The Tasgall Group

I’m sure this information can be found in many places online, but I just got this via e-mail from TradingMarkets and found it to be a useful quick summary of what’s coming up this week. I’ve pasted it below and followed with my comments (brace yourselves, this is a very long post!!!):

Upcoming Economic Events for the Week of September 4th

My Comments:

First off: I think the most useful site for economic indicators I found was the Forex Brokerage Firms site (yeah, I know, not what I would have expected either). Follow this link and take time to click on each of the US Key Economic Indicators listed on the right. I just like their format, with an Importance score, the source, typical release time, executive summary and in-depth analysis. Well done! Now, what follows are my comments and combined research. Ahhh?Labor Day weekend has given me a chunk of time to spend happily performing some market research.

Productivity: I couldn’t tell what the “Prior” and “Consensus” terms meant in the above graph, but with a little research going to the source documents shed light on the fact that the preliminary report has already been published (this is the “Prior” value) and the “Consensus” value is derived from professionals predicting what the revised report will place the value at. The Productivity value is only for the “business” sector. To provide some additional context to the Productivity value, let me add the past few quarter?s ?Preliminary? and ?Revised? non-farm business sector values:

So what does this tell us? It?s in the range of possibility based on past data that the revised value for productivity could be pushed up to 1.6%. If the consensus value is off by more than 0.2% in the either direction, I?m thinking that could move the market a bit and should signal that the experts don?t have their finger on the economy?s pulse. I also think that the fact the productivity is down vs. last quarter and the prior year?s quarter should be a sign that things aren?t as rosy as they were a year ago.

ISM Services is ?a national non-manufacturing index based on a survey of roughly 370 purchasing executives in industries including finance, insurance and real-estate, communications and utilities? and is put out by the Institute for Supply Management (source: www.thestreet.com). This is a monthly announcement and apparently doesn?t not have much market importance since it is ?too new?.

Crude Inventories is, of course, important for those invested in the oil or energy sector. This value appears to come out weekly and only applies to the US crude inventories. For the week ending on Aug 25, US crude inventories rose 2.4 million barrels to 332.8 million barrels, or 6.2% above year-ago levels (source: www.examiner.com). Gasoline inventories rose 400,000 barrels to 206.2 million barrels, or 4.6 percent above last year?s levels. With the drop in the hurricane forecast (recently announced this past week) to even fewer predicted storms for the East coast and Caribbean, I?m of the mind that our inventories will be consistently higher than last year since so much of our supply was disrupted by weather. Geopolitical events still weigh in thanks to Iran and Nigeria, but for now I?m of a mind that the oil sector is over inflated in the short term and too sensitive to bluster on the international scene. There?s not enough justification in today?s climate for crude prices to continue to sustain above $70/barrel. And yes, I?m aware the mid-east isn?t happy-fun-land, but things are as settled there as they can be and actually I think Israel will be less of a volatile force for the next several months as the internal review moves forward for what went so very wrong in the Hezbollah conflict. But I?m wandering off on my own personal commentary?back to the upcoming indicators!

Fed?s Beige Book ?is the commonly used term for a Fed report entitled: ?Summary of Commentary on Current Economic Conditions by Federal Reserve District?. It is published just before the FOMC meeting on interest rates and is used to inform the members on changes in the economy since the last meeting.? It?s published 8 times per year and is not considered to be a market mover unless the book contains data that are considerably different from analyst expectations. Sadly, we will be the last to know if the data contained in the book will move the market simply because we don?t have a team of analysts to task with poring over the roughly 30 page document before the rest of the market does. The book is actually a decent read, since it?s mostly commentary and doesn?t get bogged down with lots of tables and data sets (although this is also perceived to be a weakness for the book being used as an economic indicator since it?s mostly interpretations, not raw data). Here?s links to July 2006?s Beige Book and a reference point to look up other Beige Books.

Initial Claims is the number of newly unemployed workers issued by the Department of Labor. This is a weekly release of new jobless claims. Last week the consensus was 313,000 initial claims. Any move of 30,000 up or down is seen as a fairly significant change in job growth. The current consensus suggests that initial jobless claims are fairly static. The weekly data may be too volatile as a trading indicator, so many analysts use the 4 week moving average as more reliable indicator of the jobless trend (source: www.traderslog.com). For the original reference point, here?s the link to the Department of Labor?s release site.

Wholesale Inventories is the sales and inventory statistics for the previous month released by the Department of Commerce and is considered to be of very little importance. This indicator does not move the market, according to TradersLog.

Consumer Credit tracks debt levels for auto financing and commercial banking credit. This is considered a good indicator of consumer spending, although it?s not a good market mover, for two main reasons: (1) it?s extremely volatile and is often significantly revised and (2) it?s the last in a long line of consumer spending indiciators, such as weekly chain store sales, auto sales, consumer confidence, retail sales and personal consumption (source: www.forex-brokerage-firms.com). The source document for these releases can be found on the Federal Reserve?s site.

I?m closing out here with a final thought: I think Productivity is the most important of all the indicators coming out this week, and I?ll be looking for this and other signals for whether this 6-7 week up-trend is the start of a great bull run or the last hurrah before a significant draw-down. Right now I?m still thinking that there?s just too many reasons for the market to correct or go sideways for a while.