Weekly Economic Indicators

The economic release schedule for the week of February 20th  is as follows:

  • Monday:  US Holiday: Presidents’ Day, Bond and Equity are Markets Closed

  • Tuesday:  None

  • Wednesday:  Existing Home Sales     

  • Thursday:  Initial Jobless Claims, FHFA House Price Index, and Fed Balance Sheet 

  • Friday:  Consumer Sentiment and New Home Sales 

Click this link for a more comprehensive economic calendar for the week:  http://www.bloomberg.com/markets/economic-calendar/


Economic Indicators - What to Watch

This week I spoke with Peter Costa, NYSE Floor Trader and President of Empire Executions, and CNBC Market Commentator, about the Overall Market, Housing Data, Initial Jobless Claims, Q4 Earnings, the Upcoming Presidential Elections, and the Price of Crude Oil. The economic calendar is light due to the President’s Day Holiday, have a nice long weekend.   A complete list of economic indicators is above. 


Overall Market

Costa believes the equity markets are looking good, and he can see more movement to the upside, despite some traders saying we are due for a retraction.  Barring any cataclysmic events, he sees the market making small, cautious moves for now.  The narrow trading ranges are driving low volumes and Costa believes there is still  a lot of money on the sidelines.  He says most traders are in this market for the short term, as evidenced by daily flows between the Euro and the US dollar, depending on the news out of Europe.  Costa calls the decade of the 2000s a “lost decade“, due to the lack of growth.  He thinks the current decade will realize much more growth, but America needs to find the next phenomenon and develop products and ideas to take us to the next level. 


Housing Market

This week investors will get a few reference points of housing data, including existing home sales, FHFA house price index, and new home sales. Costa thinks home builders are starting to feel more confident about the market, but he does not yet see this reflected in the housing market.  There are still a lot of single homes available and a glut of foreclosures in the pipeline, following the agreement with regulators and the major banks over alleged foreclosure practices.  He expects the housing market to bottom out by mid 2013.  Finally, Costa said if the economy picks up, then the housing market should follow soon after, because banks will look to refinance existing loans and get rid of inventory through short sales and other methods in order to monetize the unwanted assets. 


Initial Jobless Claims

Costa sees continued improvement in the jobs market and expects the jobless claims rate to continue to fall further below the 400k mark and the unemployment rate to be lower than the current 8.5% range.  He believes the trend is going in the right direction and he sees improvements across the board including manufacturing, retail, construction, and the service sector.   However, he points out, we need to see the unemployment rate come down for the blue collar worker.  The unemployment rate for people without a college degree is about 16% compared to 5% for individuals with a college degree.  He believes one way to fix this problem is to repatriate some of the investments overseas by multinational companies.  We need to revise and revamp the corporate tax code and give companies incentives including a lower tax rates to invest in American and bring jobs back home.


4th Quarter Earnings Season

Based on what Costa saw in the final quarter of 2012, he expects 1st quarter earnings to be a little soft because of the upward arc, companies stock piling inventories, and exhausted cutting of direct expenses.  He does not expect a lot of companies will beat estimates and predicts modest revenue growth as the economy has not expanded much.  However,  he feels the markets will benefit, as companies will continue to announce stock repurchase programs and mergers and acquisitions. 


The Upcoming Presidential Elections and the Price of Crude Oil

Costa believes the Republicans should nominate Mitt Romney as the candidate to represent the party in the general elections in the fall.  He feels after Romney’s nomination, money sitting on the side lines would start to flow back into the equity markets.  With that thought in mind, he expects the 3rd quarter to be a good one, although a lot of other things could happen in between.   In particular, he is concerned with higher gas prices and the potential to hit record highs just in time for the summer driving season.  Costa points out, anytime oil goes over $100 per barrel, regular consumers have to spend about $30 more a month for gas.