 5.0%, from 5.1% in March.

Unfortunately the unemployment rate misses the fact that most people are generally not lazy. The number of individuals working part-time for economic reasons, meaning they or their spouse probably lost their full-time job, increased by 306K in April, and it measured 849K more than a year ago. These under-employed individuals, while not considered jobless, are certainly having a tougher time making ends meet. Thus, the data offers a falsely positive indicator for the near-term economy. Even so, the growth in Q1 GDP reported earlier last week was also more enthusing to see than contraction would have been, and gave stocks even more reason to seek higher ground.

Tax rebate checks have started rolling out, and offer tax paying consumers a chance to catch their breath in the near-term. If the government’s other intense election-year actions help the economy gain traction before too long, we’ll have to offer Bush, the Dems, Paulson and Bernanke and company kudos for staving off a deeper economic downturn than would resulted otherwise.

The Week Ahead

This week contains important reports concerning the housing and retail industries, as well as noteworthy news from Europe.

Monday

A significantly lighter load of economic data is in store this week, and Monday's schedule holds just one item. At 10:00 a.m., the Institute for Supply Management reports its Non-Manufacturing Survey. While Barron's notes expectations at Lehman Brothers for an ISM service sector measure indicative of economic expansion (+50.0), Bloomberg's survey of economists has set expectations for a reading of 49.3, just below the breakeven point.

Bernanke looks to start his post FOMC meeting tour, beginning with a Columbia Business School dinner. Markets will be closed on Monday in Australia, Japan, South Korea and the U.K.

As earnings season remains hot and heavy, Monday's schedule includes Goldcorp (NYSE: GG), Pilgrim’s Pride (NYSE: PPC), Airgas (NYSE: ARG), Albany Molecular (Nasdaq: AMRI), Amtrust Financial (Nasdaq: AFSI), Anadarko Petroleum (NYSE: APC), Argo Group Int'l (Nasdaq: AGII), Assisted Living Concepts (NYSE: ALC), Banco Santander-Chile (NYSE: SAN), Boots and Coots Int'l Well Control (NYSE: WEL), Bruker (Nasdaq: BRKR), Career Education (Nasdaq: CECO), CMS Energy (NYSE: CMS), Comstock (NYSE: CRK), DIVX, Inc. (Nasdaq: DIVX), Dollar Financial (Nasdaq: DLLR), drugstore.com (Nasdaq: DSCM), Forest Oil (NYSE: FST), Gladstone Capital (Nasdaq: GLAD), Hain Celestial (Nasdaq: HAIN), Human Genome Sciences (Nasdaq: HGSI), Innophos (Nasdaq: IPHS), Kindred Healthcare (NYSE: KND), LeapFrog (NYSE: LF), LookSmart (Nasdaq: LOOK), MannKind (Nasdaq: MNKD), Marvel Entertainment (NYSE: MVL), McKesson (NYSE: MCK), Midway Games (NYSE: MWY), Nam Tai Electronics (NYSE: NTE), Nautilus (NYSE: NLS), Powerwave Technologies (Nasdaq: PWAV), Sykes Enterprises (Nasdaq: SYKE), The Principal Financial Group (NYSE: PFG), Scotts Miracle-Gro (NYSE: SMG), Tidewater (NYSE: TDW), Vulcan Materials (NYSE: VMC), Weight Watchers (NYSE: WTW) and many others.

Tuesday

On Tuesday, we advise investors pay attention to the weekly same-store sales report from the International Council of Shopping Centers – UBS. Last week’s report showed growth of 0.9%, but the week before that posted the first year-over-year decrease in our memory, as sales fell 0.7%. Just last year, sales growth was running at a pace of 2%-3%.

While the Japanese market remains closed, Australian bankers will announce their latest rate decision. The Bank of Australia is expected to keep rates steady. In the States, Kansas City Fed President Hoenig keeps the Fed post-FOMC tour rolling with his address in Colorado.

