Hi Folks.
It's the last full week of August and traditionally this is one of the worst trading weeks of the year as most of European and a good portion of the US traders take the week off, including the Labor Day holiday next Monday. So do not be at all surprised if volume and volatility both seem to be missing from your charts for the next 5 days.
Now on with the Forecast.
MONDAY: Durable goods at 8:30 eastern (core and overall). Later this week (Thursday and Friday) we get an avalanche of numbers, but for Monday, this is all we get. So Durable Goods might actually create a little stir if the numbers come in a bit off. Durable Goods measures sales of bigger ticket items (cars, computers, appliances, etc.) with at least a 3 year expected lifespan. So an increase in the number (Core is expected at 0.00%, Overall at 4%) would lean towards showing a stronger economy at a time when the weakness in unemployment is more or less behind the Fed's decision to start cutting rates at the next meeting. A positive number won't likely derail those plans but it might make the Street more than a little nervous, now that they've got the Fed right where they want them. So keep an eye out Monday at 8:30...there might be some action worth trading.
TUESDAY: Two Housing Price Index numbers at 9:00, followed by Conference Board Consumer Confidence and Richmond Manufacturing Index at 10. The 9 o'clock numbers can be safely ignored. Housing numbers just don't move the market much anymore, especially in a week when 90% of the traders are on a beach somewhere. Consumer Confidence is a red folder report meaning potential volatility after the number release, but I can't remember the last time this number lit up the board enough to care. Same with the Richmond number. It's the least of the three Manufacturing Index numbers (behind Philly Fed and Empire State) so today simply does not look promising.
WEDNESDAY: Crude Oil at 10:30 and Bostic from the Fed speaking at 6 p.m. at some alumni function. If you trade Oil you already know what to do. And at 6 p.m. I'm cleaning up the dinner dishes and trying to stay awake for 3 more hours before calling it a day. I'll likely trade Oil at 10:30 because there just isn't anything else to do today.
THURSDAY: Once again we have News Dump Thursday. Instead of spreading out all these numbers over the rest of the week, today we get 8 calendar entries. So let's scroll through them. 8:30 a.m.: Preliminary GDP + Preliminary GDP Price Index, Unemployment claims, Goods Trade Balance, and Preliminary Wholesale Inventories. As I've noted earlier, weakness in employment is behind the Fed's decision to start cutting rates so a high first time claims number will likely cause the markets to break out in spontaneous demonstrations of euphoria for Big Brother, as this will all but cement a quarter point cut in September, if not a half point cut. The GDP numbers look like the sort that will move things around, but we already had the Advance GDP number last month and it really didn't do much in terms of price action. So don't look for much here either. The other two reports (Inventories and Trade balance) are nothingburgers compared to the Unemployment number this week. Pending Home sales at 10 and NatGas at 10:30 can both safely be ignored, and then Bostic from the Fed is speaking again at 3:30 (giving an overview on the Fed and how it works at a Georgia Tech business school). Pass.
FRIDAY: We actually have one worth watching this morning at 8:30: Core PCE, the Fed's favorite tool to measure how the economy is really doing. Expectations are at .2% and if they hit the number on the dot or even come in a little low, the market will be pleased. Maybe not pleased enough to cause prices to shoot up on the various US based charts, but pleased nonetheless. Should that number come in at .3%, that hissing sound you'll hear will be all the bicarb being poured into water glasses to help the street deal with their suddenly upset stomachs. And .4% or higher? Things could get ugly fast on all the charts as the market begins to see their all-but-promised September rate cut disappear, right before their eyes. And you can bet these 41,000 prices on the Dow will start to disappear right about the same time. The goods news (from the market's perspective) is the Core PCE typically comes in on target. But if today is the exception to that rule, look out below. Also today we have Personal Income, Personal Spending (also at 8:30), Chicago PMI at 9:45 and the University of Michigan Revised numbers at 10. None of those will likely matter even a tiny bit. Today is all about the Core PCE.
See you next week.
Jeff
