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Posts Tagged ‘CPI’

Pricing Pressure Building within the Depths of the PPI

May 18th, 2010 Michael McDonough Comments off

Rising producer prices eventually translate into higher consumer prices as businesses are forced to pass on a portion if not all of the price increments to their customers.  So what you might be asking, this morning’s PPI indicated that producer prices fell -0.1% on a monthly basis. While this is true the PPI is broken out into three sub-components crude, intermediate, and finished goods—the headline PPI only tracks finished goods.  As higher producer prices eventually pass-through to consumer prices; higher crude material costs ultimately impact intermediate good prices, while rising intermediate good prices in time increase the headline PPI.  As of April crude material rose roughly 30% y/y, while intermediate good prices climbed 9%, the highest reading since 2008 (See chart).   Core raw material prices rose 49.7% y/y–its largest yearly gain on record. While this isn’t an immediate recipe for higher consumer prices; it is definitely indicative that pressure is building in the pipeline. 

 

Source: Bloomberg

In terms of monetary policy, short-term inflation expectations as measured by the US TIPS breakeven curve have diminished significantly on waning commodity prices and a stronger dollar stemming from the ongoing crisis in Europe and concerns over Chinese tightening.  This will likely keep the Fed on hold through-out the remainder of the year as unemployment remains high and growth below what would be anticipated following a major recession.  Looking further ahead, inflation pressure is gaining some momentum and should become more of a factor in monetary policy decisions as the year progresses. 

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China’s Tightening Tool Box…

March 12th, 2010 Michael McDonough Comments off

The wheels of tightening may be gaining momentum in China, after February’s higher than anticipated inflation release.  High inflation leading to negative real deposit rates may entice investors to withdraw deposits and invest in more speculative assets, potentially spurring what is arguably already a bubble in the country’s housing sector.  I believe that China has been avoiding an increase in its deposit rates, at least before tightening by the U.S. Fed, in order to avoid further spikes in hot-money inflows (from investors looking to take advantage of interest rate differentials and anticipated appreciation in the RMB).  But, China’s inflation may have passed a threshold forcing the government to act.

Chinese Consumer Prices on an Annual Basis:

Source: Bloomberg

So what does further tightening in China look like?  First off we will likely see China continue removing excess liquidity through open market operations, increasing the yields and issuance of PBOC paper.  As the chart below illustrates, China has already begun this process, but thus far has proven to not be enough.

China People’s Bank of China 1Y Reference Yield:

Source: Bloomberg

China will most likely continue raising its reserve required ratio (RRR), which they have already increased to 16.5% from 15.5% since the start of the year.  I expect the RRR will move to it’s historic high of 17.5% over the next several months.

Chinese RRR:

Source: Bloomberg

A recovery in Chinese exports and inflationary concerns should reignite a gradual appreciation in the RMB, which was suspended at the onset of the global financial crisis.  (For more on this please see my recent piece on the RMB NDF curve).

RMB/USD:

Source: Bloomberg

Finally, the coup de grâce in Chinese tightening will be any hike in the country’s reference deposit/lending rates.  This would be a clear indicator that Chinese authorities mean business, and the country’s tightening cycle is approaching full swing.  Many analysts suspect we could see a hike in this rate within the next three weeks. possibly as early as next week.  Reverberations from this move would be felt globally, especially in the material and global transport sectors.  Easy money and large increments in new lending spurred almost insatiable demand from the country for raw materials for both final use and speculative purchases.  But, let us not forget, despite creating short-term volatility, these moves are necessary to guarantee China’s future economic growth.  Therefore, China’s tightening cycle will likely lead to quite a few buying opportunities both inside and outside of the country going into the future.

Chinese 1Y Deposit Rate vs. Fed Funds Target:

Source: Bloomberg

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IP, CPI, & the NY Fed Survey

January 15th, 2010 Michael McDonough Comments off

December’s Industrial Production rose +0.6%, inline with a Bloomberg consensus forecast of +0.6%. November’s release was revised to +0.8% to +0.6%.  December’s reading was almost entirely due to a 5.9% jump in utilities stemming from extremely cold weather around the country. The index’s manufacturing component actually fell -0.1% during the month, while mining output rose modestly by 0.2%.

December’s Consumer Price Index gained +0.1%, after rising +0.4% in November. On a year over year basis, CPI is up +2.7%. Core CPI rose by +0.1% during the month following no change in November. On a year over year basis Core CPI is up +1.8%.  This data continues to indicate that inflation will not be a concern over the near-term,thereby reducing pressure on the fed to remove accommodative monetary policy.

The Empire State Manufacturing Survey jumped to 15.92 in January, compared to a revised 4.50 in December (originally reported at 2.55). It is important to note that this month’s data includes annual revisions. Looking the components: New orders rose to 20.48 in January from 2.77 in December; Prices paid climbed to 32.00 from 19.74; the 6-month outlook finished at 56.00 from 52.63; and finally the employment index moved into positive territory with a reading of 4.00 in January from -5.26 in December.  This result was well above expectations, and it will be interesting to see of the Philly Fed Survey demonstrates a similar surprise on January 21st.

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US Economics Week Ahead: Retail Sales & The Start of Earnings

January 8th, 2010 Michael McDonough Comments off

With employment out of the way—for now—onto earnings; Alcoa is scheduled to kick of the 4Q09 earnings season with its report on Monday.  Earnings might be stealing most of the show this week, but don’t count out economic data with the release of a critically important retail sales release on Thursday and a torrent of Fed speak prior to the blackout period for the Jan 26-27 FOMC meeting.  Speaking of the Fed the market will gain access to the Beige Book on Wednesday, which should continue to indicate marginal upticks in economic activity throughout the fed’s districts.  Other important releases include; Thursday’s jobless claims and business inventories; and Friday’s CPI, Empire State Manufacturing Survey, industrial production, and consumer sentiment releases.