Democratic state primaries are scheduled in North Carolina and Indiana. Some would argue that it was South Carolina that set the wheels of change in motion for Barack Obama, and so perhaps it's appropriate that North Carolina can complete it; however, NC is a very different state and Bill Clinton is a very different campaign factor now. Up on Capitol Hill, the Senate Banking Committee is working on a bill to create a new regulator to watch over Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

Fannie Mae (NYSE: FNM) also leads earnings news on Tuesday, with other noteworthy reports expected from Churchill Downs (Nasdaq: CHDN), Cisco Systems (Nasdaq: CSCO), UBS (NYSE: UBS), American Capital Strategies (Nasdaq: ACAS), AMREIT (NYSE: AMY), Anglogold Ashanti (NYSE: AU), Aqua America (NYSE: WTR), Arch Chemicals (NYSE: ARJ), Athenahealth (Nasdaq: ATHN), Avis Budget (NYSE: CAR), Barrick Gold (NYSE: ABX), BIDZ.com (Nasdaq: BIDZ), Bio-Rad Labs (NYSE: BIO), Blue Nile (Nasdaq: NILE), Brightpoint (Nasdaq: CELL), Capital Senior Living (NYSE: CSU), CapitalSource (NYSE: CSE), Charles River Labs (NYSE: CRL), Church & Dwight (NYSE: CHD), Cimarex Energy (NYSE: XEC), Corrections Corp. (NYSE: CXW), Covidien (NYSE: COV), Cutera (Nasdaq: CUTR), D.R. Horton (NYSE: DHI), Dolan Media (NYSE: DM), Eagle Materials (NYSE: EXP), Emergency Medical Services (NYSE: EMS), Emerson Electric (NYSE: EMR), EPIX Pharmaceuticals (Nasdaq: EPIX), FTD Group (NYSE: FTD), Georgia Gulf (NYSE: GGC), Golden Star Resources (AMEX: GSS), Harman Int'l (NYSE: HAR), HCC Insurance (NYSE: HCC), Henry Schein (Nasdaq: HSIC), Hospitality Properties Trust (NYSE: HPT), IPCS, Inc. (Nasdaq: IPCS), Jack Henry (Nasdaq: JKHY), Kenneth Cole (NYSE: KCP), Kinross Gold (NYSE: KGC), Learning Tree (Nasdaq: LTRE), Legg Mason (NYSE: LM), Louisiana-Pacific (NYSE: LPX), Magna Entertainment (Nasdaq: MECA), Martin Marietta (NYSE: MLM), MGM Mirage (NYSE: MGM), Molson Coors (NYSE: TAP), Myriad Genetics (Nasdaq: MYGN), NYSE Euronext (NYSE: NYX), Papa John's (Nasdaq: PZZA), PG&E (NYSE: PCG), Pitney Bowes (NYSE: PBI), Playboy (NYSE: PLA), Precision Castparts (NYSE: PCP), Qwest Communications (NYSE: Q), RF Micro (Nasdaq: RFMD), RR Donnelley (NYSE: RRD), Ruth's Chris Steak House (Nasdaq: RUTH), Sara Lee (NYSE: SLE), Spectra Energy (NYSE: SE), Tenet Healthcare (NYSE: THC), Teva Pharma (Nasdaq: TEVA), The Pantry (Nasdaq: PTRY), The St. Joe Co. (NYSE: JOE), THQ, Inc. (Nasdaq: THQI), TLC Vision (Nasdaq: TLCV), ValueClick (Nasdaq: VCLK), Vornado Realty Trust (NYSE: VNO), World Wrestling Entertainment (NYSE: WWE) and more.

Wednesday

Wednesday offers a busy one for economic news, and some of it capable of moving the market. Before the open, the Mortgage Bankers' Association will report its weekly take on mortgage activity. This report has been sort of a nonfactor of late, because until it and other housing data indicate a housing market turn in earnest, investors are just not going to find value here. We have noted in the past that mortgage rates have started to reflect increased expectations for inflation, and so some of the anticipated impact to housing from the rate cuts (in isolation) has been offset.

