US Economics Week Ahead: A Quiet Week; A Busy Friday

The second full week in November brings with it not only a federal holiday on Wednesday, but a relatively quiet week on the data front. The week’s potentially most interesting piece of data—the Fed’s Senior Loan Officer Survey—has no official release date, however, looking back the report is typically published early in the week following the FOMC meeting.  Investors will be turning to the report for indications toward improvements in the credit and commercial real estate market.  After last week’s FOMC meeting Federal Reserve officials will be returning to the speakers’ circuit this week with three important speeches coming on Tuesday.

Other important indicators during the week include September’s international trade data, October’s import and export prices indices, and November’s preliminary consumer sentiment index, all occurring on Friday.   Additionally, close attention will be place on Thursday’s jobless claims release, following Friday’s worse than anticipated employment report.  As I mentioned on Thursday, as the third quarter earnings season winds down the primary catalyst for U.S. equity markets over the remainder of the year will likely be a tepid recovery in the U.S. labor market, placing added emphasis on any jobs related data.

The week could also bring with it passage by the House of their version of U.S. healthcare reform, which could drive some headlines.  Also on the political front, President Obama will make his first trip to Asia where his visit to China may grab some attention, especially after passing a recent tariff on Chinese tires.  Finally, Kraft has a deadline of 17:00 GMT Monday to make an official offer for Cadbury, or else be forced to walk away for at least six months.  On the earnings front, Wal-Mart is expected to announce third quarter earnings on Thursday.

Here is the rest of this week’s US calendar:

Monday, Nov. 9

6:15 p.m. EST: Daniel Tarullo, Federal Reserve Governor, will be speaking at a Money Marketeers event in NYC.

Tuesday, Nov. 10

7:45 a.m. EST: ICSC-Goldman Store Sales (Risk: Neutral, Market Reaction: Marginal): This weekly index tracks aggregate store sales across major US retailers, accounting for roughly 10% of total retail sales.  Given recent data supporting an increasing US saving rates and a worsening employment situation, this index could face some downward pressure.  Last week’s number indicated a weekly increment of 0.1% in store sales compared to a gain of 0.1% a week prior.

8:30 a.m. EST: November USDA Crop Report (Risk: Neutral, Market Reaction: Moderate): This report could garner added attention as frost and heavy rains have delayed harvests three to five weeks, and may have adversely impacted total crop production and yields, therefore impact prices.

8:55 a.m. EST: Redbook (Risk: Negative, Market Reaction: Marginal): The Redbook is a weekly measurement of chain stores, discounters, and department store sales.  This indicator tends to be less significant than the ICSC-Goldman Store Sales in forecasting retail sales.  According to the Redbook store sales were rose 0.9% last week on a year over year basis.

9:15 a.m. EST: Dennis Lockhart, Atlanta Federal Reserve Bank President, is giving a speech on the economy at the Urban Land Institute conference in Atlanta

10:00 a.m. EST: Janet Yellen, San Francisco Federal Reserve Bank President, is giving a speech on the economic outlook and real estate.

7:30 p.m. EST: Richard Fisher, Dallas Federal Reserve Bank President, is giving a speech on the economic outlook.

Wednesday, Nov. 11

Veteran’s Day (Federal Holiday—Fixed Income Markets are closed)

7:00 a.m. EST: MBA Mortgage Applications (Risk: Neutral, Market Reaction: Marginal): This index, which tracks new mortgage applications tends to be a reasonable forward looking indicator for home sales, but issues including customers filling out numerous applications could skew the index.  Applications rose last week 8.2% after falling 12.3% a week prior.  The increment was due to more attractive interest rates.  The refinance index rose 14.5%, while the purchase index fell 1.8%. Refinances made up 66.1% of all applications last week.

Thursday, Nov. 12

8:30 a.m. EST: Jobless Claims (Risk: Neutral, Market Reaction: Significant): Initial claims fell last week by 20K to 512K, after falling 1K a week prior. Despite second derivative improvements these numbers still indicate continued losses for monthly payrolls, and the unemployment rate, which is has already exceeded 10%. The current Bloomberg consensus forecast is expecting claims to remain flat this week after last week’s sharp drop.

9:00 a.m. EST: RBC CASH Index (Risk: Neutral, Market Reaction: Significant): The Royal Bank of Canada’s Consumer Attitudes and Spending by Household (CASH) Index is a monthly measure of consumer attitudes toward investing, the economic outlook, and personal finances.  This index does hold some importance in so much that it tends to demonstrate a pretty significant correlation with the consumer sentiment index being released next week.

10:30 a.m. EST: EIA Natural Gas Report (Risk: Neutral, Market Reaction: Moderate): This report highlights domestic natural gas inventories, which could have a significant impact on the energy sector.

2:00 p.m. EST: Treasury Budget (Risk: Neutral, Market Reaction: Moderate): The current Bloomberg consensus forecast for September’s US government budget deficit is –$150 billion compared to –$46.6 billion a month prior.  Large deficits have led to record levels of US treasuries auctions, which in some instances have placed downward pressure on rates and in a few cases the growing deficit has even sparked some mild concerns over the US’s risk free credit rating. To help put this into perspective; the government’s budget full year deficit totaled -$1.42 trillion compared to -$454.8 billion a year ago.

4:30 p.m. EST: Fed Balance Sheet & Money Supply (Risk: Neutral, Market Reaction: Marginal): Since the Fed’s shift to quantitative easing, the balance sheet has become one method to measure to the Fed’s effectiveness.  The market will pay close attention to the reserve bank credit component, which measures factors supplying   providing reserves into the banking system.  The Fed’s balance sheet expanded slightly last week to US$2.147trn from US$2.144trn a week prior.    The fed’s balance sheet has slowly been shifting away from emergency lending facilities to Treasuries, agency debt, and mortgage-backed securities to help moderate long-term interest rates.

Friday, Nov. 13

8:30 a.m. EST: September’s International Trade Data (Risk: Neutral, Market Reaction: Moderate): An anticipated increase in exports will likely be offset by higher energy prices, which should cause the trade deficit to enlarge for the fifth consecutive month.  The current Bloomberg consensus forecast is for a deficit of $32.5 billion compared to $30.7 billion in August.

8:30 a.m. EST: October Import and Export Prices (Risk: Neutral, Market Reaction: Moderate): A weakening dollar coupled with rising energy prices should lead to a large increment in US import prices.  The current Bloomberg consensus forecast is for an increase in import prices of 1.1%.

9:55 a.m. EST: Preliminary November Consumer Sentiment (Risk: Downside, Market Reaction: Significant): A worse than anticipated employment report coupled with rising energy prices and a volatile equity markets could place some pressure on November’s preliminary consumer sentiment release.  Nevertheless, the current Bloomberg consensus survey is for a reading of 71.0, compared a final release of 70.6 in October.

10:30 a.m. EST: EIA Petroleum Status Report (Risk: Neutral, Market Reaction: Moderate): This report measures US domestic petroleum inventories.  Large unanticipated swings in this index could have a significant impact on energy prices.  Last week this report showed a decline of -4.0 million barrels versus an increment of 0.8 million barrels a week prior.

9:15 a.m. EST: Charles Evans, Chicago Federal Reserve Bank President, is participating in a panel discussion with Bank of France Governor Christian Noyer on “Should Monetary Policy Prevent Bubbles?”

Enjoy the weekend!