Weekly Market Outlook – Cleared Some Hurdles

Weekly Market Outlook – March 14, 2016

Though it didn’t hit the ground running last week, a strong Friday session translated into a fourth straight week of gains. Better still, the S&P 500 (SPX) (SPY) managed to just clear a major technical hurdle, and though it’s ripe for some profit-taking, investors may finally be confident enough in the current rally to keep it going. The beginning of this week, however, is critical if the advance is going to last.

We’ll weigh the risks and rewards after a quick preview of this week’s potentially market-moving economic news. 

Economic Data

As was noted a week ago, last week was a very dead week in terms of economic news. What little we had is all on the grid below.

Economic Calendar

Source: Briefing.com

This week is clearly going to be busier. We can’t preview all of it, but we can serve up a glimpse of the bigger items, starting with inflation.

We’ll actually get two doses of inflation data… producer price inflation on Tuesday, and consumer inflation on Wednesday. After a modest but measurable increase last month, economists are looking for a lull again. Just bear and mind those same economists underestimated January’s price increases. The annualized consumer inflation rate now stands at 1.37%, and has been in an uptrend.

Inflation Chart

Source: Thomson Reuters

Either way, the Fed decision is slated for Wednesday afternoon, after the CPI data for February will be posted that morning. One can’t help but wonder how long the FOMC will wait to make the rate hiking decision, hoping to get as much inflation data as possible before making the call. It’s very much a “could go either way” scenario.

The rest of this week’s big data also comes on Wednesday…. last month’s housing starts and building permits, and last month’s capacity utilization and industrial productivity data.

The pros are planning on capacity utilization and factory activity peeling back a little after January’s promising progress. Already facing a headwind, a weak reading on one of both fronts could be damaging.