Weekly Economic Indicators

The full announcement schedule for the week of April 9th is as follows:

  • Monday:  None
  • Tuesday:  NFIB Small Business Optimism Index and Wholesale Trade
  • Wednesday:  Import and Export Prices, Fed Beige Book, and Treasury Budget
  • Thursday:  International Trade, Initial Jobless Claims, Producer Price Index, Fed Balance Sheet
  • Friday:  Consumer Price Index and Consumer Sentiment

Click this link for the full economic calendar for the week.

Economic Indicators - What to Watch

This week, I spoke with Doreen Mogavero of Mogavero, Lee & Co. and frequent commentator on Bloomberg Television and Fox Business News. Mogavero will focus on a few economic reports during the next week that she believes will impact the overall market, including the initial jobless claims, higher gas prices, Consumer Price Index, housing data, and any additional stimulus from the Federal Reserve Bank (the “Fed”).  A complete list of economic indicators is included above.     

 

Overall Market View

Mogavero pointed out that trading volume is very low and this is not a normal market.  She called it a “trader to trader” market, where value investors are being excluded and a very “opportunistic” market where no one is buying for the long term, everyone has a short term strategy.  Moreover, she said most traders are still anticipating a pull back and a lot of money remains on the sidelines. Investment managers who have waited for 2 years to get into this market feel that if they have to wait another 2 ½ years, they will  do so to be on advantageous terms.  Mogavero said she can’t remember a market like this with such a small base of participation. Investors have no confidence in the safety of the marketplace which is why they are keeping their money out of the markets, earning only 1% and 2% interest rates.  Baby boomers are the ones with funds to invest and she can’t wait from them to return to the market, but she does acknowledge, some value investors may never return. 

Week Initial Jobless Claims Data

Mogavero is concerned with the revised employment numbers.  Given the Labor Department’s decision to extend the time period to retrieve data for the jobs report, she feels we could have an unusual reading on the jobs data.  According to Mogavero, colleges are starting to have more companies come on campus to hire interns, which is a good trend.  However, she cautions that the jobs data and housing data are a “mixed bag”.  Mogavero would like to see the jobs data and housing date go in the same positive direction, which would be solidly positive for the economy.

Higher Gas Prices

Mogavero believes we could see increasingly higher gas prices, which would in turn impact GDP.  She cites the higher gas prices she saw on a recent trip out west,  along with rising state taxes, transportation costs, distribution and marketing costs, and refining costs.  Mogavero questions whether consumers are truly better off than they were a year ago?  Only the oil rich countries are benefiting from the higher gas prices and overall, no one in the US is feeling good about the economy.  Accordingly, Mogavero thinks America needs to address its energy policy in a diversified way.  As a quick fix, she believes we should drill, but as prices start to come down, we should take the opportunity to seek alternative sources of energy. 

Additional Stimulus or Possible QE3

Operation Twist ends in June and she does not expect any additional stimulus from the Fed.  Investors are focused on inflation and unusually low interest rates.  The key question is, what kind of shape is the federal government in with these low interest rates?  If the Fed was thinking of any stimulus it would have to be right now, in light of the fall elections.  However, the central bank has made it clear that there will be no stimulus anytime soon.  

Housing Market

Though Mogavero believes the housing market could decline a bit further, she thinks it is currently “bumping along the bottom.” She pointed out the housing market depends on the jobs market.  In light of the 8.3% unemployment level right now, the housing market will take a while to  recover. She suggested, maybe, a 7% unemployment rate will become the new “normal” which is necessary to drive sustained improvement.

Consumer Sentiment

Mogavero said the people she has spoken with are not buoyant about the recovery. She questions the audience the pollsters (Thomson Reuters/University of Michigan) are polling, because she does not know of anyone who feels optimistic about the economy and it is difficult to see where they are getting their data from.

 

 



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