Weekly Economic Indicators

The schedule for the week of April 16th includes:

  • Monday:  Retail Sales, Empire State Manufacturing Survey, Treasury International Capital, Business Inventories, and Housing Market Index
  • Tuesday:  Housing Starts and Industrial Production
  • Wednesday:  None
  • Thursday:  Initial Jobless Claims, Existing Home Sales, Philadelphia Fed Survey, Leading Indicators, and Fed Balance Sheet
  • Friday:  None  

Click this link for the full economic calendar for the week:

Economic Indicators - What to Watch

This week, I spoke with Steve Grasso, Director of Institutional Sales at Stuart Frankel & Co., and frequent commentator on CNBC, about the economic calendar for next week.  Grasso will be watching  a number of economic indicators as well as first quarter earnings, tax reform updates, 2012 Presidential elections, and the pending Supreme Court decision on the healthcare law.  A complete list is included above.

Overall Market View

Grasso predicts the overall market will go lower as European fears resurface and margins get squeezed.  He points out Greece is in a depression and Portugal could be the next EU member needing rescue funding.  Meanwhile, investor fears are being flamed by a blow out in Spanish bond spreads and the 24% unemployment rate in the Euro Zone, which is a 14 year high.  There are also fears of China having a ‘hard landing‘, which is the wild card that could easily drive the equity markets even lower.      

First Quarter Earnings 2012

Grasso expects margins will be lower for 1st quarter earnings, as companies report a slowdown in revenue growth and predicts lower year over year earnings for 2012 as companies face a tougher economic environment.  He feels earnings will be scrutinized more this quarter, especially against the back drop of China and Europe.

Tax Reform

Grasso favors Representative Paul Ryan’s tax proposal over the Warren Buffet rule and said Paul Ryan is the only one who has put forth a plan to address the corporate tax issue facing American companies.  The US has the highest corporate tax rate in the world and we need to reform it, as multinational companies are keeping their funds offshore.  He added that we don’t need these companies to have their headquarters elsewhere, rather we need to encourage these companies to return home and invest in America, so their employees can spend their income in the US.  We need comprehensive tax reform, and Grasso suggested our corporate tax rate should be around 25%, but if the Bush era tax cuts are allowed to expire, then the tax rate will go up to about 40%.  Grasso thinks this would be detrimental to the fragile economy.  

2012 Presidential Elections

Grasso thinks this year’s election has the potential to be life changing for Americans.  The country is at a crossroads where a choice needs to be made on whether to allow the government to steer the ship or the private sector.  He would like to see less government involvement, personally.  Separately, Grasso said Representative Paul Ryan would be a strong Vice Presidential candidate for the Republican party.  He believes Ryan is the only congressional member who has drafted a budget plan and is the only one who has meaningful ideas for discussion.

Pending Supreme Court Decision on Healthcare Law

Grasso would be surprised if the Supreme Court overturns the Obama healthcare law.  He called the debate “a political football,” even though the court is not supposed to be political.  He believes the Supreme court will do their best to dress up their ruling or judgment in June and that President Obama’s second term hinges on the results.  Ultimately, Grasso thinks the vote will be a 5-4 decision in favor of keeping the law in its current state, but he would like to see the Supreme Court strip the healthcare law of its individual mandates.  This would have healthcare companies change their defensive stance to a more aggressive mode and start hiring and making more investments.  

Housing Data

There are a number of housing reports coming this week, including the housing market index, housing starts, and existing home sales.  Grasso surmises that the housing market has not bottomed out yet and feels that as long as interest rates are low, the housing market will not pick up. There is no sense of urgency for anyone to buy homes right now and rates are not going up for a while.  He believes that as soon as there is any hint that rates will tick up, the housing market will begin to recover.