The Reuters/University of Michigan consumer sentiment index dipped for the fist time in five months to 66, compared to a market consensus of 65 for July. At the same time the July expectations index increased to 63.2 versus July's preliminary reading of 60.9. The drivers behind this month's declines were derived from weakness in the labor market and wages. This reading implies that consumers remain concerned over the current economic conditions, and will likely keep spending restrained until a brighter outlook for the employment situation emerges.
Showing posts with label Consumer Sentiment. Show all posts
Showing posts with label Consumer Sentiment. Show all posts
Friday, July 24, 2009
Friday, July 17, 2009
US Economic Week Ahead: Cue Earnings
After last week’s barrage of economic data, this week is relatively light. The few exceptions will be Monday’s leading indicator release, Thursday’s jobless claims and existing home sales data, and Friday’s consumer sentiment report. This week’s claims data will likely take on added importance as the market tries to decipher the impact early auto plant shutdowns may have had on the index’s seasonal adjustment factors, leading to better than expected claims data over the past couple weeks. Additionally, starting on Tuesday Fed Chairman Ben Bernanke will deliver his semi-annual monetary policy testimony to House Financial Services Committee, which will almost certainly generate some headlines. But, earnings will again steal the spotlight this week with roughly 33% of the companies in the DJI and 25% of the S&P500 set to report. Some of the major names include Apple, Microsoft, Boeing, Caterpillar, UPS, Morgan Stanley, Yahoo, EBay, Amazon, Texas Instruments, and Advanced Micro Devices.
Monday July 20th:
10:00AM: Leading Indicators (Risk: Neutral, Market Reaction: Maringal/Moderate): The leading indicators index is a composite index of ten economic indicators considered to be forward looking to economic activity, these include among others jobless claims, building permits, stock prices and the University of Michigan expectations survey. The index climbed in both May and April by 1.2% and 1.1%, respectively. The market is currently anticipating a 0.5% increment in June’s release.
Tuesday July 21st:
7:45AM: ICSC-Goldman Store Sales (Risk: Negative, 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 0.9% decline in store sales over the previous week.
8:30AM: Chicago Fed National Activity Index (Risk: Neutral, Market Reaction: Marginal): The CFNAI is an index of 85 separate data sets designed to represent national economic activity and inflationary pressure. A reading of 0 indicates the economy is growing at the historical trend while a negative or positive result indicates the economy is growing below or above its historical average, respectively. Given the volatile nature of this index the three month moving average is typically quoted. This index remains somewhat obscure in the mainstream media and is likely to have a minimal impact on trading. I anticipate that we will see a marginal improvement from last month’s reading of -2.67 based on improving economic data,
10:00AM: Fed Chairman Ben Bernanke delivers his semi-annual monetary policy testimony to House Financial Services Committee
Wednesday July 22nd:
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 purchase index fell 9.4%; while the refinance index increased by 18.0% on the back of relatively low mortgage rates.
10:00AM: Fed Chairman Ben Bernanke delivers his second day of semi-annual monetary policy testimony to House Financial Services Committee
10:30AM: EIA Petroleum Status Report (Risk: Neutral, Market Reaction: Moderate): This report indicates domestic petroleum inventories, which could have a significant impact on the energy sector.
Thursday July 23rd:
8:30AM: Jobless Claims (Risk: Downside, Market Reaction: Significant): After two consecutive weeks of positive surprises, stemming from what was likely erroneous seasonal adjustment factors caused by early auto plant shut downs, we will likely see a correction. The current Bloomberg consensus stands at 560K compared to last week’s reading of 522K.
9:30AM: Fed Governor Daniel Tarullo testifies to the Senate Banking Committee, FDIC, and SEC on regulatory restructuring
10:00AM: Existing Home Sales (Risk: Downside, Market Reaction: Moderate/Significant): The Bloomberg consensus for existing home sales stands at 4.850 compared to last month’s reading of 4.770. It will be important to watch the inventory levels, which last month declined to 9.6 months from 10.1 months, the month prior. But, a recent article in the WSJ highlights the fact that a glitch in the California Association of Realtors computer system may have been inflating the number of homes sold in San Diego over the past several months, which means we will likely see some downward revisions.
10:00AM: 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 increased by US$34.2bn to move back above US$2 trillion.
