Weekly Economic Indicators: Seeking Confidence in Financial Markets

The schedule of economic releases for the week of April 8th is as follows:

  • Monday:  None
  • Tuesday:  NFIB Small Business Optimism Index, ICSC-Goldman Store Sales, and Wholesale Trade
  • Wednesday:  MBA Purchase Applications, FOMC Minutes, Treasury Budget
  • Thursday:  Chain Store Sales, Jobless Claims, Import and Export Prices, and Fed Balance Sheet
  • Friday:  Producer Price Index, Consumer Sentiment, and Business Inventories

I spoke with Peter Costa, Trader and President of Empire Executions, and CNBC Market Commentator, about the overall market, FOMC Minutes, weekly jobless claims, and his expectations for the market from the trading floor.

Costa expects the equity markets to flat line for the next three to four months and bounce around on various headlines from the euro zone and geopolitical events around the globe, including North Korea. Although companies have been beating expectations over the past few years, Costa believes that first quarter earnings for 2013 will come in line with forecasts. He said companies have been lowering expectations for too long and that can't keep going on forever. On investing opportunities around the world, he likes South East Asia and the Latin American market, specifically Mexico and Brazil. He pointed out goods are easier to ship from Mexico and Brazil than from China. He anticipates growth in the technology space, consumer staples area, and commodities including corn, wheat, rice, and the water related sector, such as water filtration and purification companies. He said, "We have 7 billion people in the world and we have to feed and educate them."

FOMC Minutes

This week investors will get the minutes of the Federal Reserve’s last FOMC meeting. Costa said, "What are they going to say, toe the line? The central bank keeps printing money." He believes Chairman Ben Bernanke and the Fed are not concerned with inflation at this time, even with higher gasoline and food prices. Such inflation is not foreseen at this time. The concern is, however, with wage inflation which he refers to as hard core inflation. He is interested to see which FOMC members have started to wane in their positions and are beginning to think about taking the "punch bowl" away and stop the endless stimulus.

Weekly Jobless claims

Costa is expecting the claims numbers to come in below the 330,000 range and continue the trend down. He credits the improving unemployment numbers to the record high equity market and improving consumer sentiment, which is encouraging consumers to go out and spend. The expectation is that the claims numbers will get better in the second and third quarters of this year. He says "this will be a good summer for the US economy..This is a rally no one wants, because it does not have full participation of all investors, particularly the small investors." He blames the lack of participation on a lack of confidence in financial markets.

Final Word

He would like to see a stable investing environment, but he realizes that is not possible. We will get some hiccups with a mild pull back in equities, which will create a buying opportunity. This could move some of the money from the sidelines back into the markets.