Don’t ignore the fed speak.  It is my belief that as we move closer to a new fed tightening cycle the first indications of a shift in the Fed’s bias will come through subtle or maybe even not so subtle clues in fed officials numerous public speeches.  The next indicator will come in the form of the FOMC minutes, but that is another story for another day.  Given the weakness in last week’s employment report I still think we are a ways off from a new tightening cycle—November 2010—, but I am not the one making the decisions, so I recommend listening to Fed officials closely as we move closer to an inevitable move.

Other notable companies reporting earnings next week include Intel (INTC) and JP Morgan (JPM).  Next week will also see the opening of the Detroit Auto Show on Monday, where heavy focus is likely to be placed on small and hybrid vehicles.  Finally, I wanted to thank everyone who has recently emailed me regarding the usefulness of this piece.  Additionally, I invite anyone with any comments or recommendations on how to make the Economic First Look even more useful to please shoot me an email.

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

Monday, Jan. 11

12:40 p.m. EST: Dennis Lockhart, the Atlanta Federal Reserve Bank President, will give a speech on the economy at the Rotary Club of Atlanta.

9:10 p.m. EST: James Bullard, the St Louis Federal Reserve Bank President, will speak in Shanghai.

Tuesday, Jan. 12

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.  Last week’s number rose +1.5% compared to an increment of +0.4% a week prior.  This week’s release will cover the first full in January.

8:30 a.m. EST: November’s International Trade (Risk: Neutral, Market Reaction: Moderate): I anticipate that November’s trade balance will widen slightly as likely imports rose at a faster pace than exports, due to higher energy import costs.  In October, export growth surprised to the upside leading to a marginal contraction in the trade balance. It is usually expected that both exports and imports rise during the start of an economic recovery, while the trade balance widens.  The current Bloomberg consensus forecast is for the trade balance to widen to -$35.0bn in November from -$32.9bn in October.

8:55 a.m. EST: Redbook (Risk: Neutral, 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 rose 1.6% last week on a yearly basis.

7:00 p.m. EST: Charles Plosser, the Philadelphia Federal Reserve Bank President, will give a speech on the economic outlook at the Entrepreneurs Forum of Greater Philadelphia.

Wednesday, Jan. 13

7:00 a.m. EST: MBA Mortgage Applications (Risk: Neutral, Market Reaction: Marginal): This index, which tracks new mortgage applications tend to be a reasonable forward looking indicator for home sales, but issues including customers filling out numerous applications could skew the index.  Applications rose 0.5% last week after plummeting -22.8% a week prior.  Refinance applications fell -1.6%, while purchase applications rose 3.6%.  A wave of buyers, filling out multiple mortgage applications, that were looking to take advantage of the first time home buyer tax credit–originally set to expire on Nov. 30th–have already completed their transactions, and have recently reduced the demand for mortgages.    However, the recent extension of the first time home buyer tax credit should eventually bring a new set of buyers into the market, which could help support the purchase index over the coming months.

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 an increase of 1.3 million barrels versus a drop of -1.5 million barrels a week prior.

12:30 p.m. EST: Charles Evans, the Chicago Federal Reserve Bank President, will speak at the Corridor Economic Forecast Luncheon.

2:00 p.m. EST: Beige Book (Risk: Neutral, Market Reaction: Significant): In the Fed’s previous Beige Book all of its districts reported at least modest upticks in growth, and I anticipate this trend will continue in the current release.  The report covers the last week in November though the first week of January.  The Beige Book is used as an input at the FOMC’s monetary policy meetings, meaning it shouldn’t be ignored by investors.

2:00 p.m. EST: December’s Treasury Budget (Risk: Neutral, Market Reaction: Moderate): December’s treasury budget will almost certainly show a record 15th consecutive month of deficits.  In November the monthly deficit totaled -$120.3 billion, bringing the government’s fiscal year to date total deficit up to -$296.7 billion.  December’s deficit may get some relief through TARP paybacks, but remain negative.  The current Bloomberg consensus forecast is for a deficit in December of -$92.0 billion.

Thursday, Jan. 14

8:30 a.m. EST: December’s Retail Sales (Risk: Neutral, Market Reaction: Significant): After rising 1.3% in November, retails sales should experience its third consecutive month of growth in December.  This growth will likely be led by strong vehicle sales during the month, which rose to a pace of 11.2mn vehicles during the month from a pace of 10.9mn units in November.  Excluding the auto component, retail sales should show some growth, but at a more moderate rate.  Of course any surprise to the upside in this data would be welcomed by the market.  The current Bloomberg consensus forecast is for retail sales to rise 0.4% in December, with retail sales ex-auto rising a more moderate 0.2%.

8:30 a.m. EST: Jobless Claims (Risk: Neutral, Market Reaction: Significant): Initial claims rose 1K last week to 434K, after falling 22K a week prior.  The four week moving average improved to 450,250 from 460,250.  This week’s strong seasonal adjustment factor—the strongest of the year in fact—could have some sway over the weekly report.  Improving initial jobless claims are indicative of fewer job losses in the BLS’s monthly employment report; however, the job situation will still get worse before it gets better.  The current Bloomberg consensus is for an initial jobless claims reading of 437K on Thursday.

