What Factory Orders and the Beige Book mean to you!

What Factory Orders and the Beige Book mean to you!

Market Focus: Lots of Fed Speak in the wake of a bad Employment number combined with Europe should only add to the volatility. Look to Wednesday’s European Central Bank meeting to see if they blink first in the stimulus battle.

Monday:

Factory Orders: Factory orders represent the dollar level of new orders for both durable and nondurable goods. This report gives more complete information than the advance durable goods report which is released one or two weeks earlier in the month. The consensus estimate is for an increase from last month’s -1.5 to .1%. What it means to you: The orders data show how busy factories will be in coming months as manufacturers work to fill those orders. This report provides insight to the demand for not only hard goods such as refrigerators and cars, but nondurables such as cigarettes and apparel. In addition to new orders, analysts monitor unfilled orders, an indicator of the backlog in production. Shipments reveal current sales. Inventories give a handle on the strength of current and future production.

Tuesday:

ISM Non Mfg Report: The non-manufacturing ISM surveys nearly 400 firms from 60 sectors across the United States, including agriculture, mining, construction, transportation, communications, wholesale trade and retail trade. The consensus estimate is for a the same as last month’s reading of 53.5. What it means to you: The non-manufacturing composite index has four equally weighted components: business activity, new orders, employment, and supplier deliveries. The ISM did not begin publishing the composite index until the release for January 2008. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly-and causing potential inflationary pressures.

ICSC Goldman Store Sales:  This weekly measure of comparable store sales at major retail chains, published by the International Council of Shopping Centers, is related to the general merchandise portion of retail sales. It accounts for roughly 10 percent of total retail sales. What it means to you: Consumer spending accounts for more than two-thirds of the economy, so if you know what consumers are up to, you’ll have a pretty good handle on where the economy is headed.

Redbook: A weekly measure of sales at chain stores, discounters, and department stores. It is a less consistent indicator of retail sales than the weekly ICSC index. What it means to you: The pattern in consumer spending is often the foremost influence on stock and bond markets.

James Bullard (St. Louis Federal Reserve President) Speaks

Richard Fisher (Dallas Federal Reserve President) Speaks

Charles Evens (Chicago Federal Reserve President) Speaks

Wednesday:

Productivity and Costs: Productivity measures the growth of labor efficiency in producing the economy’s goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends. The consensus is for a -.8% increase in Productivity  (an increase from last month’s -.5% and an increase of 2.1% in Unit Labor Costs. Slightly more than last months 2%. What it means to you:  Productivity growth is critical because it allows for higher wages and faster economic growth without inflationary consequences. In periods of robust economic growth, productivity ensures that inflation will remain well behaved despite tight labor markets. Productivity growth is also a key factor in helping to increase the overall wealth of an economy since real wage gains can be made when workers are more productive per hour.

Beige Book: This book is produced roughly two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Fed district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts. What it means to you: This report on economic conditions is used at FOMC meetings. If the Beige Book portrays an overheating economy or inflationary pressures, the Fed may be more inclined to raise interest rates in order to moderate the economic pace. Conversely, if the Beige Book portrays economic difficulties or recessionary conditions, the Fed may see the need to lower interest rates in order to stimulate activity.

Dennis Lockhart (Atlanta Federal Reserve President) Speaks

Daniel Tarullo (Federal Reserve Governor) Speaks

John William (San Francisco Federal Reserve President) Speaks

Janet Yellen (Federal Reserve Vice Chairman) Speaks

EIA Petroleum Report: The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S. The level of inventories helps determine prices for petroleum products. What it means to you: Petroleum product prices are determined by supply and demand – just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices – or price increases for a wide variety of petroleum products such as gasoline or heating oil.

Thursday:

Weekly Jobless Claims: New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility. The consensus estimate is for a decrease from 383,000 to 379,000. What it means to you: By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation threatens, it’s a good bet that interest rates will rise.

Bloomberg Consumer Comfort Index: A weekly, random-sample survey tracking Americans’ views on the condition of the U.S. economy, their personal finances and the buying climate. What it means to you: The pattern in consumer attitudes can be a key influence on stock and bond markets. Consumer spending drives two-thirds of the economy and if the consumer is not confident, the consumer will not be willing to spend. Confidence impacts consumer spending which affects economic growth.

Consumer Credit: The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns. The consensus estimate is for a decrease from 21.4 billion to 12 billion. What it means to you: Growth in consumer credit can hold positive or negative implications for the economy and markets. Economic activity is stimulated when consumers borrow within their means to buy cars and other major purchases. On the other hand, if consumers pile up too much debt relative to their income levels, they may have to stop spending on new goods and services just to pay off old debts. That could put a big dent in economic growth.

Ben Bernanke (Federal Reserve Chairman) Speaks

Dennis Lockhart (Atlanta Federal Reserve President) Speaks

Narayana Kocherlakota (Minneapolis Federal Reserve President) Speaks

Richard Fisher (Dallas Federal Reserve President) Speaks

Money Supply

Friday:

International Trade: International trade is composed of merchandise (tangible goods) and services. It is available nationally by export, import and trade balance. Detailed information is reported on oil and motor vehicle imports. Services trade is available by export, import and trade balance for seven principal end-use categories. The consensus estimate is for -49.3 after last month’s -51.8. What it means to you: The international trade balance on goods and services is the major indicator for foreign trade. While the trade balance (deficit) is small relative to the size of the economy (although it has increased over the years), changes in the trade balance can be quite substantial relative to changes in economic output from one quarter to the next. Measured separately, inflation-adjusted imports and exports are important components of aggregate economic activity, representing approximately 17 and 12 percent of real GDP.

Wholesale Trade: Wholesale trade measures the dollar value of sales made and inventories held by merchant wholesalers. It is a component of business sales and inventories. The consensus estimate is for an increase in inventories from .3 to .5. What it means to you: Investors need to monitor the economy closely because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a slower rate of growth that won’t lead to inflationary pressures. Wholesale sales and inventory data give investors a chance to look below the surface of the visible consumer economy.  

Narayana Kocherlakota (Minneapolis Federal Reserve President) Speaks

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