Weekly Economic Indicators: Cyprus Dilemma and Fed Talks

Ben Bernanke (lower-right), Chairman of the Fe...

Ben Bernanke (lower-right), Chairman of the Federal Reserve Board of Governors, at a House Financial Services Committee hearing on February 10, 2009. (Photo credit: Wikipedia)

The schedule for the week of March 25th includes:

  • Monday:  Chicago Fed National Activity Index, Dallas Fed Manufacturing Survey, William Dudley and Ben Bernanke speaks
  • Tuesday:  ICSC-Goldman Store Sales, Durable Goods Orders, S&P Case-Shiller HPI, New Home Sales, Consumer Confidence, and Richmond Fed Manufacturing Index
  • Wednesday:  MBA Purchase Applications, Pending Home Sales Index, Charles Evans, Eric Rosengren, Sandra Pianalto and Narayana Kocherlakota speaks
  • Thursday:  GDP, Jobless Claims, Chicago PMI, Kansas City Fed Manufacturing Index, and Fed Balance Sheet
  • Friday:  Good Friday US Equity Markets Closed, Banks Open

I spoke with Benedict Willis III, Managing Director of Albert Fried & Company, LLC., and frequent commentator on Bloomberg, CNBC, and FOX Business, about the economic calendar for next week. Willis is focused on the overall market, weekly jobless claims, housing data, and a number of Federal Reserve speakers, including Ben Bernanke on the speaking circuit.

Overall Market View

Willis is anticipating a pullback in US equities, but the market keeps finding a reason to continue to rally, particularly with the amount of money on the sidelines. He added, “what the European Union and the ECB tried to accomplish this past week by requiring banks in Cyprus to levy a tax on personal accounts was stealing.” He was particularly disturbed by the ECB and EU’s move to confiscate private property in the country. The events in Europe triggered reversal effect in US markets, as it became a safe haven for investors.

Weekly Jobless Claims and Housing Data

With the improving jobless claims data in recent weeks, Willis is forecasting the numbers to be in line with expectations.  He said it’s all about how you view the data. If investors view the data as the glass half full, then confidence in the markets will continue, but if market participants see the glass as half empty, then sentiment will erode. The economic calendar is loaded with housing related data, including S&P Case-Shiller HPI, new home sales, MBA purchase applications, and pending home sales index. Willis sees the housing data as one of the underpinnings for the rally in equity markets, as it has improved investor confidence in the markets.

Fed Speakers on the Circuit

There are a number of Federal Reserve speakers on the circuit, and Willis is wondering, will all the FOMC members line up behind Chairman, Ben Bernanke? After the last meet, several hawkish members were more in favor of pulling back the throttle on the central bank’s policy of repurchasing $85 billion of treasury securities per month. He feels if the agency was to announce some pullback in its policy, the markets would view it as a positive and the rally will continue.

Buzz on the Trading Floor

According to Willis, traders were very taken back by the ECB and EU’s policy of forcing Cyprus to impose a tax on depositors. This was very destructive for investors, and dampened confidence in the ECB; it was an unprecedented move by the European Central Bank.   

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