Thoughts on Upcoming Economic Data

FOMC Meeting: Will they officially end the Quant Easing program thus taking off another prop to the market? (Another thing to mention, the home-buyer’s credit. Will the gov’t extend and increase it?)

Durable Goods Orders: I am looking for continued strength in the indicator, though I think that over the next 2 months, we could see some weakening as capacity utilization remains high, auto sales slump, and the homebuilding season fades. (depending if additional stimulus measures are passed)

Consumer Sentiment: It has been going higher, but is still at recessionary levels, in fact it’s reading worse than the lowest point in the previous recession! Rising markets could turn in better results for this indicator from it’s depressed levels.

Chicago PMI: Empire and Philly Fed surveys, while positive, did show some kinks in the armor (employment indicator hooked back down and prices paid moved higher on both reports)… if Chicago PMI shows a hook down in employment, we could see a negative surprise in the payrolls number for September. Consistent rises in the prices paid component could jeopardize companies’ profit margins.

Motor Vehicle Sales: Reports are already surfacing that Car sales for September are turning out to be a disaster. What implications will this have on the manufacturing sector? Will CEOs from other sectors of the economy see this and become even more hesitant to take the plunge and increase capital spending?

Others

The Jobs Report in Early October should be an important event for the bulls. If it improves substantially, it will give them another data point to look at as reason to continue buying. If it doesn’t, look out below (this market is already priced to perfection as it is).

Existing and New Home sales should come in once again showing positive trends. Question is, it really a genuine trend, or one induced by gov’t intervention? Guess which way I’m siding? And more importantly is whether they will keep the punch bowl around for another year (extension and increase in the homebuyers’ tax credit). While we find out whether they will or won’t, I’ll be keeping a close eye on Mortgage applications in order to see if the demand begins to taper off. The moment of truth I believe will be in the next couple of weeks. If Mortgage Applications begin to fall, then more stimulus better be passed if we want to “see” what resembles a housing rebound.

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