Hi Folks,

Here is this week's US based economic forecast.

MONDAY: We start out a busier than average Monday at 8:30 a.m. with the Empire State Manufacturing Index, which is not exactly a number a lot of traders pay attention to, and that's likely more true today than most because of the Flash numbers scattered across the calendar today. What's happening across the board in the US and elsewhere is a bit more important than what's happening in New York, so don't expect much at 8:30. But at 9:45 a.m. we get the Flash Manufacturing and Services PMI numbers (2 separate numbers) and those have a long and well documented history of making price move around. They are also the last numbers for the US for the day, so expect to see some short term trending take place after these numbers drop, even at a time (pre-Christmas) where with every passing day we see a drop in volume as traders start wrapping things up for the year. It's early enough I expect we'll see some action today with the PMI's.

TUESDAY: It's a bit delayed compared to other months but at 8:30, amongst a slew of Canadian reports, we get Retail Sales and Core Retail Sales. Truthfully it isn't that big a deal as CPI and even PPI to a smaller extent have stolen the thunder from RS, but the remaining numbers for today are all throwaways, so possibly we'll see some activity based the Sales number...a small possibility, which will be made smaller if the numbers come out on target. So pay attention to that. If the numbers miss by more than a tenth of a point or two, it might make price go zoom at least for a few minutes. After RS, we get Industrial Production and Capacity Utilization numbers at 9:15 a.m. (before the Indices open) and Business Inventories and the NAHB Housing Market Index numbers at 10:00. None of the four ever do much and I don't expect that to change today.

WEDNESDAY: Starting off at 8:30 a.m. with Building Permits, Current Account (the difference in price between what we bought and what we sold as a country, a number consistently in the red by about a quarter of a trillion dollars) and Housing Starts. None of these on their own ever do much for price action and I can't see them starting anything as a group project, and expect nothing even more than usual based on the later news drop today. 10:30 is Crude Oil (just for oil traders) and at 2:00 p.m. we get the final FOMC Interest Rate Decision from the Fed. The whole "will they or won't they" question of another rate cut is apparently leaning heavily in favor of "they will" based on various FedWatch tools (the percentages range from 80 to 95% that "they will"). While I can't argue with the tools which are probably right (based on the long and storied history of the Fed making boneheaded decisions until inflation spirals out of control and forces them to raise rates) there is enough data from the last 6 weeks showing inflation keeps nudging higher every single week that at a minimum the prudent course would be No Rate Cut and the intelligent course would be to bump it back up by a quarter point. But it looks like they'll cut again for no real good reason other than the Market wants it. And if you missed this from earlier screeds, data shows once an economy suffers through 5% inflation or higher for a period of at least six months, it takes on average 8 Years to wring inflation out of the economy and get back on a 2% or less track. And we are nowhere near the 8 Year mark yet. So don't be surprised if after Christmas you can comfortably fit $100 worth of grocery staples into a single plastic bag or two.

THURSDAY: 8:30 starts off with Final GDP q/q and the Weekly Unemployment number, along with the Final GDP Price Index q/q and the Philly Fed Manufacturing Index. Final GDP rarely inspires a lot of trading as we already got a heads up from the Preliminary number a week ago or so, but the Fed is still watching the Unemployment number, which conveniently spiked above 240k last week and is now estimated to be above 240K again this week. Unemployment comes out a day AFTER the Fed meeting but you can bet your last dollar they at least took a look at the expected number before they acted on the Interest Rate yesterday. But traders now have the rate info in hand so since we have another 6 weeks before the next FOMC meetup, it likely won't mean as much unless the Fed balks at another cut and stands pat. If no rate cut yesterday, then maybe this number sets off the fireworks. There is also the Final GDP Price Index q/q number (a lesser inflation gauge) and the Philly Fed Manufacturing Index at 8:30, and neither of those is likely to do much, at least compared to the GDP and Unemployment numbers. So as impactful as these could be, it could end up being a snoozer from a price action standpoint. At 10:00 a.m. we have Existing Home Sales and the Conference Board Leading Index number. Housing numbers do nothing any longer, and the CB Leading Index number (which is a compilation and distillation of a bunch of other numbers all boiled down into this one) has done absolutely ZERO in any of the economies where the number is produced. It seems like this is a vanity thing for the people who release it, because no traders I am aware of even glance at it when it drops. NatGas is at 10:30 (for NatGas traders) and another Bond Auction is at 1:01. Neither are worth tuning in for.

FRIDAY: It's a shame they waited so long this week, but at 8:30 we have the Core PCE Price Index m/m, which has been the Fed's favorite number to watch for their rate decisions. They (the Fed) have a target of 0.2% each month, which coincidentally is the Forecast number this month, after a 0.3% last month. But a long series of 0.2% numbers indicates that inflation is under control. So this one tends to be a big deal, bigger than it would be if it weren't for the Fed's reliance on the number to steer their decision-making. And since they issued their rate cut decision two days ago, this number drops too late to save them from making a mistake on that decision (should the number come out higher than 0.2%. Personal Income and Personal Spending also drop at 8:30 but it's that PCE number that will do all the heavy lifting this morning. The week closes out at 10:00 with the UofM Revised Consumer Sentiment and Inflation Expectations numbers. We already saw the Preliminary numbers a week or two ago and those did nothing at the time that I recall, so the odds that these numbers move price around any is probably right at Zero. So not much sense sticking around after the 8:30 PCE number. Close up shop after that and turn your attention to Amazon and your Christmas shopping as there are only 4 shopping days left before the Big Day.

See you back here next week with the Christmas/New Years edition of the Forecast.

Jeff