Tuesday, March 3, 2009

"We're Almost There"...

Dow 6500. I should post some of the comments I received when I made that statement back in December. Perhaps not. As the futures look to rebound this morning I thought I would encourage many of you to step back from the ledge. Should we actually reach the 6500 level not all is lost. Keep in mind, the meek run in a corner and hide or jump. Stay the course

This economy will rebound. It'll take some time see me in 2010. We have all taken lumps. Fiscal lumps, credibility lumps, business lumps. Lumps. Leadership is key through these difficult time. Develop your strategy (trading, buying, business, personal) and stay with it. Migrating from one concept to another will only get you in trouble. Stay wise.

This week's economic indicator(s)

Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis

Mon. Mar. 2, 8:30 a.m. ET
Jan. Personal Income
PCE Index
-0.2% vs. last -0.2%
+0.4% vs. last -1.0%
+0.1% vs. last 0.0%

Further erosion in the employment sector has undoubtedly taken a toll on personal incomes. Rising energy prices likely nudged the spending component of this report fractionally higher. The personal consumption expenditure index, one of the Fed’s favorite measures of inflation pressure at the consumer level, is expected to remain benign. This collective body of data is already priced into the mortgage market rendering these numbers essentially toothless with respect to their influence on the trend trajectory of fixed interest rates.

Mon. Mar. 2, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
33.8 vs. last 35.5
Market participants are well aware that the manufacturing sector is under pressure as last week’s durable goods orders report showed demand has contracted for six consecutive months while inventories continue to rise.

Tue. Mar. 3, 10:00 a.m. ET
Fed Chairman Bernanke testifies on the Economic Outlook and the Federal Budget Situation to the Senate Budget Committee
Mr. Bernanke spoke to both chambers of Congress last week. I would not expect much (if anything) different here. There will be a Q&A session to follow his formal comments which will be monitored by investors – but few expect this event to generate much, if any noticeable movement in the markets.

Wed. Mar. 4, 10:00 a.m. ET
Feb. Institute of Supply Mgmt.
Service Index
41.0 vs. last 42.9
This broad barometer of economic activity is expected to show business conditions remained challenging in February. No market changes here.

Thurs. Mar 5, 8:30 a.m. ET
Revised Q4 Productivity &
Unit Labor Costs
+1.5% vs. last +3.2%
+3.4% vs. last +1.8%
Declining productivity and rising unit labor cost will likely be slightly unsettling for mortgage investors. Should we have some unsettling numbers here, equities may fall and fixed income, say mortgage levels will move fractionally higher.

Thurs. Mar. 5, 8:30 a.m. ET
Initial jobless claims for the week ended 2/28
Down 17,000
Further erosion in the employment sector is broadly anticipated by investors and has already been deeply priced into the mortgage market. Today’s figures will likely draw little more than a passing glance from investors as they await tomorrow’s much more important February nonfarm payroll report.

Thurs. Mar. 5, 10:00 a.m. ET
Jan. Factory Orders
-3.5% vs. last -3.9%
This old stale bit of macro-economic news will likely do nothing more than take up space on this week’s calendar.

Fri. Mar. 6, 8:30 a.m. ET
Feb. Nonfarm Payrolls
Jobless Rate
Average hourly earnings
7.9% vs. last 7.6%
+0.2% vs. last +0.3%
Mortgage investors are keenly aware the labor market has fallen off of a cliff. A really nasty series of numbers have already been priced into the market here -- which means this report will likely have little, if any meaningful impact on the trend trajectory of interest rates if the actual numbers reasonably approximate the consensus estimate.