Busy Day!

Strap yourselves in:  We have quite a busy day ahead:

MBA Purchase Applications
[Report] [Bullet] 7:00ET

ADP Employment Report

[Report] [Bullet] 8:15ET

Employment Cost Index
[Report] [Bullet]
8:30ET

GDP (advance)
[Report] [Star]
8:30ET

Construction Spending

[Report]  [Bullet]
10:00ET

NAPM-Chicago
[Report]

[Bullet]  10:00ET
   

   

EIA Petroleum Status Report

[Bullet]  10:30ET

FOMC Announcement
[Report][Star]
2:15ET

Farm Prices

[Bullet]
3:00ET
 

And a slew of earnings today, including Google after the close .

             
                

                

   

via econoday

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What's been said:

Discussions found on the web:
  1. Will Geisdorf commented on Jan 31

    This is not the correct calendar.

    ~~~

    BR Good catch! My bad — its fixed now

  2. Macro Man commented on Jan 31

    Quick! Someone post how stronger than expected growth and lower than expected employment costs is bearish for the equity market!

  3. ac commented on Jan 31

    Growth wasn’t higher than expected after the reduced consumption revision work through.

  4. Josh commented on Jan 31

    None of this matters today. Bush is speaking on the state of the economy so the Fed and GDP will help him.

  5. ac commented on Jan 31

    True, but 3.0-3.5% is pretty typical historical growth for a year and the housing bust hasn’t even started yet, which is the surprise in the “bushes” so to speak.

  6. Banker commented on Jan 31

    The numbers today seem once again to be on the strong side. I cannot see the Fed changing rates (or wording) for the forseeable future (3-6mths) unless something unforeseen happens….

  7. Macro Man commented on Jan 31

    Residential investment subtracted more than 0.7% for three consecutive quarters. As this blog has made abundantly clear, sales have been substantially lower in 2006 than in 2005. You can’t read a thread without someone in Florida telling you that they are giving away 3 BR condos for $3.99 and four boxtops of Trix. What, then, constitutes the ‘housing bust’?

    Also, the average and median forecasts of 77 Wall St economists was 3.0%. While I would agree that 3.5% was not statistically significant than that forecast, it clearly was a lot higher than these same guys, as well as clowns like Roubini, were forecasting six weeks ago.

  8. Steve commented on Jan 31

    Banker,

    Regarding the Fed statement, I think the concern now is that it might be more hawkish.

  9. ac commented on Jan 31

    Macro, residential needs to subtract alot more than that to be called a “bust”(1.5% would be decent, 2.5-3.0% about right). That is the point and what will be learned. Especially if it tanks again this spring.

    Starts,sales and margins need to shrink lower because they came off some a high level.

  10. Teddy commented on Jan 31

    Macro Man, that growth you’re talking about is inflation. If you had been reading BR’s blog recently, you would have noticed that the US experienced it’s lowest productivity gain in 10 years for 2006. With double digit growth in money supply occuring as we speak, is there a new paradigm that completely disregards the brilliant John P Hussman’s analysis of the market that BR recently posted? And are stocks now mainly a hedge against inflation versus the old paradigm as a vehicle to capture productivity and real GNP gains.

  11. Fred commented on Jan 31

    Um…Teddy…Where is your inflation?

    4Q-A GDP Price Index…at 1.5%…vs. street at 1.5%

    4Q Employment Cost Index…rises 0.8%…vs. street at 1.0%

  12. Cherry commented on Jan 31

    Barry, what about your belief Bonds are wiser than Equities. We all fell for the Bonds game last summer, but they are turning out to be wrong. A recession may start in 2007, but it won’t start during the 1st half.

  13. Teddy commented on Jan 31

    Fred, liar liar pants on fire!

  14. Macro Man commented on Jan 31

    Moreover, I hear about inflation on this blog…except when it comes to retailers, where the only reason they shift inventory is because they slashed prices. And Amazon, which is getting squeezed by Itunes.