Friday July 24th:
10:00AM: Consumer Sentiment (Risk: Neutral, Market Reaction: Significant): Rising stock prices and receding energy prices should bode well for this index, but could be offset by continued weakness on the labor front. The current Bloomberg consensus for July’s final consumer sentiment index is 65.0 compared to mid-July’s reading of 64.6.
Enjoy the weekend!
Friday, July 3, 2009
US Economic Week Ahead: The Calm after the Storm
This week’s economic calendar is relatively quiet, especially compared to the hustle and bustle of last week. Monday’s non-manufacturing ISM report starts the week off, followed by Wednesday’s consumer credit report, Thursday’s jobless claims data, and Friday’s US trade statistics and consumer sentiment. The impact of this week’s non-manufacturing ISM report could be somewhat subdued since its release comes after June’s employment report; negating the importance the report’s employment index. But, significant declines or advances in the report’s business activity index could help shift market sentiment. This week’s big headlines, however, will likely be driven by the start of the 2Q09 earnings seasons, with Alcoa set to announce earnings on Wednesday. There is also a G8 summit taking place this week in Italy, which could produce some headlines. Here is this week’s US economic calendar:
Monday July 6th:
10:00AM: ISM non-manufacturing Index (Risk: Neutral, Market Reaction: Moderate/Marginal): The non-manufacturing ISM index will likely experience its third consecutive monthly rise. The current Bloomberg consensus for the index is 46.7 compared to last month’s reading of 44.0. The market would take any positive surprises to this index as good news echoing better than anticipated data in the manufacturing sector pointing towards a less severe recession. It will also be important to pay attention to non-manuf. ISM’s new order index, which tends to be a forward looking indicator for the primary business activity index. Since June’s employment report has already been released the employment index is essentially a non-factor.
Tuesday July 7th:
7:45AM: ICSC-Goldman Store Sales (Risk: Downside, Market Reaction: Marginal): This weekly index tracks same store sales at major US retailers, account for roughly 10% of total 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 1.6% increment in store sales over the previous week.
Wednesday July 8th:
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. A recent drop in refinancing activity caused this index to drop 18.9% on a weekly basis last week, while the level of mortgages to purchase new homes dropped by 4.5%.
3:00PM: Consumer Credit (Risk: Downside, Market Reaction: Marginal): Consumer credit has contracted quite severely over the past several months as saving rates rise and banks tighten consumer credit. The current Bloomberg consensus indicates a month over month change of –US$7.5bn compared to –US$15.7bn a month prior—the second biggest drop on record. Given recent deterioration in the employment situation and a drop in consumer confidence we could see this indicator disappoint.
Thursday July 9th:
Same Store Sales: (Risk: Downside, Market Reaction: Moderate): This monthly release breaks out same store sales data for individual retail chains. Like weekly the ICSC-Goldman Store Sales index, recent data supporting an increasing US savings rate and a worsening employment situation coupled with deep discounts at some stores, will likely place some downward pressure on same store sales.
8:00AM: Federal Reserve Governor Elizabeth Duke: Is speaking at the FDIC's Interagency Minority Depository Institutions National Conference in Chicago. This could create some headlines.
8:30AM: Initial Claims (Risk: Neutral, Market Reaction: Significant): The current Bloomberg consensus forecast for initial claims is 610K versus last week’s number of 614K. It is likely that after Thursday’s disappointing employment data the market will become more sensitive to changes in claims, as it is an excellent forward looking indicator toward payroll data. I anticipate both initial and continuing claims data will improve as the month progresses.
Friday July 10th:
8:30AM: International Trade (Risk: Neutral, Market Reaction: Marginal/Moderate): The current Bloomberg consensus for the US trade balance is –US$28.8bn versus last month’s reading of –US$29.2bn. Recent increments in oil prices could add to the current deficit, while placing upward pressure on the import price index.
9:55AM: Consumer Sentiment (Risk: Neutral, Market Reaction: Marginal/Moderate): The current consensus on Bloomberg for the Reuters/University of Michigan Consumer Sentiment Index stands at 71.5 versus last month’s result of 70.8. The sentiment index is broken up into two parts, current conditions and future expectations. Investors are likely to focus more on this report after last week’s disappointing consumer confidence number. A positive or negative surprise in this index could impact the day’s trading.
10:00AM: Treasury Secretary Tim Geithner: Is set to testify before the House Financial Services and Agriculture Committees on derivatives regulation. This could create some headlines.
Have a good weekend!
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