8:30 a.m. EST: Import and Exports Prices (Risk: Neutral, Market Reaction: Marginal): A decline in energy prices during the month and a modest appreciation in the US dollar will likely helped to bring down import prices in December.

9:00 a.m. EST: RBC CASH Index (Risk: Neutral, Market Reaction: Marginal): 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 on Friday.

10:00 a.m. EST: November’s Business Inventories (Risk: Positive, Market Reaction: Moderate): Marginal attention is typically placed on this release, but this month the business inventories report takes on added significance. Economists use this release to help gauge the impact of the inventory cycle on fourth quarter GDP growth.  What this means is economists will be using this data to confirm or alter their fourth quarter 2009 inventory projections, which could sway fourth quarter GDP projections.  Many economists—including myself—expect the inventory cycle will play a lead role in the current recovery.  It is important to note that the manufacturing and wholesale inventory components of the report have previously been released and rose +0.2% and +1.5%, respectively.  Therefore, the report’s retail inventory component—the only unknown figure— is the most important for investors to watch.  The current Bloomberg consensus forecast is for a rise in business inventories of 0.2%.

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.

4:30 p.m. EST: Fed Balance Sheet & Money Supply—Current Week’s Release (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 shrank marginally last week to US$2.216trn from US$2.219trn.  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, Jan. 15

8:30 a.m. EST: December’s Consumer Price Index (Risk: Neutral, Market Reaction: Significant): Headline consumer prices likely rose in December, albeit at a slightly more moderate pace than the 0.4% rise in November.  A bit of warning, on a year over year basis headline CPI will likely rise at the fastest pace in over a year due to extraordinarily low energy prices realized in the fourth quarter of 2008, this pattern will likely continue over the next few months and then normalize as past energy prices play catch-up.  Core CPI should remain relatively subdued during the month.  The current Bloomberg consensus forecast is for a monthly rise in headline CPI of 0.1%, with Core CPI anticipated to rise at the same pace.

8:30 a.m. EST: January’s Empire State Manufacturing Survey (Risk: Negative, Market Reaction: Significant): This release will be investors first window into the fed’s regional factory sector reports for 2010.  Over the prior two months this survey has lost significant ground falling to 2.6 in December from 34.6 in October—a reading over 0 signifies expansion.  In December the Richmond fed’s release fell below 0 for the first time in 7 months; ironically, Richmond was the first of the fed’s districts to indicate a marginal recovery.  Nevertheless, I do not anticipate the NY fed’s survey will follow suit.  The current Bloomberg consensus forecast is for a survey result of 13.0, compared to 2.6 in December.  The new orders component remained positive in December, but barely, so I recommend keeping a close eye on December’s number.  Additionally, don’t forget to watch the prices paid and employment components of the release.

8:30 a.m. EST: December’s Industrial Production (Risk: Neutral, Market Reaction: Significant): Extremely cold weather across the country should help boost utility output during the month, which should help bolster December’s industrial output.  Growth in the manufacturing component should be relatively restrained during the month as aggregate hours worked in manufacturing fell -0.4% during December.  The current Bloomberg consensus forecast is for an increment in industrial production of 0.6%, compared to 0.8% a month prior.  The same forecast anticipates capacity utilization to rise to 71.9% from 71.3% in November.

9:55 a.m. EST: Preliminary January Consumer Sentiment (Risk: Neutral, Market Reaction: Significant): I expect this index will be up marginally from its final reading of 72.5, on the back of early indications of improvements in the labor market, and incentives around the holiday season.  But, these positive factors will be playing a tug-of-war against negative factors including energy prices and what, despite improvements, is a weak labor market.  The current Bloomberg consensus forecast is for a reading of 74.0.

12:30 p.m. EST: Jeffrey Lacker, the Richmond Federal Reserve Bank President, will speak about the economic outlook to the Richmond Risk Management Association.

2:30 p.m. EST: Janet Yellen, the San Francisco Federal Reserve Bank President, will give a speech on “Economic Environment for Innovation” at the Innovation and Equity Conference in San Francisco, CA

Enjoy the weekend!

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US Economics Week Ahead: No Change by the Fed

December 12th, 2009 Michael McDonough Comments off

There is no doubt that this week’s FOMC meeting will steal the economic headlines, however, the result is likely to be rather anticlimactic.  I do not anticipate any major changes to the FOMC’s statement, and certainly no shift in the target rate—despite last month’s better than expected employment data.  The Fed will not view a single data point as the start of a trend, and regardless of being on their minds the employment data will not have a significant impact at this meeting.  After Wednesday we will inevitably be one meeting closer to an eventual rate hike, however, ahead of any hike the Fed would remove the phrase  ‘extended period’ from the statement, and I do not yet believe that is in the cards.

Other important indicators this week include the producer price index, consumer price index, and industrial production.  On the inflation front both headline producer and consumer prices will face some upward pressure due to higher energy and food prices, while the core releases should remain tame.  Industrial production will face some headwinds from a relatively mild month reducing utility output, which should be more than offset by manufacturing output.  An increase in aggregate manufacturing hours worked during the month help to support this belief.

During the week we will also hear earnings from FedEx (FDX), Best Buy (BBY), Nike (NKE), Oracle (ORCL), and Research in Motion (RIMM) to name a few.  In other news, the Senate Banking Committee is expected to vote Thursday on the reconfirmation of Federal Reserve Chairman Bernanke.  Boeing is also expected to conduct its first test flight of their new 787 Dreamliner, after numerous delays. Finally, President Obama will attend the UN Climate summit in Copenhagen to push for several environmental initiatives.

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

Monday, Dec. 14

Nothing

Tuesday, Dec. 15

First day of the FOMC meeting

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 fell -1.3% compared to a drop of -0.1% a week prior.

