Background on “Weighing the Week Ahead”
There are many good lists of upcoming events. One source I regularly follow is the weekly calendar from Investing.com. For best results you need to select the date range from the calendar displayed on the site. You will be rewarded with a comprehensive list of data and events from all over the world. It takes a little practice, but it is worth it.
In contrast, I highlight a smaller group of events, including some you have not seen elsewhere. My theme is an expert guess about what we will be watching on TV and reading in the mainstream media. It is a focus on what I think is important for my trading and client portfolios. Each week I consider the upcoming calendar and the current market, predicting the main theme we should expect. This step is an important part of my trading preparation and planning. It takes more hours than you can imagine.
My record is pretty good. If you review the list of titles it looks like a history of market concerns. Wrong! The thing to note is that I highlighted each topicthe week before it grabbed the attention. I find it useful to reflect on the key theme for the week ahead, and I hope you will as well.
This is unlike my other articles at “A Dash” where I develop a focused, logical argument with supporting data on a single theme. Here I am simply sharing my conclusions. Sometimes these are topics that I have already written about, and others are on my agenda. I am putting the news in context.
Readers often disagree with my conclusions. Do not be bashful. Join in and comment about what we should expect in the days ahead. This weekly piece emphasizes my opinions about what is really important and how to put the news in context. I have had great success with my approach, but feel free to disagree. That is what makes a market!
Last Week’s Data
Each week I break down events into good and bad. Often there is “ugly” and on rare occasion something really good. My working definition of “good” has two components:
- The news is market-friendly. Our personal policy preferences are not relevant for this test. And especially — no politics.
- It is better than expectations.
The Good
With the shutdown limiting issuance of fresh government data, there was much less (non-political stuff) to ponder, and very little good news.
- Janet Yellen was nominated to be Fed Chair. This was widely expected, so it did not have much market impact. Yellen opponents should consult above for the definition of “good” as “market-friendly.” Felix Salmon has some interesting ideas on how she can improve communications, an area where many of us have found Bernanke disappointing.
- Non-government indicators show strength. Scott Grannis has a chart pack that shows some optimistic market-based indicators. This is something we should all read in addition to the headlines!
- The market bounce was not just short-covering. This is in sharp contrast to general media reports, so it is important to note. Bespoke provides the analysis including this chart:
The Bad
Despite the data shortage, there was some bad news.
- The IMF warned on the threats to global growth and especially from the US debt ceiling issue.
- Jobless claims spiked higher. Partly this was the “California effect” as their computers caught up with recent claims. The overall level is still better than recent months, but there is more noise than ever. This will not diminish with the effects of the government shutdown.
- Consumer sentiment, as measured by the University of Michigan, remains disappointing. There is a real chance that the political issues, even if resolved, will have an impact on confidence and the economy. Doug Short has my favorite chart for this indicator, showing the current level in the context of history and recessions:
Gallup also shows a decline in confidence (via Calculated Risk).
The Ugly
More investor confusion! Mark Hulbert notes that many newsletter writers make impossible, exaggerated claims. These often exceed the results of the best investors.
Who could have known?
One method seems to involve avoiding mark-to-market. You just book the winning trades and ignore the losers. Annualize returns. Presto!
Noteworthy
This week marked the Eighth Blogiversary for Abnormal Returns. Congratulations to Tadas for these years of pioneering excellence. He has helped to define the concept of content curation. His work is indispensable for all of us who follow markets and the economy. I use it constantly. Everyone also enjoys the touch of humor and personal interest links.
Well done!
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