At 8:30 on Wednesday, Q1 Productivity and Costs will be noted. Pay attention to late coming reports and revisions, especially those that play a role in the GDP calculation. Economists will be adjusting their forecast for GDP ahead of its reported revision this month. Nonfarm productivity is seen improving by 1.7% in Q1, after an increase of 1.9% in Q4 2007. Unit Labor Costs, the more important part of this report now due to its contribution to inflation, is seen increasing 2.6% in Q1, after an increase of 2.6% in Q4. We expect this figure to decrease in future quarters as lower cost workers replace higher paid legacy employees. This has been a staple factor in the cost reduction efforts at General Motors (NYSE: GM) and Ford (NYSE: F) and should be commonplace in Q2. Certainly the maintenance of the unemployment rate, while jobs are shed at the same time, finds logical explanation in this phenomenon.

The stock market has proven resilient to recently deteriorating housing data, and it will get another resiliency test on Wednesday when the Pending Home Sales Index is reported for March. February’s report displayed a decrease of 1.9% from January. While many economists are pointing toward another double digit decline in home values before we touch bottom, and we agree values must still adjust lower, major media has started to pick up on vulture investing opportunities in the foreclosure market. However, if the foreclosure market is getting so much attention, this says something about the still wary buyers in the general real estate market. It's hard to overspend in the foreclosure space, if you do your research and do not enter into a contract for a home loan involving a property that has other liens against it. In other words, do you homework.

Petroleum Status is on tap for its regular 10:30 reporting. Last week, a precipitous decline was offset by Turkish bombing of Kurd positions. Thus, you can expect oil to start lower again this week, but The Greek is on record warning about future ECB actions and how they might some day end this dollar rally. If the ECB raises rates, a real possibility, look for dollar enthusiasts to get a slap in the face, and commodity bears also. Still, everything depends on that ECB decision and press conference on Thursday, and the most important thing you can do on Thursday is pay attention to that news flow.

With Congress coming down on credit card companies, and rightly so, the Consumer Credit Report should get more interesting in the near future. Many of you may not be aware of credit card company roughhousing, so we'll inform. When the less fortunate get into a bind and fall behind a payment or two, the credit card companies tighten the noose around the borrower's neck, often times raising the APR on consumer credit above 30%. This places the borrower into a deeper hole he often cannot get out of, outside of settling on partial payment or declaring bankruptcy, both detrimental to credit record. And many poor folk don't even understand their options and continue to struggle month to month, paying late fees, over the limit fees and a plus 30% interest rate.

This highway robbery has to stop, and I don't care if it's in the contract or not. If you tell me you are going to rob, rape and murder me in fine print, that still does not make it okay. Consumer Credit for the month of March is indicated to rise by $6.0 billion when reported on Wednesday afternoon. February credit increased by $5.1 billion, and the rate of credit expansion looks to have decreased this year generally.

One will have to wonder if the Antichrist has ushered in the "beast" when Vladimir Putin hands over the Kremlin to Dmitry Medvedev on Wednesday. Medvedev is officially inaugurated on this day, but whether the puppeteer's strings are severed or not is another question. Markets in France will be closed on Wednesday, presumably to make sure all the nuclear energy plants are working properly as Russia prepares to hold Europe hostage for heat and electricity. In the States, a Senate subcommittee considers the Delta-Northwest merger (NYSE: DAL, NYSE: NWA).