8:30 a.m. EST: November’s Producer Price Index (Risk: Neutral, Market Reaction: Moderate): Rising food and energy prices during the month will likely place some upward momentum on the November’s PPI.  However, increments in the core number should be only modestly positive after falling -0.6% in October.  The current Bloomberg consensus forecast is for a monthly increment in headline PPI of 1.0%, compared to 0.2% for the core release.

8:30 a.m. EST: December’s Empire State Manufacturing Survey (Risk: Negative, Market Reaction: Moderate): Recent weakness in the manufacturing sector, combined with a declining new orders index could place additional downward pressure on the NY fed’s manufacturing survey for December after falling 11 points to 23.51 in November.  Nevertheless, the current Bloomberg consensus forecast is anticipating a rise in the month to 25.0.  As always it will be important to monitor the new orders-a forward looking component—, prices paid, and employment aspects of the survey.

8:55 a.m. EST: Redbook (Risk: Neutral, 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 rose 1.2% last week on a yearly basis.

9:00 a.m. EST: October’s Treasury International Capital (TIC) Data (Risk: Neutral, Market Reaction: Moderate): This report highlights the flow of financial instruments to and from the U.S. It indicates foreign demand for U.S. financial instruments and thus tends to have a stronger impact on the dollar and the bond markets than it does on equities.  But, given the recent record levels for treasury auctions, it will be interesting to monitor foreign demand for US debt.

9:15 a.m. EST: Industrial Production (Risk: Neutral, Market Reaction: Significant): A significant increment in manufacturing hours worked during the month—a positive for industrial production—will be partially offset by an anticipated decline in utility output, stemming from relatively mild weather across the country.  With this in mind the current Bloomberg consensus forecast is for a monthly increment in industrial production of 0.6%, versus 0.1% in October, with capacity utilization rising to 71.2% from 70.7%

1:00 p.m. EST: December’s Housing Market Index (Risk: Neutral, Market Reaction: Moderate): The NAHB Housing Survey, which measures home builder confidence, should continue to benefit from the extension/expansion of the first time home buyer tax credit.  However, numerous headwinds still exist for the sector so any improvements in December are likely to be modest.  The index was unchanged at 17 in November.

Wednesday, Dec. 16

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 8.5% last week after rising 2.1% a week prior.  Refinance applications climbed 11.1%, while purchase applications rose 4.0% on the back of attractive interest rates.  A wave of buyers, filling out multiple mortgage applications, that were looking to take advantage of the first time home buyer tax credit–originally set to expire on Nov. 30th–have already completed their transactions, and have recently reduced the demand for mortgages.    However, the recent extension of the first time home buyer tax credit should eventually bring a new set of buyers into the market, which could help support the purchase index over the coming months.

8:30 a.m. EST: November’s Consumer Price Index (Risk: Neutral, Market Reaction: Significant): As with the PPI, higher energy and food prices during the month will likely add some pressure on headline CPI, while core CPI should only show a modest rise. The current Bloomberg consensus forecast is for an increment of 0.4% for the headline number, and 0.1% for core.  It may be important to note that headline CPI will likely experience its first year over year gain since February 2009.

8:30 a.m. EST: November’s Housing Starts (Risk: Neutral, Market Reaction: Moderate): Housing starts look to be up in November on the back of good weather, after falling more than anticipated in October. Additionally, construction jobs declined by only -27K during the month compared to -56K in October. The Bloomberg consensus forecast anticipates starts to rise to 575K, versus 529K in October; I anticipate that new building permits should also rise during the month after declining by -4.0% a month prior—permits tend to be a forward looking indicator toward starts.

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 -3.8 million barrels versus a jump of 2.1 million barrels a week prior.

2:15 p.m. EST: December’s FOMC Announcement (Risk: Neutral, Market Reaction: Very Significant): Despite being the week’s most eagerly anticipated piece of economic news, the outcome is likely to be somewhat anticlimactic.  I do not anticipate any major changes compared to November’s FOMC statement, and certainly no shift in the target rate.  The Fed will not view one month of better than anticipated employment data as a trend, and thus it is very unlikely to have a significant impact at this meeting, however, it will be on their minds.  Nevertheless, we will be one meeting closer to an eventual rate hike, but I do not yet anticipate the removal of the key phrase ‘extended period’ from the FOMC’s statement.  The Fed will likely reiterate that employment is still lagging and that “with substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time”.

Thursday, Dec. 17

8:30 a.m. EST: Third Quarter’s Current Account (Risk: Neutral, Market Reaction: Marginal): The third quarter current account deficit likely widened on the back of a wider trade deficit stemming from more expensive energy imports.  The current account deficit totaled $99 billion in the second quarter.

8:30 a.m. EST: Jobless Claims (Risk: Neutral, Market Reaction: Significant): Initial claims rose 17K last week to 474K, after falling 5K a week prior. Despite the decline in last week’s claim number the 4 week moving average improved to 473,750 from 481,500.  Improving initial claims are indicative of fewer job losses in the monthly employment report; however, the job situation will get worse before it gets better.  The current Bloomberg consensus forecast is expecting claims to come in at 465K, a decrease of -9K from last week.

10:00 a.m. EST: November’s Leading Indicators (Risk: Neutral, Market Reaction: Moderate): November’s leading indicator index will likely show its 8th consecutive month of positive readings.  The current Bloomberg consensus forecast is expecting a +0.7% rise for the month, compared to a +0.3% increment in October.  The biggest positive contributions for the index will likely come from the yield curve, initial jobless claims, and the average workweek, while the University of Michigan’s consumer expectations index should be the largest negative factor.

