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
This was a good week, despite the market reaction on Friday.
- Larry Summers withdraws from consideration to be the Fed Chair. (Remember that our definition of “good” is “market-friendly”). I explained the market effect, the political background, and the challenge for the new chair in this post.
- The FOMC maintains current policy. For insight on what was behind the Fed decision you have hundreds of choices, many highly political or exasperated reactions from losing traders (See report from Joe Weisenthal). I recommend three articles that will give you the real story. Tim Duy, who was a bit surprised and still thinks we might see action as soon as next month. Gavin Davies thinks that the Fed is more dovish than previously perceived, offering three reasons for their action. Ryan Avent (the “RA” in The Economist pieces) has an excellent discussion of the various constraints and pressures on the Fed.
- Existing home sales beat expectations. Calculated Risk is our authority on all things housing. Bill McBride notes that the impact of higher mortgage rates would not yet have been seen in this report. Here is his typically helpful chart:
- Sea container counts are higher. Steven Hansen analyzes the data from Los Angeles and Long Beach (YoY, Imports Red, Exports Blue):
- Weekly jobless claims set another new post-2007 low on the four-week moving average. Bespoke has a good post, including this chart:
The Bad
There was also some bad news last week.
- Immigration reform appears to be dead for the year. The original gang of eight is now down to five, with only one Republican left. (Via The Hill and the Washington Post).
- The House passed a Continuing Resolution that would eliminate funding for ObamaCare. Since this has no chance of approval, it is the first step toward a government shutdown. (Ezra Klein in the Washington Post).
- Building permits disappointed. Regular readers know that I am especially interested in this housing indicator. Bespoke has a great chart package here, including this table:
- FOMC members spoke out on Wednesday’s decision, making it clear that QE purchases might well be reduced as soon as October. Market reaction included politics and expiration effects, but partly revised thinking about QE as well.
The Ugly
Nukes – three stories:
Senior Israeli minister: Iran is on course to develop a nuclear bomb in 6 months — (The Jerusalem Post)
Iran regrets IAEA failure to curb Israeli nuclear threat — (Tehran Times)
US narrowly escaped nuclear blast in 1961 H-bomb accident – (The Washington Post)
The Indicator Snapshot
It is important to keep the current news in perspective. I am always searching for the best indicators for our weekly snapshot. I make changes when the evidence warrants. At the moment, my weekly snapshot includes these important summary indicators:
- For financial risk, the St. Louis Financial Stress Index.
- An updated analysis of recession probability from key sources.
- For market trends, the key measures from our “Felix” ETF model.
Click below to read more.