Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Economic Forecasts and Analysis For U.S. Financial Markets (Nov 17-21)

Economics / US Economy Nov 15, 2008 - 07:27 AM GMT

By: Joseph_Brusuelas

Economics Best Financial Markets Analysis ArticleThe week ahead in financial markets will see a modest quantity of data that will hit the tapes largely on Thursday and Friday. The major market moving events will be the Friday release of the October advance retail sales data and the Thursday release of the US Trade Balance, Jobless Claims and the US Budget Statement. On Friday in Frankfurt Germany, Fed Chair Bernanke and ECB President Trichet will lead a cast of global central banking all-stars that will address monetary policy within the current global financial crisis.


Fed Talk

The week in Fed talk will see heavy week of discussion on the economic outlook. Fed Vice-Governor Kohn and Richmond Fed President will speak at a conference on the subprime crisis Wednesday. The following day Treasury Secretary Paulson and St. Louis Fed Bullard will speak on the US economy. The week will close with Richmond Fed's Lacker and Chicago Fed President Evans addressing the economic outlook, with Philadelphia Fed President Plosser speak on financial conditions and the overall outlook for the economy.

Empire Manufacturing (November) Monday 08:30 AM

The market gets its first opportunity to observe data from the real economy in November via the New York Fed's survey of regional manufacturing conditions. With the economy decelerating at a rapid clip and orders for basic inputs and finished goods from the external sector moderating we do expect that there is major risk to the downside for the month. The fall in the general business headline to -30.0 implied by our forecast assumes that the new orders from the domestic and external sectors should continue to decline during the month in an orderly fashion. Should new orders fall off a cliff, as is often the case in a recession, the market could observe a much sharper decline in the headline.

Industrial Production/Capacity Utilization (October) Monday 09:15 AM

Given the rather large moves to the downside in the ISM, Empire and Philadelphia Fed surveys of the manufacturing sector we do expect to see third straight contraction within the Federal Reserve's estimate of industrial production. Our forecast of a -0.2% decline accounts for the fact that production at Boeing did not start until after the sampling period ended and industrial activity remained weak in the aftermath of the twin hurricanes to hit the Gulf region in September. Moreover, with production of autos curtailed and demand for utilities not yet poised for a late autumn increase, we do think that the risk for the trading day is to the downside. Going forward, indicators of near term production suggested that the industrial sector is likely to remain soft over the next several months. For most major industry groups capacity utilization will remain well below their long-term averages.

Producer Price Index (October) Tuesday 08:30 AM

The decline in commodity prices in October represented the single worst month in sector in 52 years. They nature and scope of the change in cost of production should be reflected in the decline in prices just about across the board during the month. Inside the data the cost of crude goods should see its third straight month over month decline. Total crude goods were down -7.9% in September after an -11.9% drop in August. Ex food and energy, crude goods were down -9.4% in September. To provide a bit of perspective on the fall of basic inputs for production, the cost of natural gas is down -16.5%, crude petroleum -9.0%, iron and scrap metal -22.4% and nonferrous metal ores -6.9% during the previous reporting period. The developments in crude goods should begin to translate into relief in the pipeline and further downward pressure in the headline over time. We anticipate that headline costs will decline -2.8% m/m and the year over year measure ease to a 5.4% increase, down from 8.7% posted previously. The core ex-food and energy measure should see a 0.2% m/m increase and a 3.9% advance for the month.

Consumer Price Index (October) Wednesday 08:30 AM

The decline in energy and commodity prices in the headline and the fall in the shelter component inside the core, which comprises 42.4% of the overall index, should again be the primary catalyst for the long needed relief for consumers after a long period of inflation. The disinflation now moving through the system should accelerate as firms now facing bloated inventories in the aftermath of the -3.1% contraction in real personal income should price goods to move as the economy enters what is shaping up to be the most difficult three month period in the economy since the first quarter of 1982 where the economy contracted at a -6.4% rate. Going forward, it is quite clear that the quantitative easing policy of that has become the primary focus behind the Fed's efforts at stimulating aggregate demand will expand in the context of the disinflation that we are observing and be shaped to support the expansionary fiscal policy in the pipeline on the part of the Federal government. Until, these policies gain traction the pricing environment will have a decidedly negative tilt.

