What Producer Price Index, Consumer Sentiment, and Import Prices Mean to You!

What Producer Price Index, Consumer Sentiment, and Import Prices Mean to You!

Market Focus: Europe, Producer Price Index, Consumer Sentiment and lots of Fed Speak. Elections in France and Greece should hold the edge with a thin economic calendar.

Monday:

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 an increase from 8.7 billion to 9.8 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.

Jeffrey Lacker (Richmond Federal Reserve President) Speaks

Tuesday:

NFIB Small Business Optimism Index:  The index is a composite of ten seasonally adjusted components based on questions on the following: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job opening, expected credit conditions, now a good time to expand, and earnings trend. The Consensus Estimate is for a slight rise from 92.5 to 93 for a possibly fifth straight increase. What it means to you: Small businesses are responsible for a majority of new job creation and the NFIB focuses on this sector of the economy. The direction of the health of small businesses can portend changes in the stock market.

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.

3 Year Note Auction

Jeffrey Lacker (Richmond Federal Reserve President) Speaks

Richard Fisher (Dallas Federal Reserve President) Speaks

Wednesday:

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 a decrease in inventories from .9 to .6. 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.  

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.

10 Year Note Auction

Sandra Pianalto (Cleveland Federal Reserve President) Speaks

Charles Plosser (Philadelphia Federal Reserve President) Speaks

Thursday:

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 -49.5 after last month’s -46. 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.

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 an increase from 365,000 to 366,000. 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.

Import and Export Prices: Import price indexes are compiled for the prices of goods that are bought in the United States but produced abroad and export price indexes are developed for the prices of goods sold abroad but produced domestically. These prices indicate inflationary trends in internationally traded products.  The consensus estimate is for a significant decrease to .2 from last month’s .8. What it means to you: Changes in import and export prices are a valuable gauge of inflation here and abroad. Furthermore, the data can directly impact the financial markets such as bonds and the dollar.

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.

Ben Bernanke (Federal Reserve Chief) Speaks

Naryana Kocherlakota (Minneapolis Federal Reserve President) Speaks

30 Year Bond Auction

Money Supply

Friday:

Producer Price Index: The Producer Price Index (PPI) is a measure of the average price level for a fixed basket of capital and consumer goods received by producers. The consensus estimate is for a 0% gain in the overall number and a .2% gain in the core rate. The overall number remaining the same as last month.  What it means to you:  Changes in the producer price index for finished goods are considered a precursor of consumer price inflation. If the prices that manufacturers pay for their raw materials rise, they would have to raise the prices that consumers pay for their finished goods in order to not decrease profit margins. Changes in the supply and demand for labor will affect wage changes with a delay because wages are institutionalized and contractual. However, commodity prices react more quickly to changes in supply and demand.

Consumer Sentiment: The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending. Consumer confidence and consumer sentiment are two ways of talking about consumer attitudes. The consensus estimate is for a small  decrease to 76.4 from 76.2. What it means to you:  Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it’s easy to see how this index of consumer attitudes gives insight to the direction of the economy.

Richard Fisher (Dallas Federal Reserve President) Speaks

 

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