Merk Economic Calendar: Week Ahead In US Financial Markets (June 9-13 2008)
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Financial Markets Summary For The Week of June 9-13
Fed Chair Ben Bernanke will headline a major week of Fed talk when he speaks
at conference on inflation on Monday evening. The market will be closely
observing his keynote address to see if the Fed chair follows up on his recent
remarks to support the value of the dollar. The major market moving reports
for the upcoming week in US financial markets will be the Thursday release
of the advance retail sales report and the Friday publication of the CPI,
both of which will cover the May sampling period. We expect that the primary
emphasis of the market will be the efficacy of the fiscal stimulus package
and just how much of the recent rise in headline and core prices that the
CPI captures. Beyond the top tier data, the week will kick off with the April
pending home sales report and the following day will see the April trade
data. Wednesday will feature the publication of the Fed beige book and the
US budget statement for May. The May import price report and jobless claims
will supplement the release of the retail sales data Thursday and the week
will end with the aforementioned release of the CPI data and the University
of Michigan's consumer sentiment data on Friday.
Fed Talk
The week of June 9-13 will see a heavy week of Fed talk. The week will kick
off with a speech by NY Fed President Geithner on the economic outlook mid-day
on Monday. Tuesday will see Boston Fed President Rosengren provide the opening
remarks before a research conference on inflation, where Fed Chair Bernanke
will give the keynote address Tuesday evening. The very hawkish Dallas President
Richard Fisher will speak on globalization and monetary policy Wednesday
morning. Fed Gov. Mishkin will moderate a panel on inflation that same day
in Boston. Thursday will see a Cleveland Fed President Pianalto and Fed Gov.
Kroszner will speak on community development mid-day.
| Economic Calendar US - Weekly | ||||||
| Date Time | Event | Survey | Merk | Actual | Prior | |
| 09.06.2008 | Pending Home Sales MoM | APR | 0,00% | 1,30% | - - | -1,00% |
| 10.06.2008 | Trade Balance | APR | -$59.5B | -57,1 | - - | -$58.2B |
| 11.06.2008 | Monthly Budget Statement | MAY | -$155.0B | -174,1 | - - | - - |
| 11.06.2008 | Fed's Beige Book | na | na | na | na | |
| 12.06.2008 | Import Price Index (MoM) | MAY | 2,10% | 2,70% | - - | 1,80% |
| 12.06.2008 | Import Price Index (YoY) | MAY | - - | 19,94% | - - | 15,40% |
| 12.06.2008 | Advance Retail Sales | MAY | 0,60% | 0,60% | - - | -0,20% |
| 12.06.2008 | Retail Sales Less Autos | MAY | 0,70% | 0,80% | - - | 0,50% |
| 12.06.2008 | Initial Jobless Claims | 07. Jun | - - | 365 | - - | - - |
| 12.06.2008 | Business Inventories | APR | 0,30% | 0,30% | - - | 0,10% |
| 13.06.2008 | Consumer Price Index (MoM) | MAY | 0,50% | 0,50% | - - | 0,20% |
| 13.06.2008 | CPI Ex Food & Energy (MoM) | MAY | 0,20% | 0,20% | - - | 0,10% |
| 13.06.2008 | Consumer Price Index (YoY) | MAY | 3,90% | 3,90% | - - | 3,90% |
| 13.06.2008 | CPI Ex Food & Energy (YoY) | MAY | 2,30% | 2,30% | - - | 2,30% |
| 13.06.2008 | U. of Michigan Confidence | JUN P | 59,4 | 56,1 | - - | 59,8% |
| Market Consensus Obtained Via Bloomberg | ||||||
Chart Of The Week
Pending Home Sales (April) Monday 10:00 AM
Pending homes sales for April will likely provide another, in a long line of
indicators that the housing crunch is far from over. The 11 months of inventory
of existing homes and the very difficult future faced by the building community
are but a few of the major economic issues that will be with us long after
financial markets begin functioning normally. Potential purchasers of homes
are correct to remain quite wary of entering in agreements to purchase given
the necessary decline in the price of homes to clear the large quantity of
inventory on the books. The whisper campaign underway by the development
community that some micro-areas of the real estate market have turned the
corner should be taken with more than a bit of skepticism. We expect that
pending sales will fall -1.3% for the month.