Wednesday's earnings schedule includes Croc’s (Nasdaq: CROX), Total S.A. (NYSE: TOT), AAON (Nasdaq: AAON), Aeterna Zentaris (Nasdaq: AEZS), Allergan (NYSE: AGN), Allos Therapeutics (Nasdaq: ALTH), Bluefly (Nasdaq: BFLY), Central Garden & Pet (Nasdaq: CENT), Checkpoint Systems (NYSE: CKP), Chesapeake (NYSE: CSK), Conseco (NYSE: CNO), Cooper Tire & Rubber (NYSE: CTB), Devon Energy (NYSE: DVN), Expeditors Int'l (Nasdaq: EXPD), Foster Wheeler (Nasdaq: FWLT), Great Plains Energy (NYSE: GXP), Hansen Natural (Nasdaq: HANS), Healthsouth (NYSE: HLS), Hospira (NYSE: HSP), InterDigital (Nasdaq: IDCC), Kintera (Nasdaq: KNTA), Marsh & McLennan (NYSE: MMC), McCormick & Schmick's (Nasdaq: MSSR), Middleby (Nasdaq: MIDD), Nationwide Financial (NYSE: NFS), NCR Corp. (NYSE: NCR), Neenah Paper (NYSE: NP), Nobel Learning (Nasdaq: NLCI), ON Semiconductor (Nasdaq: ONNN), PeopleSupport (Nasdaq: PSPT), Pioneer Natural Resources (NYSE: PXD), Protective Life (NYSE: PL), Quality Distribution (Nasdaq: QLTY), ResCare (Nasdaq: RSCR), Senior Housing Properties Trust (NYSE: SNH), Service Corp. (NYSE: SCI), Speedway Motorsports (NYSE: TRK), The DirectTV Group (NYSE: DTV), Transocean (NYSE: RIG), U.S. Cellular (NYSE: USM), Yamana Gold (NYSE: AUY) and more.

Thursday

On Thursday, the Chain Store Sales Report for the month of April is likely to offer further verification for what we expect will be an ongoing deterioration of the retail sector in 2008.

Supporting anecdotal evidence has been mounting, with news last week that Home Depot (NYSE: HD) would close 15 stores. Also, Linens 'n Things filed for Chapter 11 bankruptcy protection last week, and Talbots (NYSE: TLB) doesn't look far behind. Finally, within the Employment Situation Report last Friday, it was noted that the retail trade industry shed 27,000 jobs in April. Thus, we expect April Chain Store Sales will offer good reason for market concern and keep the shares of the poorest performing retailers from participating in general market ascension.

Last week’s spring economic forecast published by the European Union, brought Europe’s inflation concerns to the fore. Anyone who watches European TV occasionally, like me, knows all about the mania in Europe concerning rising costs. Americans with travel plans across the pond are certainly working the calculator these days, and watching the likelihood of this year’s trip dwindle with each passing day, and each penny the euro strengthens against the dollar.

This week, the ECB might put its money where its mouth is, and God forbid, raise European interest rates as it battles the inflation enemy. The ECB and Bank of England will announce their respective rate decisions on Thursday morning. A rate increase would almost surely prove damaging to the dollar, but it's not generally expected.

The regular reporting of Weekly Initial Jobless Claims is due for 8:30 release. Bloomberg's consensus of economists forecasts a level of 370K claims this time around, after the measure rated at 380K last week. March Wholesale Trade is due for mid-AM report, and inventories rose 1.1% in February (+0.8% in Jan.) on the wholesale level. The ratio of inventory to sales is more important, and there's been an uptick in the trend recently, indicating the impact of recession or fear of it in product flow and purchases. The long-term trend, however, shows great efficiency gain from improved global distribution, technology and just-in-time production.

The weekly Natural Gas Report is on tap for its usual 10:30 notation. In the pending war with Iran, natural gas will be our energy resource of choice. We have nice stores of coal-bed methane in the Colorado Rockies, and plenty of gas in Canada. Coal of course is an important resource in North America as well, if you're forecasting the possibility of serious competition for control of Middle Eastern energy resources. Hey, this is not so far fetched, so fetch your one eyebrow back from that raised position. India is reportedly considering similar protectionist measures to China regarding rice, and so it's becoming plainly obvious that the free market extends only as far as free availability of commodities. Then, we're sorry to say, protectionism and maybe even war become real possibilities...