10:00 a.m. EST: December’s Philadelphia Fed Survey (Risk: Negative, Market Reaction: Moderate): As with the NY fed survey, recent weakness in the manufacturing sector will likely place some downward pressure on the Philly fed survey.  The survey’s six month expectations index peaked at 60.1 in June and has since fallen to 36.8 in November—this tends to be an ominous sign for the spot reading.  Nevertheless, the current Bloomberg consensus forecast is anticipating only a modest decline to 16.5 from 16.7 in November.  However, the forecast range goes from a high of only 18.0 to a low of 6.9.

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.

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 shrank last week to US$2.169trn from US$2.186trn, primarily due to a reduction in long-term loans to banks.    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, Dec. 18

Quadruple Witching

Enjoy the weekend!

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Housing Pains & Inflation Creep

November 18th, 2009 Michael McDonough Comments off

October’s Housing Starts disappointed the market finishing at an annual rate of 529,000 (-10.6%), while September’s release was revised up to 592K from 590K. Permit’s in October declined -4.0%, to 552K. Single-family starts fell -6.8%, while multi-family homes plummeted by -34.6%. The Bloomberg consensus forecast was for starts at 600K, with forecasts ranging from 570K to 630K.  This release was indicative of a housing market that is struggling rather than in the midst of a strong recovery.

Additionally, the level of mortgage applications continued to decline,–purchase applications hit a 12 year low–likely due what would have been the expiration of the first time home buyer tax credit.  Meaning, those looking to take advantage of the tax credit already have; it will take some time for a new group of buyers to enter the market on the back of the the tax credit’s extension.

October Consumer Price Index rose +0.3% after rising +0.2% in September. This compares to a Bloomberg consensus forecast of +0.2%. The core CPI increased by +0.2% during the month after rising +0.2% a month prior.  The main culprit behind the month’s larger than anticipated jump was a 1.7% increment in vehicle prices, which if factored out would have led to a flat core CPI number.  As expected, energy prices climbed 1.5%, adding momentum to the headline release.  Surprisingly, food prices were relatively stable during the month rising only +0.1%.  Despite adding some ammunition for inflation hawks, I do not believe this report indicates any significant inflation concerns over the near-term, but of course should be monitored as an eventual uptick inflation is inevitable.

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US Economics Week Ahead: Retail Sales will set the Pace

November 13th, 2009 Michael McDonough Comments off

The last full week in November brings with it its fair share of economic data, Fed talk, and a few important earnings stragglers.  The general themes of the week will be housing, manufacturing, inflation, and the consumer.  On the economic front, October’s retail sales—released on Monday—should steal the show, followed up by October’s industrial production data on Wednesday.  Other important indicators include Monday’s empire state manufacturing survey and business inventories, Tuesday’s PPI and TIC data, Wednesday’s CPI and housing starts report, and finally Thursday’s jobless claims and leading economic indicators release.  On the earnings front we can expect to hear from Home Depot, Lowes, Dell, GM, Gap, and Target.  Bernanke will be providing the week’s most critical ‘Fed chatter’, with his speech to the Economic Club of New York on Monday, which some believe could have implications for the dollar.

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

Monday, Nov. 16

8:30 a.m. EST: October’s Retail Sales (Risk: Neutral, Market Reaction: Significant): After dropping 1.5% in September, primarily due to the expiration of the ‘Cash for Clunkers’ program, retail sales should have experienced a modest jump in October, partially on the back of higher auto sales.  Vehicle sales likely picked up during the month after falling 10.4% in September. The current Bloomberg consensus forecast for retail sales is an increment of 0.9%, while retail sales ex-autos is expected to rise 0.4%, after rising 0.5% in September.

8:30 a.m. EST: November’s Empire State Manufacturing Survey (Risk: Neutral, Market Reaction: Moderate): The New York Fed manufacturing index will likely experience a modest pullback after reaching a five year high in October.  Nevertheless, the index should remain well above its breakeven point of 0.  The current Bloomberg consensus forecast is for a reading of 29.0, versus 34.6 in October.  As always I recommend paying close attention to the forward looking new orders index, along with the employment and prices paid index for hints toward the labor market and inflation story.

10:00 a.m. EST: September’s Business Inventories (Risk: Neutral, Market Reaction: Marginal): The rate at which businesses are reducing inventories is anticipated to decline in September, albeit remain negative.  September will be the 14th consecutive month business inventories have decline.  Inventories declined -1.5% in August, but should be down a more modest 0.8% in September.  Auto inventories could be up slightly for the month as car dealers complete a limited restocking due to a jump in sales from the ‘Cash for Clunkers’ program

12:00 p.m. EST: Ben Bernanke, Fed Chairman, speaks to the Economic Club of New York

1:15 p.m. EST: Richard Fisher, Dallas Fed President, will discuss US economy and central bank at a community forum hosted by the District Bank in Dallas, TX

6:15 p.m. EST: Donald Kohn, Fed Vice-Chairman, will be participating in Northwestern University’s Kellogg Distinguished Lecture Series discussing “Federal Reserve Policy Challenges.”

Tuesday, Nov. 17

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 decline of -0.1% in store sales compared to a gain of 0.1% a week prior—this was the first decline in six weeks.

8:30 a.m. EST: October’s Producer Price Index (Risk: Neutral, Market Reaction: Moderate): Rising food and energy prices during the month will likely lead to a significant increment in headline PPI.  Factoring out these volatile components the core-PPI should experience a more modest gain of around +0.1%.  The current Bloomberg consensus forecast for headline PPI is an increment of +0.5%, versus a decline of -0.6% a month prior.

