Posted by: cfigueira | October 26, 2010

Economic News

Key Economic News:

Home prices, consumer confidence, the Richmond Fed index, and one more Fed speech….

9:00: S&P/Case-Shiller Home price index for Aug…another decline? This index has started to give back some of the increase posted during the spring quarter, when the homebuyer tax credit was in place. Most analysts expect another small decline, but the huge drop that has been rumored for August and September on the basis of a competing index.
Median forecast (of 15): -0.2%, ranging from -1.1% to flat; last -0.13%.

10:00: Conference Board confidence index for Oct…a small increase? This index suffered a setback in September. The median forecast looks for a partial recovery. As usual, we will look at the gap between those saying jobs are plentiful and those saying they are hard to get. In September it widened to -42.3 from -41.5 in August. The cycle low was -46.1 in November, 2009.
Median forecast (of 75): 49.9, ranging from 45 to 53; las 48.5.

10:00: Richmond Fed manufacturing index for July…will it stabilize? This index dipped below the zero dividing line between industrial expansion and contraction in September. The six economists who forecast it look for either a flat reading or a slight return to positive territory. All three components of this composite index have behaved in roughly similar fashion, dropping to either zero (new orders) or slightly negative (shipments and employment) in September.
Median forecast (of 6): +1, ranging from 0 to +5; last -2.

16:30: New York Fed President William Dudley speaks on the national and regional economy…at the University of Rochester. This looks like largely a repeat of the speech he gave at Cornell University yesterday.

17:00: ABC consumer comfort index…It’s been bouncing between -47 to -46 lately, last at -46.

Advice:

Another Modest decline
Case-Shiller home price index falls slightly more than expected in August, as payback following expiry of the homebuyer tax credit continues. The seasonally-adjusted regional distribution of the August decline is broad based: the biggest declines occur in Phoenix (-2.21%), Denver (-1.14%) and Cleveland (-1.14%). New York is the only metro area that did not show declining house prices (+0.01%).

Key Numbers:
Case-Shiller 20 metro index -0.28% in Aug (mom, seas. adj., +1.7% yoy) vs. median forecast -0.2%.

With this news and as long as the Conference Board and the Richmond index come in as expected. I believe we will see the market recover today.

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