The Week Ahead in the Markets and why Investors Care

Certainly the protests around the globe as well as in Wisconsin will have an impact on the markets but so too will earnings and consumer reports.


All Markets will be closed for Presidents Day.


S&P Case-Shiller HPI: The S&P/Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S. Investors care because many economists believe that the U.S. economy and especially the depressed housing sector will not recover until home prices firm back up. This makes watching home prices all the more important for the investor.

Consumer Confidence: The Conference Board compiles a survey of consumer attitudes on present economic conditions and expectations of future conditions. The Conference Board’s consumer confidence index is expected to rise from 60/6 to 65. Investors care because typically retail sales will move in tandem with consumer optimism – although not necessarily each and every month.

State Street Investor Confidence Index: The State Street Investor Confidence Index measures confidence by looking at actual levels of risk in investment portfolios. This is not an attitude survey. Investors care because conventional wisdom suggests investors are confident when stocks are rising and pessimistic when falling. But in fact, the State Street group notes prices tend to be higher when economic fundamentals are strong; i.e., when economic indicators are growing at a healthy clip.

Two Year Note Auction:


MBA Purchase Applications: The Mortgage Bankers’ Association compiles various mortgage loan indexes. The purchase applications index measures applications at mortgage lenders. This is a leading indicator for single-family home sales and housing construction. Investors care because this provides a gauge of not only the demand for housing, but economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house.

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. Investors care because 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. The ICSC-Goldman index is one of the more timely indicators of consumer spending, since it is reported every week.

Existing Home Sales: Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month. Investors care because this provides a gauge of not only the demand for housing, but the economic momentum. Even though home resales don’t always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer.
Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic “ripple effect” can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Five Year Note Auction:


Durable Goods Orders; Durable goods are expected to rise 3%. This is key because the index has had two months of surprise drops. Durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. Investors care because they want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. Orders for durable goods show how busy factories will be in the months to come, as manufacturers work to fill those orders.

Jobless Claims: Expectations are for a drop of 5,000 after last weeks increase of 25,000. 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. Investors care because jobless claims are an easy way to gauge the strength of the job market. 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, bond and stock prices will fall.

New Home Sales: New home sales measure the number of newly constructed homes with a committed sale during the month. Investors care because this provides a gauge of not only the demand for housing, but the economic momentum. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.
Seven Year Note Auction:


GDP: The quarter to quarter change is expected to rise .2% but the headline price index is expected to stay the same. Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Investors care because Gross domestic product is the country’s most comprehensive economic scorecard. GDP is the all-inclusive measure of economic activity. Market participants view increased expenditures on investment favorably because they expand the productive capacity of the country. This means that we can produce more without inciting inflationary pressures.

Consumer Sentiment: The expectation is that it remained unchanged. The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Investors care because the pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation.

You must be logged in to post a comment.