For the week of August 10th (in conjunction with Econoday):
The Fed meeting will take center stage this week as investors have become largely convinced that big changes will be made to the statement. Let’s take a look at what else is on tap:
No market moving news. Investors will likely be positioning for what is expected to be a bullish FOMC statement on Tuesday.
ICSC Goldman Store Sales 7:45 AM ET
Productivity and Costs 8:30 AM ET
Nonfarm business productivity for the first quarter came in at a moderately healthy 2.8 percent annualized gain. Meanwhile, unit labor costs declined 1.3 percent annualized. The second quarter numbers are not likely to be as favorable given the slowing in GDP growth for the same period. The output component of productivity and unit labor costs is based on many of the same sources as GDP. Real GDP growth slowed to 2.4 percent from an annualized 3.7 percent in the first quarter.
Nonfarm Business Productivity Consensus Forecast for initial Q2 10: 0.0 percent annual
Unit Labor Costs Consensus Forecast for initial Q2 10: +1.5 percent annual rate
Redbook 8:55 AM ET
Wholesale Trade 10:00 AM ET
FOMC Meeting Announcement 2:15 PM ET
The FOMC announcement for the August 10 FOMC policy meeting is expected to leave the fed funds target unchanged at a range of zero to 0.25 percent. Traders will be picking apart the statement for any wording hinting of additional quantitative easing and for changes in the Fed’s view of the economy.
FOMC Consensus Forecast for 8/10/10 policy vote on fed funds target range: unchanged at a range of zero to 0.25 percent
Wednesday – Cisco (CSCO) reports after the bell.
MBA Purchase Applications 7:00 AM ET
International Trade 8:30 AM ET
The U.S. international trade gap expanded in May to $42.3 billion from $40.3 billion in April. Exports rebounded 2.4 percent while imports bounced back 2.9 percent. The worsening in the deficit was in the nonpetroleum portion. The nonpetroleum deficit widened to $32.3 billion in May from $27.8 billion the prior month. The petroleum goods gap, however, narrowed to $21.5 billion from $24.1 billion in April.
International trade balance Consensus Forecast for June 10: -$42.5 billion
EIA Petroleum Status Report 10:30 AM ET
Treasury Budget 2:00 PM ET
The U.S. Treasury monthly budget report for June showed a budget gap for June of $68.4 billion, which brought the fiscal year-to-date gap to $1.004 trillion, compared to $1.086 trillion for June of 2009. Looking ahead, the month of July typically shows a sizeable deficit for the month. Over the past 10 years, the average deficit for the month of July has been $55.2 billion and $81.3 billion over the past 5 years. The July 2009 deficit came in at $94.3 billion.
Treasury Statement Consensus Forecast for July 10: -$170.0 billion
Jobless Claims 8:30 AM ET
Initial jobless claims jumped 19,000 in the July 31 week to 479,000. The prior week was revised 3,000 higher to 460,000. The four-week average rose 5,250 to 458,500 but was still slightly lower than the same time in June. Markets will be hoping for the first reading in August to head down and suggest a better employment situation report for the month than in July.
Jobless Claims Consensus Forecast for 8/7/10: 460,000
Import and Export Prices 8:30 AM ET
EIA Natural Gas Report 10:30 AM ET
Consumer Price Index 8:30 AM ET
The consumer price index in June dipped 0.1 percent, following a 0.2 percent decline in May. Excluding food and energy, however, the CPI firmed to 0.2 percent after a 0.1 percent uptick in May. For the latest month, the energy component dropped 2.9 percent while food prices overall were flat. Bumping up the core rate was a number of components – notably apparel, medical care, used cars, and tobacco. June’s rise in the core followed several months of weakness.
CPI Consensus Forecast for July 10: +0.2 percent
CPI ex food & energy Consensus Forecast for July 10: +0.1 percent
Retail Sales 8:30 AM ET
Retail sales in June shrank 0.5 percent, following a 1.1 percent decline in May. The June decline was led by a decline in motor vehicle sales with lower gasoline station sales also contributing. Sales ex autos only edged down 0.1 percent, following a 1.2 percent drop in May. Sales excluding autos and gasoline rebounded 0.1 percent, following a 1.0 contraction in May. Recent news is mixed for the strength of July sales. Unit new auto sales rebounded 3.3 percent. Chain store sales for July were mixed.
Retail sales Consensus Forecast for July 10: +0.5 percent
Retail sales excluding motor vehicles Consensus Forecast for July 10: +0.2 percent
Consumer Sentiment 9:55 AM ET
The Reuter’s/University of Michigan’s Consumer sentiment index for the final reading of July rose 1.3 points to 67.8 from 66.5 at mid-month and compared against 76.0 at month-end June. Because the survey is about evenly split in terms of sample size between the initial reading and those added in the second half of the month, the end of month number implies that the second half was stronger than the first half of July. This could carry over to the initial reading for August.
Consumer sentiment Consensus Forecast for preliminary August 10: 69.0
Business Inventories 10:00 AM ET
Business inventories edged up 0.1 percent in May. By components, retail and wholesalers’ inventories rose 0.5 percent and 0.3 percent, respectively. Meanwhile, manufacturers’ inventories declined 0.4 percent. There may be problems for June inventories as retail sales and manufacturers shipments fell that month.
Business inventories Consensus Forecast for June 10: +0.2 percent
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.