Weekly Economic Indicators: Looking Ahead to 2013

The economic release schedule for the week of December 31st is as follows:

  • Monday:  Dallas Fed Mfg Survey
  • Tuesday:  New Year’s Day, All Markets Closed
  • Wednesday:  Motor Vehicle Sales, MBA Purchase Applications, ICSC-Goldman Store Sales, PMI Manufacturing Index, ISM Mfg Index, Construction Spending, and FOMC Minutes
  • Thursday: Chain Store Sales, Challenger Job-Cut Report, ADP Employment Report, Weekly Jobless Claims, and Fed Balance Sheet
  • Friday:  Employment Situation, Factory Orders, and ISM Non-Mfg Index

Click this link for a more comprehensive economic calendar for the week.

Economic Indicators - What to Watch

This week I spoke with Gordon Charlop Ph.D., Managing Director, Rosenblatt Securities, and frequent CNBC commentator.  This is a holiday shortened week and Charlop will focus on the overall market, looking ahead to 2013, non-farm payrolls, weekly jobless claims, and the FOMC minutes.  A complete list of economic indicators is above.

Overall Market

Charlop said it’s all about the fiscal cliff for the markets now.  He is encouraged by President Obama cutting short his Christmas vacation and returning to Washington to negotiate a last minute deal and believes the stakes are too high for politicians not to get a deal done.  He predicts the President will accept taxing income levels at 400K and Republicans will break rank and vote with the Speaker.  This could cost some of them their jobs, but it will be for the good of the country.  Charlop is hopeful politicians are listening to what the American people want, namely a deal to get the economy moving again.

Looking Ahead to 2013

Assuming Washington is able to compromise on the fiscal cliff and avoid another recession, Charlop thinks we will see money flow back into the capital markets, following strength in capital investments.  On the other hand, if they can’t get a deal done, we are likely to see a move towards the risk off trade and a slowdown in M&A activity.

Non-Farm Payroll & Jobless Claims

Charlop said there is something psychological about the 8% unemployment rate, as it significantly retraced from a technical level.  The next important level is 7.5% and clearing it will indicate we are getting better, but we still have a ways to go, especially with the U6 number (includes under-employed).  Charlop believes the unemployment situation will continue to improve slowly and the housing market will keep showing positive signs.  “The ingredients are in place for a 2-2.5% GDP, unless politicians derail it.”   On the jobless claims numbers, Charlop said the trend is encouraging, as the numbers keep dropping, now hovering around the 350K range.

FOMC Minutes

Charlop is not expecting any surprises from the FOMC’s last meeting, unless the employment numbers improve drastically.  The Federal Reserve will not back off from their stands, as is the case globally with other central banks.  Central bankers are keeping their foot on the accelerator, pumping more stimulus into their economies, and unless Chairman Bernanke decides he has had it with political leaders and the gridlock in Washington, the same is expected to continue.  Charlop commented we need to get back to an environment that encourages investment.

Buzz on the Trading Floor

Charlop is concerned that equity volumes remain low.  This strengthens the argument that current volumes are the new normal.  He recognizes that some believe that the current market structure may not be providing small investors with a level of comfort that the markets are fair and orderly which may be contributing to the volume decline.  Although he is not convinced of the validity of this argument.

Charlop’s Gripe

Charlop said politicians have to remember what they were elected for, and that is to do the people’s work, and not to be obstructionist.  They are expected to move things along to the best of their abilities by compromising.  He pointed out, the nature of politics is to negotiate and cooperate and this is the time for political leaders to rise above the partisan politics and accomplish what the American people elected them to do.  It has not been encouraging, since they battle over every small issue that comes up.  That is not the best way to show the world how a democracy works.  Charlop said “cooperation is no longer the order of the day. Where is our leadership from Washington?”

Happy New Year!


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