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 1.7% last week on a year over year basis.

9:00 a.m. EST: September’s Treasury International Capital (TIC) Data (Risk: Neutral, Market Reaction: Moderate): This report highlights the flow of financial instruments to and from the U.S. It indicates foreign demand for U.S. financial instruments and thus tends to have a stronger impact on the dollar and the bond markets than it does on equities.  But, given the recent record levels for treasury auctions, it will be interesting to monitor foreign demand for US debt.

9:15 a.m. EST: October’s Industrial Production (Risk: Neutral, Market Reaction: Significant): After rising 0.7% in September, industrial production could face some pressure in October due to weakness in manufacturing, however, this weakness could be at least partially offset by utility output during the month.  On the manufacturing side, the expiration of the ‘Cash for Clunkers’ program should continue to adversely impact auto manufacturing, while manufacturing hours worked during the month also fell.  The current Bloomberg consensus is for an increment of +0.4%, compared to September’s growth of 0.7%.

10:00 a.m. EST: Jeffrey Lacker, Richmond Federal Reserve Bank President, is giving a speech on the economic outlook in Richmond.

1:00 p.m. EST: November’s Housing Market Index (Risk: Neutral, Market Reaction: Marginal): The extension of the first time home buyer tax credit should help bolster the NAHB/Wells Fargo housing market index, which fell to 18 in October.  This release could also provide a good lead in for the housing starts and permit data being released a day after.

12:30 p.m. EST: Sandra Pianalto, Cleveland Fed President, will give a speech at the 11th Annual Ohio Housing Conference

Wednesday, Nov. 18

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 3.2% after gaining 8.2% a week prior.  Last week’s overall increment was due entirely to a jump in refinance applications, which rose 11.3%, while the purchase index fell 11.7%.  A wave of buyers, filling out multiple mortgage applications, that were looking to take advantage of the first time home buyer tax credit–originally set to expire on Nov. 30th–have already completed their transactions, thereby reducing the current demand for mortgages.    However, the recent extension of the first time home buyer tax credit should eventually bring a new set of buyers into the market, which could help support the purchase index over the coming months–don’t forget buying a house can be a long drawn out process.   Nevertheless, increased lending standards for FHA loans, due to the organizations worsening finances, could place some headwinds on the purchase index’s recovery.

8:30 a.m. EST: October’s Consumer Price Index (Risk: Neutral, Market Reaction: Significant): Consumer prices in October likely experienced a modest rise on the back of higher food and energy prices, after rising 0.2% in September.  Core-CPI should remain relatively tame, with increasing auto prices potentially placing some upward pressure on the index.  Interestingly, residential rent and owners’ equivalent rent both declined by -0.1% in September—according to the BLS this is only the second time a decline of this magnitude has occurred.   The current Bloomberg consensus forecast is for an increase of 0.2% in the headline number and 0.1% for the core.

8:30 a.m. EST: October’s Housing Starts (Risk: Neutral, Market Reaction: Moderate): Housing starts and permits should continue to gain some momentum as the inventory of homes for sales continues to moderate.  It will be important to monitor multi-family housing starts, which has been a volatile component compared to single family starts—single family starts have been positive for every month since March, excluding August. The current Bloomberg consensus forecast is for an increase in starts to 600K from 590K a month prior.

9:15 a.m. EST: James Bullard, St. Louis Federal Reserve Bank President, will discuss the US economic outlook at the Commerce Bank Economic Breakfast in Clayton, MO.

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 gain of -1.8 million barrels versus a decline of -4.0 million barrels a week prior.

Thursday, Nov. 19

Charles Plosser, Philadelphia Federal Reserve Bank President, will be speaking at the Global Interdependence Center conference on food and water in Singapore.

8:30 a.m. EST: Jobless Claims (Risk: Neutral, Market Reaction: Significant): Initial claims fell last week by 12K to 502K, after falling 20K a week prior. I should note there is a potential for initial jobless claims slip below 500K this week, which would assuredly invoke numerous headlines.  Nevertheless, despite second derivative improvements these levels still indicate continued losses for monthly payrolls—albeit at a slower pace—coupled further deterioration to the unemployment rate, which has already exceeded 10%. The current Bloomberg consensus forecast is expecting claims to come in at 505K, essentially unchanged from last week.

10:00 a.m. EST: October’s Leading Indicators (Risk: Neutral, Market Reaction: Moderate): October’s leading indicator index will likely show its seventh consecutive month of positive readings.  The current Bloomberg consensus forecast is expecting a +0.4% rise for the month, compared to a +1.0% increment in September.  The biggest positive contributions for the index will likely come from the yield curve, initial jobless claims, and stock prices, while the University of Michigan’s consumer expectations index should be the largest negative factor.

10:00 a.m. EST: November’s Philadelphia Fed Survey (Risk: Negative, Market Reaction: Moderate): Recent weakness in the Philly Fed’s expectations index may catch up with the current conditions index potentially placing some pressure on November’s headline number.  Nevertheless, the current Bloomberg consensus forecast is for a reading of 12.0 compared to 11.5 in October.

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.

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 fell slightly last week to US$2.117trn from US$2.147trn 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.

4:45 p.m. EST: Richard Fisher, Dallas Federal Reserve Bank President, will give the closing address to the Cato Institute’s annual monetary policy conference in Washington

Friday, Nov. 20

Charles Plosser, Philadelphia Federal Reserve Bank President, will be speaking at the Global Interdependence Center conference on food and water in Singapore.