Trade Balance (April) Tuesday 10:00 AM
A weak dollar should continue to buttress a sagging economy that without the
robust demand from the external sector would have contracted through the
first three months of the year. Our forecast implies that the nominal deficit
should see improvement for the month of April arriving at -$57.1bn vs. the
-$58.2bln previously. We expect that foreign demand for in the goods sector,
specifically for semiconductors, electronics and telecommunications equipment
should be quite brisk for the month. The benefits of a flexible and open
economy should be on display during a month when we expect to see continued
improvement in the trade deficit between the US and the Pacific Rim countries
which at this point should begin to trickle into the debate over free trade
underway in the US election
US Budget Statement (May) Wednesday 2:00
The general slowdown in the economy should generate an outsized decline in
tax receipts for the May reporting period when we expect to see a -$174.1bln
operating deficit. Moreover, with government spending activity on the upswing
in an attempt to offset the housing induced case of the blues that currently
afflict consumers we do think that the risk for the series is to the upside.
Fed Beige Book (May) Wednesday 2:00
With the economy moving sideways showing no signs of recovery, but not in a
condition resembling collapse, the market will be looking to the beige book
for hints on regional conditions regarding the state of personal consumption,
the housing sector and the pricing environment. We anticipate that the beige
book will indicate that the housing sector continues to act as a deadweight
and consumption ex-gasoline is sluggish at best. Outside of the external
sector, the economy saw negative growth through the first three months of
the year and the primary question outstanding going forward is whether the
rebate checks will offset the sharp rise in the cost of gasoline and food
over. In our estimation, the rise in gasoline prices has reduced the power
of the rebates and we expect to see growth in Q2 arrive at 1.7, down from
our provisional estimate of 2.1%.
Import Prices (May) Thursday 8:30
The weak dollar and the surge in demand for commodities and energy has been
the primary catalyst behind the rise in the cost of imported goods. Given
the most recent increase in the aforementioned categories we expect that
the month over month reading to advance 2.7% and the annual basis to increase
15.1% for the May sampling period. It is our estimation that import prices,
as a factor in inflation, is being underestimated at this point. We believe
that the recent rebound in the value of the dollar will prove transitory,
and long term structural adjustment downward in the value of the greenback
will act as a catalyst for inflation beyond what is currently priced in by
the market.
Advance Retail Sales (May) Thursday 8:30
The first real test of the efficacy of the fiscal stimulus out of Washington
will be on display when we see the advance retail sales report for the month
of May. Through the end of the sampling period, the US Treasury sent out
$45.46 billion in rebate checks, which should provide a net boost to overall
sales. With auto sales inching up for the month, after a dismal April, we
expect that the stimulus should provide enough of an offset to the rising
cost of gas and food to generate a 0.6% increase in headline sales and a
0.8% rise in the core rate. However, we do think that the risk is to the
downside and the Spending Pulse report of a -6.0% decline in demand for retail
gasoline that could weigh quite heavily on the overall report.
Initial Jobless Claims (Week Ending 7 June) Thursday 8:30
We expect that initial claims will tend back towards the top of its range to
365K for the week ending 7 June. The labor market, much like the economy
is moving sideways at the moment, with no decisive catalyst provide a breakout
in either direction over the horizon. Our year-end estimate of 5.5% in the
rate of unemployment still stands and the recent 3.093mln posting in the
continuing claims data supports that forecast.
Consumer Price Index (May) Friday 8:30
After a very modest increase in both headline and core inflation in April,
the market will be focused on any possible revisions to data after seasonally
adjusted inspired -2.0% decline in the cost of gasoline. Our skepticism regarding
the current state of the data is a matter of record and we will not delve
on it further here. Over the next few months the data will begin to capture
the increase in the core costs that most individuals have begun to observe
and are behind our assessment that inflation will continue to rise throughout
the remainder of 2008. For us, just as important is the relative increase
in the cost of food that hit a record 5.1% in April and is poised to continue
to increase at near record levels in May. Food represents 13.8% of the cost
of living for the median consumer and the combination of the sharp increase
in the cost of food and energy has begun to change the consumptive behavior
of the individual. Our forecast implies that headline CPI will advance 0.5%
m/m and 3.9% y/y. The core will increase 0.2% m/m and 2.3% y/y for May with
the risk for the trading day to the upside.
University of Michigan Consumer Sentiment (June Preliminary) Friday 10:00
We do not expect any improvement in the very bearish condition of consumer
sentiment anytime soon. For sometime we have made the case that consumer
sentiment has become quite sensitive to changes in the cost of gasoline.
At this point, the cost of petroleum has increased so sharply, it is stimulating
a further change in behavior. According to the US Department of Transportation
miles driven has fallen 4.3%. The Department of Transportation reports that
demand for petroleum is down 3.9% and the Spending Pulse report on credit
card spending stated that demand for retail gasoline dropped 6.0%. It is
little wonder that the estimates of consumer sentiment across the board are
touching decade long lows. We expect the headline to fall to 56.1 for the
preliminary June estimate.
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Author: Joseph Brusuelas
Joseph Brusuelas
Chief Economist
VP Global Strategy
Merk Investments LLC
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.
Mr. Brusuelas lives in Connecticut with his wife and St. Bernard.
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