Housing Starts/Building Permits (October) Wednesday 08:30 AM

With the median price of a home in most parts of the country still experiencing declines, beyond the replacement of existing stock, there is little incentive to apply for a permit to build a new home. Although, inventory levels have come down in recent months, this has to do with sales of foreclosed homes. There is little evidence that the current pace of sales can be maintained given the disruption in the domestic system of credit. With the strong probability that the pace of foreclosures will pick up as the rate of unemployment increases, there is little in the way of a rational argument that would encourage the development community to continue to build homes except under a very narrow range of circumstances. With the existing stock of homes in both the new and used category still far to high for what current demand can absorb, we expect that starts in October will fall to 750K and permits should decline to 730K.

FOMC Minutes (October) Wednesday 15:00 PM

The FOMC minutes from the October meeting should be quite the potent release. We anticipate that the minutes will provide further information on the sharp deceleration in economic activity in the areas of real personal consumption, business investment and discuss the deteriorating situation in the labor market. The committee should be expected to have discussed stresses in the financial markets that were in part one of the primary catalysts behind the reduction of the federal funds rate by 50bps. Given that the federal funds rate has moved towards the zero bound, the efficacy of reducing the target rate to stimulate aggregate demand will be constrained going forward. Thus, the expansion of the Fed balance sheet has taken on a far more significance with respect to overall economic activity. We do expect that going forward the minutes should and will begin to discuss these efforts in an attempt to add an element of transparency and communications in the committees efforts to stabilize the financial system and get ahead of the curve to ward off the disinflation currently moving through the system.

Jobless Claims (Week Ending November 8) Thursday 08:30 AM

The week ending November 15 should see jobless claims continue to surge. Our forecast implies an increase to 520K for the week and the continuing claim data for the week ending November 1 will advance to 3.945mln. The constrained environment for credit and slump in consumption by individuals has provided a strong incentive for firms to begin shedding jobs.

Philadelphia Fed (November) Thursday 10:00 AM

Although, the cost environment for basic inputs has increased decisively over the past few months, there is little doubt that the combination of reduced demand from the external sector and the collapse in aggregate demand on a domestic basis, particularly in the auto industry, should combine to drive the headline general business activity index to -40.0, with risk to the downside. Unlike other purchasing managers surveys, the Philadelphia Fed survey headline is not a composite score but a stand-alone question that often is best viewed as a barometer of confidence in the region. Thus, with the disruption in the credit market and the very real probability that GM will not make through the end of the year and Ford through the middle of 2009, there is a risk of the headline seeing a precipitous decline well beyond our very bearish forecast.

By Joseph Brusuelas
Chief Economist, VP Global Strategy of the Merk Hard Currency Fund

Bridging academic rigor and communications, Joe Brusuelas provides the Merk team with significant experience in advanced research and analysis of macro-economic factors, as well as in identifying how economic trends impact investors.  As Chief Economist and Global Strategist, he is responsible for heading Merk research and analysis and communicating the Merk Perspective to the markets.

Mr. Brusuelas holds an M.A and a B.A. in Political Science from San Diego State and is a PhD candidate at the University of Southern California, Los Angeles.

Before joining Merk, Mr. Brusuelas was the chief US Economist at IDEAglobal in New York.  Before that he spent 8 years in academia as a researcher and lecturer covering themes spanning macro- and microeconomics, money, banking and financial markets.  In addition, he has worked at Citibank/Salomon Smith Barney, First Fidelity Bank and Great Western Investment Management.

© 2008 Merk Investments® LLC
The Merk Hard Currency Fund is managed by Merk Investments, an investment advisory firm that invests with discipline and long-term focus while adapting to changing environments.
Axel Merk, president of Merk Investments, makes all investment decisions for the Merk Hard Currency Fund. Mr. Merk founded Merk Investments AG in Switzerland in 1994; in 2001, he relocated the business to the US where all investment advisory activities are conducted by Merk Investments LLC, a SEC-registered investment adviser.

Merk Investments has since pursued a macro-economic approach to investing, with substantial gold and hard currency exposure.

Merk Investments is making the Merk Hard Currency Fund available to retail investors to allow them to diversify their portfolios and, through the fund, invest in a basket of har

Joseph Brusuelas Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in