Enjoy the weekend!

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Morning Recap–CPI Shows Modest Gains, Claims Down, & Empire State Manuf. Survey Reaches 5Y High

October 15th, 2009 Michael McDonough Comments off

September’s CPI rose +0.2%, compared to a +0.4% increment a month prior. Core CPI increased +0.2%.  This was generally in-line with the Bloomberg consensus forecast.  Food prices fell -0.1% during the month while energy prices rose +0.6%.  These modest gains continue to indicate that some deflationary risk remains on the table, and inflation should not be a big factor in the Fed’s decisions over the near-term as the unemployment rate likely moves north of 10.0%.

Initial jobless claims fell 10K to 514K.  Continued improvements in initial claims should lead to a slower rate of decline for the payrolls.  Nevertheless, claims are still depressed and things will continue getting worse before they get better in the labor market.

The Empire State Manufacturing Survey rose to 34.57 in October, compared to 18.88 a month prior.  In October, new orders increased to +30.82, versus +19.84 a month prior, while prices paid fell to +19.48 from +20.24. The 6-month outlook index finished at +55.69 from +52.29.  Surprisingly, this is the index’s highest reading in over five years.  This is an extremely positive report for manufacturing in the NY Fed’s district.  Additionally, a large jump in the new orders index should help support next month’s release.

The Philadelphia Fed’s general business activity index fell to 11.5 in September, compared to 14.1 a month prior.  This was slightly below the consensus forecast of 12.0  The prices paid index rose to 21.3 from 14.9, while the new orders index increased to 6.2 from 3.3. The employment index moved to -6.8 from -14.3.  Despite coming in slightly below expectations the number remains positive, and an increment in the new orders index should help maintain positive performance at least through next month.

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CPI Up +0.4, Core-CPI Up +0.1%

September 16th, 2009 Michael McDonough Comments off

August’s CPI and Core-CPI were up +0.4% and +0.1%, respectively.  This compares to a consensus estimate of +0.4% for the headline and +0.1% for the core number.  August’s headline number faced some pressure from increasing fuel costs (+4.6%) during the month that were partially offset by a much smaller increase in food prices.  The pricing indices will remain a closely watch indicator as many investors are fearful that excessive liquidity in the market could lead to significant inflation pressure in the future.  Personally, I can see their point, but believe we’re still ways away from experiencing any real inflationary threat.  Much of the liquidity placed into the market by the fed is making up for lost credit growth, which will take some time to recover.  I don’t anticipate the fed will start debating on taking away the punch pull until at least the latter half of next year.  But, with that said, the fed would react in the unlikely scenario of a sudden and severe uptick in inflation or inflation expectations.  Nevertheless, gold prices have continued to rallying indicating some investors are likely fearful over near-term prices in the US.

CPI Data from BLS:

Source: BLS

Source: BLS

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Categories: Data Release, US Tags:

US Economics Week Ahead: A Deluge of Data

September 12th, 2009 Michael McDonough Comments off

After last week’s relatively light economic calendar, the market faces a deluge of data from nearly every facet of the economy. With that said this week’s most closely watched release will likely be Tuesday’s retail sales announcement, which is expected to show a +2.0% gain on the back of increased auto-sales and higher gas prices, but not on what would traditionally be back-to-school spending.  Other notable releases include Tuesday’s PPI & Empire State Manufacturing Survey, Wednesday’s CPI & Industrial Production data, and Thursday’s Housing Starts, Jobless Claims, and Philly Fed Survey releases.  The week concludes with a quadruple witching on Friday, which has the potential to bring unusual volatility and volumes to the market.

Over the next several months, the incremental improvements in the US housing market could begin to come under some pressure as the US government’s first time home buyer tax incentive program is set to expire on November 30th.   This deadline doesn’t leave new buyers much time to find and close on any new purchases, which should lead to a gradual unwinding of the program.  The first evidence of this could be seen in this month’s housing starts data, given the long lag between getting homes permitted and sold to buyers in time to qualify for the program.  This combined with the temporaneous effect of the government’s now expired ‘Cash for Clunkers’ could help catalyze a retrenchment, or at least place adverse pressure on the housing and manufacturing sectors amid a still weakening labor market.

Here is the rest of this week’s calendar:

Monday September 14th:

8:35AM: Fed Governor Elizabeth Duke speaks at an annual conference for CPA’s in Washington D.C. on “Regulatory Perspectives on the Changing Accounting Landscape”.

12:30AM: Atlanta Fed President Dennis Lacker speaks on “Choices in Financial Regulation” with Q&A at the Risk Management Association’s annual conference.

3:50PM: San Francisco Fed President Janet Yellen will discuss the US economic outlook to CFA analysts in San Francisco.

Tuesday September 15th:

7:45AM: ICSC-Goldman Store Sales (Risk: Downward, 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 rise of 0.6% in store sales compared to an decline of -0.5% a week prior.

8:30AM: Producer Price Index (Risk: Neutral, Market Reaction: Significant): Rising energy prices from July to August will place upward pressure on August’s headline PPI number, while the core-PPI should remain largely unchanged.  The current Bloomberg consensus forecast is for a rise of +0.8% in the PPI, and +0.1% for the core number.

8:30AM: Retail Sales (Risk: Neutral, Market Reaction: Significant): What is typically a jump in August retail sales driven by increased back-to-school purchases will likely not materialize.  However, the index should experience relatively robust gains through a combination of mostly higher auto sales, due to the government’s ‘Cash for Clunkers’ program, and to some degree the pricing effect of rising gasoline prices.  The current Bloomberg consensus forecast is for an increment in retail sales of +2.0%, while retails sales ex-autos are anticipated to come in at +0.4%.

