Economic Indicators: New Home Sales, Jobless Claims

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Arthur Cashin, Managing Director of Floor Operations at UBS Financial Services, thinks New Home Sales, Durable Goods, Jobless Claims, and GDP will be the most watched economic indicators the week beginning August 22. Cashin says traders will be closely watching the impact of Governor Perry’s cautious words on Federal Reserve Chairman, Ben Bernanke, at the FOMC meeting in Jackson Hole, WY., as well as looking at the Richmond Fed and Kansas City Fed reports, especially since the New York Fed and Philadelphia Fed released very disappointing business activity numbers as a result of a decline in new orders and shipments. The 2 year, 5 year, and 7 year treasuries will continue to be in focus as investors look for signs of deflation or a flight to safety. Cashin adds that “Europe continues to drive the bus"; traders will be watching for developments in Europe regarding the sovereign debt crisis. The European banks have been in the forefront recently as investors look for signs of liquidity in the financial institutions. Germany and France do not want its financial institutions to bear the cost of bailing out the region.

Various other economic indicators are also due from manufacturing, real estate, the cost of living, consumer sentiment and the broader market. The announcement schedule for the week of August 22th includes the following:

  • Monday:  None

  • Tuesday:  New Home Sales

  • Wednesday:  Durable Goods Orders

  • Thursday:  Initial Jobless Claims

  • Friday:  GDP and Consumer Sentiment

Highlights from the week of August 15 thru 19: The volatility of the past several weeks did not stop merger Monday from returning, after Google announced it is acquiring Motorola Mobility in a $12.5 billion deal, and Bank of America agreed to sell its MBNA international credit card portfolio to TD Bank for $8.5 billion. The equity markets were higher as the Dow soared closed to 2% and S&P climbed over 2%.

The manufacturing data on Monday was disappointing and uneventful, as it was overshadowed by merger announcements. European sovereign debt fears returned on Tuesday, and the markets gave back some of Monday’s gains after investors were not convinced by the plans announced by German Chancellor, Angela Merkel and French President, Nicolas Sarkozy. The plans call for closer integration of the euro zone, rejected the idea for a common euro bond, and proposes a financial transaction tax. The housing data was slightly better than expectations but still negative, and import prices were disappointing led by higher food prices. On Wednesday, the inflation numbers came in higher than forecasted for July, led by higher prices for tobacco, trucks and pharmaceuticals, showing declines in commodity costs have yet to filter to other goods. Global economic fears spooked investors on Thursday, world markets were down significantly and volatility returned. The cost of living in the U.S. climbed in July more than anticipated, led by higher energy and food prices. The jobless claims data was higher again as more Americans than forecast filed applications for unemployment benefits.  Existing home sales and the Philadelphia Fed Factory index were disappointing. Leading Economic Indicators were the only bright spot, but were considered mostly an afterthought for traders. The Dow and S&P both plunged over 4%. The equity markets finished the week on a down note with light volume as the European sovereign debt crisis continues to take center stage. Towards the close, traders were tired over the global economic slowdown.

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


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