Thursday's earnings include American International Group (NYSE: AIG), Coca-Cola Hellenic Bottling (NYSE: CCH), Priceline.com (Nasdaq: PCLN), Activision (Nasdaq: ATVI), Adaptec (Nasdaq: ADPT), Agnico-Eagle Mines (NYSE: AEM), Akeena Solar (Nasdaq: AKNS), Barr Pharma (NYSE: BRL), Brooks Automation (Nasdaq: BRKS), Cablevision (NYSE: CVC), Celgene (Nasdaq: CELG), Deutsche Telekom (NYSE: DT), Dot Hill Systems (Nasdaq: HILL), El Paso (NYSE: EP), Electro Scientific (Nasdaq: ESIO), First Marblehead (NYSE: FMD), Gartner (NYSE: IT), Global Cash Access (NYSE: GCA), Heely's (Nasdaq: HLYS), Internet Capital Group (Nasdaq: ICGE), King Pharma (NYSE: KG), Koppers (NYSE: KOP), Leap Wireless (Nasdaq: LEAP), Lifetime Brands (Nasdaq: LCUT), Live Nation (NYSE: LYV), Mirant (NYSE: MIR), Nationwide Health Properties (NYSE: NHP), Pediatrix Medical (NYSE: PDX), Plug Power (Nasdaq: PLUG), Public Storage (NYSE: PSA), R.H. Donnelley (NYSE: RHD), Ralcorp (NYSE: RAH), Real Networks (Nasdaq: RNWK), Scientific Games (Nasdaq: SGMS), Six Flags (NYSE: SIX), Steinway Musical (NYSE: LVB), Sunrise Senior Living (NYSE: SRZ), Superior Well Services (Nasdaq: SWSI), The NASDAQ OMX Group (Nasdaq: NDAQ), Toyota (NYSE: TM), Trump Entertainment (Nasdaq: TRMP), U.S. Physical Therapy (Nasdaq: USPH), Unilever NV (NYSE: UN), Verisign (Nasdaq: VRSN), Vestas Wind Systems (VWS.CO), Vonage (NYSE: VG), Watson Wyatt (NYSE: WW) and more.

Friday

Friday offers two reports, including the International Trade data for starters. The deficit is expected to narrow to $60.8 billion in March. "What about China!", we hear you screaming. Remember, there are important dynamic factors at play now offsetting the global production factor. First of all, with global development comes international demand for U.S. branded goods. If you've ever been to Eastern Europe, you know they'll pay $100+ for a pair of lousy old Levi's. Anything American sells way above value, and they seek "made in America" tags even more intently then super-patriotic types do here.

Besides this, of course the decline in the dollar has helped American exporters, and manufacturing is getting a well-publicized boost from it all. Finally, never forget there are two factors to this equation, and when America nears recession, demand for overall goods and services declines, and so import demand wanes. In a report last week, we saw imports and exports both rose recently, but exports exceeded import growth near three-fold.

After April ended five consecutive months of stock market decline, expect the RBC Cash Index to begin to show the signs of confidence building. Sure, sure, the little guy is still hoarding cash, but we bet the investments he's buying now include some names he would not have touched months ago. Heck, I bet even SIVs have made some courageous folks some money lately, considering the government's willingness to hold risk.

Friday's earnings schedule includes Allianz S.E. (NYSE: AZ), Beacon Roofing (Nasdaq: BECN), Clear Channel Communications (NYSE: CCU), Cornell (NYSE: CRN), Gold Fields Ltd. (NYSE: GFI), Huntsman (NYSE: HUN), National Dentex (Nasdaq: NADX), Petrobras Energia (NYSE: PZE), Rosetta Resources (Nasdaq: ROSE), Sotheby's (NYSE: BID), Southern Union (NYSE: SUG), Westar Energy (NYSE: WR), Windstream Communications (NYSE: WIN) and a few others.

Please find our daily market commentary and our disclosure at Wall Street Greek.