The schedule for the week of September 30th includes:
- Monday: Chicago PMI, Dallas Fed Mfg Survey, 3-Month Bill Auction, and 6-Month Bill Auction
- Tuesday: Motor Vehicle Sales, ICSC-Goldman Store Sales, PMI Manufacturing Index, ISM Mfg Index, and Construction Spending
- Wednesday: MBA Purchase Applications, ADP Employment Report, and Ben Bernanke speaks
- Thursday: Challenger Job-Cut Report, Jobless Claims, Factory Orders, ISM Non-Mfg Index, Fed Balance Sheet, Richard Fisher Speak, and Jerome Powell speak
- Friday: Employment Situation and Narayana Kocherlakota speaks
I spoke with Benedict Willis III, Managing Director of Albert Fried & Company, LLC., and frequent commentator on Bloomberg, CNBC, and FOX Business, about the economic calendar. Willis will be focused on the overall market, employment report, manufacturing data, 3rd quarter earnings, and Ben Bernanke speech.
Willis feels the market is in a contraction mode. Investors are digesting the message from the Federal Reserve, which is not much, as they delayed their decision to taper. The forward guidance market participants received from the Fed was a $10 billion a month cut in its bond buying program. The decision to not scale back its stimulus program devalued and diminished the central bank’s credibility. The agency has a lack of clarity on its plans to roll back its asset purchase program. This lack of action by the Fed broke the market rally and left it floundering. However, Willis anticipates the equity markets will finish the year up as the economic data is showing signs of improvements.
Employment Report and Manufacturing Data
Investors will continue to scrutinize employment data, as trends of improvement will be responsive to the Fed’s tapering. We need the unemployment rate to drop for Ben Bernanke to begin reducing the Fed’s asset purchase program. The employment data this month is forecasted to be about 180K versus 169K for the month prior. The weekly jobless claims data has been trending down lately to the low 300Ks and has shown signs of improvement. There are a slew of manufacturing reports this week and Willis will look for the data to show an upward trend.
3rd Quarter Earnings
According to Willis, 3rd quarter earnings can’t get much worse than the previous quarter and the data has to get better. However, the quarter will be tough for everybody. Second quarter earnings were a little disappointing. He went on to say rising interest rates are good for banks, despite a downturn in mortgage origination and refinancing applications. He added, the financial sector sold off when the Fed did not taper. This coming earnings season Willis likes the material and energy sectors, as they have continually been good across the board.
Bernanke and Company
This week chairman, Ben Bernanke and other top Fed officials will be speaking at various events throughout the country. Fed watchers will be looking for clues from the central bank as to when it will begin tapering. Willis said “we will be watching for an explanation for why Fed did not taper.” Dallas Federal Reserve Bank President, Richer Fisher, who is regarded as a hawk will also be speaking this week. Fisher recently commented that the central bank missed an opportunity to taper and the agency’s credibility is at stake. Investors will also be looking for Bernanke’s exit strategy and who his possible successor will be, even though vice chairwoman Janet Yellen is the clear front runner for the job.
