Weekly Economic Indicators: Post Election, Back to Business

The schedule of economic releases for the week of November 12th is as follows:

  • Monday:  US Holiday: Veteran’s Day Observed, Stock Market Open, Bond Market Closed, Banks Closed
  • Tuesday:  NFIB Small Business Optimism Index and Treasury Budget
  • Wednesday:  MBA Purchase Applications, Producer Price Index, Retail Sales, Business Inventories, FOMC Minutes, and John  William speaks
  • Thursday:  Consumer Price Index, Jobless Claims, Empire State Manufacturing Survey, Philadelphia Fed Survey, Fed Balance Sheet, Jeffrey Lacker, Richard Fisher, and Charles Plosser speak
  • Friday:  Treasury International Capital, Industrial Production, and Dennis Lockhart speaks

This week I spoke with Peter Costa, Trader and President of Empire Executions, and CNBC Market Commentator, about the overall market, initial jobless claims, FOMC Minutes, and the buzz from the trading floor.

Overall Market View

Post presidential election, Costa urges  getting back to business and addresing the fiscal cliff, including taxes and regulation. The capital markets have been flat for the last two years or so, and until the uncertainty is removed by Washington, the markets will continue to remain stagnant. He added that no matter when the fiscal cliff gets addressed, we will be affected. We are already suffering from the damages that were inflicted by Washington and we need to see a compromise from both parties. Costa proposed Obama incorporate some of Romney’s ideas, or even have Romney join his administration and have him be the bridge to bring the two parties together.

Initial Jobless Claims

Costa says he feels whatever recovery we have been seeing, has stalled. He is expecting the jobless claims to tick up, the range has been stuck at 350,00 to 370,000. He calls it a “stubborn problem,” and it will not go away until companies start hiring again. The storm that devastated the northeastern United States will also impact the claims numbers, as it has disrupted individuals and businesses in the area. Separately, companies want Washington to remove the uncertainty, including taxes and regulation for them, so they can expand and hire again. Until the Labor Department is able to convince CEO’s that they are working on this, the claims number will continue to stagnate.

FOMC Minutes

Costa is not expecting Federal Reserve Chairman, Ben Bernanke or the FOMC to announce any big program or event from the minutes of the central bank’s last meeting. The Fed has done all it can do, now it’s up to Washington to fix the fiscal issues affecting the economy.  He does expect the Fed to keep a watchful eye on inflation, however, especially with rising gasoline and food prices. That being said, he does not see any inflation on the horizon as wages have to begin to increase for such inflationary pressures to be brought on.

Buzz on the Trading Floor

Some traders are disappointed that Romney did not win the election. “President Barack Obama inherited some of the problems when he was first elected, but this time around, his second term, he owns the next four years, he can ‘t claim he inherited this baggage,” says Costa. He would like to see the administration make it easier for small businesses to start up and expand. People want to have the feeling that they are moving forward, both from a personal side and the corporate side.

Costa’s Gripe

Costa proposes one way to build confidence back into the financial markets, and make it attractive for small investors to return, is to bring more liquidity into the markets. He suggests a return to trading in eighths or nickels. Trading firms are not making money, as margins are very thin. Costa said “there is only so much computer programs and complicated formulas can do to eke out small gains,” and the industry, SEC, and Washington should be looking at ways to increase margins.