Weekly Economic Indicators: Housing and Job Data Improvement

 The schedule for the week of February 18th includes:

  • Monday:  US Holiday, President’s Day, All Markets Closed
  • Tuesday:  Housing Market Index
  • Wednesday:  MBA Purchase Applications, ICSC-Goldman Store Sales, Housing Starts, Producer Price Index, and FOMC Minutes
  • Thursday:  Consumer Price Index, Jobless Claims, PMI Manufacturing Index Flash, Existing Home Sales, Philadelphia Fed Survey, Leading Indicators, Fed Balance Sheet, and James Bullard Speaks
  • Friday:  Jerome Powell Speaks.

I spoke with Benedict Willis III, Managing Director of Albert Fried & Company, LLC., and frequent commentator on Bloomberg, CNBC, and FOX Business, about the economic calendar. Willis will be focused on the overall market, housing data, weekly jobless claims, and the FOMC minutes.

Overall Market View

Willis said it would be in the best interest of all investors if there was a pull back in the equity market, as it would give market participants who are sitting on the sidelines an opportunity to partake in the long term rally. Also, it would be healthy for the rally, rather than having it continue higher. He appreciates the great rotation of money flowing out of bond funds and into equity funds, but he cautioned that the increase since the beginning of the year has been too strong, having already gained some 6% for the year. He predicts that if there are any bumps in the road for equities, they could come from currencies. Also, there will be interruption from Asian and other global economies, but the macro data suggests the world economy is improving. He credits the new regime in China; they understand the dynamics of their economy and its contribution to the rest of the world.

Housing Data

Willis continues to be impressed with the improving housing data, as it is an example of how the world economy is recovering. He added that the trend is getting better across the board and money is being made. This week there are reports on the housing market index, including MBA purchase applications, housing starts, and existing home sales.   The housing sector is improving more than it was a year ago, he commented. It will get interesting as the interest rate on the 10 year treasury bond keeps rising, which will force mortgage rates up and buyers will have limited options to price houses. It will cost more to buy a house even though interest rates continue to be at historically low levels.

Weekly Jobless Claims

“The improving jobless claims data is encouraging, but it is not progressing as rapidly as one would hope,” Willis said. He would like to see the trend continue and fall below 250,000, but he believes that is wishful thinking. He forecasts that once the claims data falls to the 300,000 range, the economy will start to pick up. This week he is expecting a tick upwards in the claims numbers after last weeks surprise that did not have Connecticut or Illinois numbers in the report.

FOMC Minutes

The minutes of the Federal Reserve are not expected to reveal any earth shattering news, according to Willis. The press conference held by Chairman Ben Bernanke after the FOMC two-day meeting already revealed most , if not all of the breaking news. Willis added “the minutes have become less relevant now since the Chairman started holding the press conference.” However, that being said, he will be looking to see which members have started to sway and become hawks. The central bank’s asset buying program has increasingly becoming the focus for the equity market, particularly since the economic data has been improving.

Ben’s Gripe

He continues to be baffled by the media’s focus on the euro zone as opposed to China. The second largest economy in the world is much more important now to the globe than Europe. The impact that Greece, Cypress, Italy, and Spain have on the world is minimal, so he would like to see more attention directed to the new regime in China.

Buzz on the Trading Floor

Ben said professional traders are looking for a pull back, but the equity market continues to go higher. This rally may not be as healthy as it seems. A pullback and re-tracement would not be such a bad idea.