After a slow week last week the news picks up again. In addition to several important economic reports we also get a Fed meeting on Tuesday. Investors are expecting further accommodative talk from the Fed so any decision could already be priced into the market. Language changes could be the more important factor this time around. Earnings season is officially over, but FedEx does sneak in a report on Thursday morning. Let’s take a more in-depth look at what’s on tap (in conjunction with Econoday):
Empire State Mfg Survey 8:30 AM ET
Treasury International Capital 9:00 AM ET
Industrial Production 9:15 AM ET
Housing Market Index 1:00 PM ET
The Empire State manufacturing index in February jumped nearly 9 points to 24.91 — a reading that indicated substantial month-to-month acceleration in the region’s manufacturing conditions. February’s figure was a rebound as this index had hit a recent high of 33.44 in October of this past year. Looking ahead, forward momentum for New York State manufacturing may be pausing as the new orders index eased to 8.78 from 20.48 in December. Nonetheless, it is still above breakeven, indicating modestly positive growth.
Empire State Manufacturing Survey Consensus Forecast for March 10: 22.0
Industrial production in January advanced 0.9 percent, following a 0.7 percent jump in December. Importantly, the manufacturing component made a robust comeback, jumping 1.0 percent after edging down 0.1 percent the month before. A big chunk of the manufacturing spike was due to a jump in auto assemblies—but gains were healthy elsewhere. The overall capacity utilization rate is still low but rose to 72.6 percent from 71.9 percent in December. Looking ahead, early warnings for the February number are mixed. Although the Philly Fed and New York Fed manufacturing indexes rose for February, the ISM index edged back. All three, however, remained in positive territory, implying positive growth. In contrast, production worker hours for the month fell 0.9 percent, according to the February employment situation numbers. Analysts expect weaker auto production to help pull down the manufacturing component. But higher utilities output from atypically cold February weather could support the headline production number.
Industrial production Consensus Forecast for February 10: 0.0 percent
Capacity utilization Consensus Forecast for February 10: 72.4 percent
ICSC-Goldman Store Sales 7:45 AM ET
Housing Starts 8:30 AM ET
Import and Export Prices 8:30 AM ET
Redbook 8:55 AM ET
FOMC Meeting Announcement 2:15 PM ET
Housing starts in January rebounded 2.8 percent after dipping 0.7 percent in December. January’s annualized pace of 0.591 million units was up 21.1 percent on a year-ago basis. The January comeback was led by a 9.2 percent increase in multifamily starts while the single-family component edged up 1.5 percent. February snow storms likely slowed starts down during the month. Focus should be more on permits as they are less affected by weather during a given month.
Housing starts Consensus Forecast for February 10: 0.565 million-unit rate
The FOMC announcement for the March 16 FOMC policy meeting is expected to leave the fed funds target rate unchanged at a range of zero to 0.25 percent. However, focus will be on any news on the Fed’s balance-sheet exit strategy, including whether there is progress on moving toward using the interest rate paid on reserves as a new target rate. Also, there is a possibility that the Board could announce another 25 basis point increase in the discount rate as the Fed has recently announced that it is gradually moving toward a normalization of the spread between the discount rate and the fed funds target rate (traditionally 100 basis points but currently 50 basis points).
FOMC Consensus Forecast for 3/16/10 policy vote on fed funds target range: unchanged at a range of zero to 0.25 percent
Wednesday –PPI will be the market moving news of the day. Nike (NKE) reports after the bell.
Producer Price Index 8:30 AM ET
EIA Petroleum Status Report 10:30 AM ET
The producer price index in January jumped 1.4 percent after rising 0.4 percent in December. At the core level, the PPI increased to a 0.3 percent gain after a flat reading in December. The headline increase was led by a 5.1 percent surge in energy costs with gasoline up 11.5 percent. Food costs also were up notably, gaining 0.4 but down from 1.3 percent in December. On a seasonally adjusted basis, oil prices were down slightly in February and this will likely weigh on the headline number. But cold weather damage to Florida crops probably will boost food prices.
PPI Consensus Forecast for February 10: -0.2 percent
PPI ex food & energy Consensus Forecast for February 10: +0.1 percent
Thursday – CPI, jobless claims and leading indicators will all be market movers. In addition, FedEx (FDX) reports before the bell. The bellwether is an important gauge future economic strength.
Consumer Price Index 8:30 AM ET
Jobless Claims 8:30 AM ET
Leading Indicators 10:00 AM ET
Philadelphia Fed Survey 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
The consumer price index rose a moderate 0.2 percent in January despite upward pressure from energy costs. The headline number has cross currents as oil prices were seasonally weak in February but food prices could be up (cold weather damage to Florida vegetables and fruits). But expect the core to be soft as shelter costs remain weak.
CPI Consensus Forecast for February 10: +0.1 percent
CPI ex food & energy Consensus Forecast for February 10: +0.1 percent
Friday – No market moving news, but options expiration could add to market volatility.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.