This week’s calendar is loaded with important data. Now that the Jackson Hole Fed Conference is over, can we expect a policy change soon? Every data report this week will get special scrutiny. Will the Fed get the signal to hike rates?

Last Week

The important economic news was pretty good, but interest focused on Chair Yellen.

Theme Recap

In my last WTWA, I predicted a week-long focus on the Fed conclave at Jackson Hole and the implications of Chair Yellen’s speech. This was the story from CNBC’s opening on Monday through the Fast Money group on Thursday after the close. There was an interlude for the “squatty potty” story, but even CNBC cannot talk about the Fed all of the time. Jane Wells is a good sport about such assignments and seems to enjoy “suiting up” for the occasion. I congratulate her on her new status as “special correspondent.”

The Story in One Chart Short

I always start my personal review of the week by looking at this great chart from Doug Short. The overall range is very narrow, with stocks remaining near record highs. It shows the effect from the Yellen speech, the Fischer comments, and the final verdict. It was all pretty muted. Doug has a special knack for pulling together all of the relevant information. His charts save more than a thousand words! Read his entire post where he adds analysis and several other charts providing long-term perspective.

The News

Each week I break down events into good and bad. Often there is an “ugly” and on rare occasion something really good. My working definition of “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

The Good

  • Initial jobless claims fell 1000 to 261K. The four-week moving average also edged lower. This is a continuing strong signal about labor market conditions.
  • Chemical activity continues higher. GEI has the story. “Davidson” (via Todd Sullivan) shows why this is important.

    •  

  • Durable goods orders rose 4.4% snapping the recent losing streak.
  • New home sales beat expectations by a mile – SAAR of 654K versus expectations of 580. The NYT (finally) joins Calculated Risk in noting the rebound in the housing market.

    • The Bad

  • Q2 GDP rose only 1.1% according to the revised calculations.
  • Existing home sales declined 3.2%. Calculated Risk has the story.

    • The Ugly

    Budget projections. Left unchanged, the U.S. federal budget will increase in relation to total economic output for the first time since 2009. Econintersect.com does a great job of highlighting key reports from a wide variety of sources. This analysis from the non-partisan Congressional Budget Office includes a revealing chart of what is in prospect.

    Perhaps one of the Presidential candidates will reach agreement with Congress to address this.

    On a personal note, I used to teach a public finance course with a unit on budgeting. One of my favorite lectures included the progression of projections. What started out as “balanced” on a five-year projection always turned into a deficit when “year zero” was reached. I taught those classes a long time ago, but nothing has changed.

    The Silver Bullet

    I occasionally give the Silver Bullet award to someone who takes up an unpopular or thankless cause, doing the real work to demonstrate the facts. No award this week. Nominations always welcome! For ideas, go to your favorite conspiracy site and look for people doing data mining and/or poets writing about economics.

    The Week Ahead

    We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react. That is the purpose of considering possible themes for the week ahead. You can make your own predictions in the comments.

    The Calendar

    We have a huge week for economic data. While personally I watch everything on the calendar, you do not need to! I highlight only the most important items in WTWA. Focus is essential.

    The “A” List

  • Employment situation (F). Another strong report? Will this tip Fed policy into a rate increase?
  • ISM index (Th). Great concurrent read on the overall economy with some leading aspects.
  • Personal income and spending (M). You have to earn it before you can spend it! July data, but both are important.
  • Consumer confidence (T). The Conference Board version helps to assess both job creation and spending plans.
  • Auto sales (Th). One of the best non-government reads on the economy.
  • Core PCE prices (M). This – not CPI – is the measure the Fed uses to evaluate the 2% inflation target.
  • Initial claims (Th). The best concurrent indicator for employment trends, but less attention during “employment week.”
    • Print Friendly, PDF & Email

    Related Posts