8:30AM: Empire State Manufacturing Survey (Risk: Neutral, Market Reaction: Moderate): The NY State Manufacturing Index should remain in positive territory in September, after its first positive reading in over a year last month.  This theory is supported by last month’s large increase in the survey’s new order index, which rose to 13.4 from 5.9 a month prior.  It will be important to monitor August’s new order index, which should remain positive, but may face some downward pressure due to strong seasonal adjustment factors. The current Bloomberg consensus forecast is for a September reading of 14.0, versus an August reading 12.1.

8:55AM: 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 down -2.4% last week on a year over year basis.

10:00AM: Business Inventories (Risk: Neutral, Market Reaction: Marginal): The current Bloomberg forecast is for a -0.9% decline in July’s business inventories.  If this release is indeed negative it will be the 12th consecutive month inventories have declined.  But, over the past several months, the inventory to sales ratio has been receding from its January 2009 high.

10:00AM: Chairman Ben Bernanke will deliver the same speech he gave at the Jackson Hole Symposium to the Brookings Institute, but Q&A is anticipated.

Wednesday September 16th:

7:00AM: MBA Purchase 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.  Last week the overall index resumed its upward trend, rising 17.0%.  The refinance index rose 22.5%, while the purchase index climbed 9.5%; these increments were primarily driven by falling mortgage rates and relatively low home prices.

8:30AM: Consumer Price Index (Risk: Neutral, Market Reaction: Significant): As with the PPI, August’s CPI release could face some upward pressure due to increases in fuel prices over the month; the Bloomberg consensus forecast is presently anticipating a +0.4% increment in the headline number.  At the core level, consumer prices should remain relatively steady with the current Bloomberg consensus forecast calling for an increment of just +0.1%.  Other factors that could impact this month’s release include upward pressure from increasing auto and tobacco prices.

8:30AM: Current Account (Risk: Neutral, Market Reaction: Marginal):  The 2Q09 current account deficit will likely fall to its lowest levels in several years, on the back of declining energy import prices during the quarter.  During 1Q09 the deficit stood at -US$102.7bn.

9:00AM: Treasury International Capital (TIC) Data (Risk: Neutral, Market Reaction: Marginal): This report highlights the flow of financial instruments to and from the U.S. It indicates foreign demand for U.S. financial instruments and thus tends to have a stronger impact on the dollar and the bond markets than it does on equities.  But, given the recent record levels for treasury auctions, it will be interesting to monitor foreign demand for US debt.

9:15AM: Industrial Production (Risk: Downside, Market Reaction: Significant): The current Bloomberg consensus forecast is for August’s industrial production to show an increase of +0.7%, compared to July’s increment of +0.5%.  A large portion of August’s increment is anticipated to come from increased auto production, which in my opinion, however, could be more than offset by weakness in other areas of manufacturing due to a reduction in hours worked for employees in the sector during the month.  The Bloomberg consensus forecast anticipates that capacity utilization will move to 69.0% in August from 68.5% a month prior.

10:30AM: 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 -5.9mn barrels versus a decline of -0.4mn barrels a week prior.

1:00PM: Housing Market Index (Risk: Neutral, Market Reaction: Marginal): The NAHB/Wells Fargo Housing Market Index is expected to show a modest gain on the back of tax credits, attractive mortgage rates, and low home prices.  The current Bloomberg consensus forecast is for a reading of 19 in September, compared to the previous month’s result of 18.  This index measures builders’ views over the conditions of the housing market; any reading below 50 implies their view is negative.  The index remains depressed primarily due to, improving, but still enormous inventory levels.

Thursday September 17th:

8:30AM: Housing Starts (Risk: Downside, Market Reaction: Moderate): Increased single-family starts will likely place upward momentum on the overall index with the Bloomberg consensus forecast presently anticipating a rise to 0.600mn units in August from 0.581mn units a month prior.  But, going forward there are some downside risks to this data due to the expiration of the government’s first time home buyer tax rebate in November.  What this means is that according to the NAHB, “July was probably the last month in which to get homes permitted and started in time for customers to take advantage of the incentive.”

8:30AM: Jobless Claims (Risk: Neutral, Market Reaction: Significant): Initial claims fell last week by 20K to 550K. Claims should demonstrate marginal improvements over the coming months as weakness in the labor market slowly abates. But, make no mistake about it these levels are still uncomfortably high, and will continue to adversely impact the US payroll data for some time.  The current Bloomberg consensus for this week’s initial claims number is 575K.  This week’s projected increment is partially due to the positioning of this year’s Labor Day Holiday.  In fact using a simple regression analysis claims at their current levels would indicate a decline in payrolls of roughly 500K, however, recently this model has been exaggerating the actual effect on payrolls, but nevertheless is a cause for concern going forward.

10:00AM: Philadelphia Fed Survey (Risk: Neutral, Market Reaction: Moderate): The Philly Fed Index should continue last month gains with the current Bloomberg consensus survey indicating a reading of 8.0 for September compared to 4.2 in August.  This anticipated increment is on the back of the new order index’s strong performance in August moving to +4.2 from -2.2.  Given recent momentum the new orders index should also experience an additional rise this month.

10:30AM: 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.

4:30PM: 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.  Last week the Fed’s balance sheet rose again to US$2.072trn from US$2.069trn 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 September 18th:

Quadruple Witching: Contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire today.  As a result, we could see an increased amount of volumes and volatility in the market, especially toward the end of the day.

Enjoy the weekend!

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