    As for housing…the y/y trend in mortgage apps for purchase has improved from -20% y/y over the summer to -10%. Sure, it’s still negative, but the rate of change is improving. Moreover, I have yet to hear an adequate explantion from anyone here or on Wall Street what makes America so special that a housing downturn will lead to an implosion of the economy when it failed to do so in the UK, Australia, or New Zealand. All of these countries, incidentally, have 99.9% of their mortgages as floating rate. Answers on a postcard please!

  15. Teddy commented on Jan 31

    Macro Man, John P Hussman is not only a brilliant man, his academic credentials speak for themselves, but in my IMHO, he is a decent man, who doesn’t try to fit square pegs in round holes like so many of the financial engineers are attempting to do. The fact that “lower than expected employment costs” are occuring with inflation does not bode well for the real world, but is good for stocks just as you implied .

  16. Macro Man commented on Jan 31

    Ac

    For what it’s worth, the two worst quarters for residential investment since 1982 were…Q3 and Q4 2006. Obviously, there is nothing to say that this cannot get worse…but the ecomomy has already proven to be more resilient than it was to a housing decline in the 80’s or 90’s.

  17. Craig commented on Jan 31

    Okay kids, there’s more to go…..

    Don’t unfurl your “Mission Accomplished” banners yet.

    Construction has yet to do it’s thing.
    There will be a civil war, just wait to see what 5.25 fed rates does to equities.

  18. Cherry commented on Jan 31

    Damn, the bonds buy up on the Chicago PMI’s poor January results, dismiss “Advanced” GDP report. Here we go again?

  19. zell commented on Jan 31

    The economy is more resilient than in the 80’s and 90’s floating on a sea of liquidity………There has been a major paradigm shift that will affect many economies as per the ING report linked to Barry’s site……..Israel will attack Iraq by this summer as it has to maximize the remainder of Bush’s term….The primary principle of the nation state of Israel is ‘never again’………..Iran has threatened too many times and Hezbollah’s partition of southern Lebanon and ability to rocket northern Israel was a wakeup call that can’t be ignored……The U.S. has already started positioning naval assets in anticipation of this event…..This is an economic blog and it’s my feeling all bets will be off by mid year.

  20. munger commented on Jan 31

    FYI – another hedge fund play — large volume today.
    ADVANCED MARKETING SERVICES
    TICKER: MKTS (MKTSQ)
    We bought this stock at $0.20 — it’s now at $0.35! Up 70% on serious volume. This is a pure liquidation play with approximately $1 dolalr of NAV. This is an opportunity to potentially gain a 2x return in a year. Best to do this thru an IRA account given that you will be paid distributions. This is just another example of the buffet liquidation process — pure NAV.

  21. Mike_in_FL commented on Jan 31

    My short, short version of today’s reports:

    GDP better than expected … “official” inflation readings tame … Chicago PMI … Milwaukee NAPM strong … ADP in line … construction spending punk. Lots of wild intraday swings, but so far, the sum total of the data is MUDDLED. Some weak. Some strong. Probably neutral for bonds and stocks, on its face.

    More details and analysis at my blog if you’re interested
    http://interestrateroundup.blogspot.com/

    The one question: Does the Fed lob a hand grenade into this market with some tough talk on inflation? I tend to think yes, they’ll talk hawkish simply because the asset markets have gone nuts and because TIPS spreads are widening out again (we know the Fed watches this market-based indicator of inflation). But that’s just me.

  22. ac-clone commented on Jan 31

    Damn, the bonds buy up on the Chicago PMI’s poor January results, dismiss “Advanced” GDP report. Here we go again?

    Also:

    “Consumer prices fell 0.8% annualized in the quarter, the first quarterly decline in 45 years and the biggest drop in 52 years.”

  23. Mike_in_FL commented on Jan 31

    so much for a bearish hand grenade. Looks like the Fed is talking DOVISH on the inflation front. Bonds say “Me likey.” Now we see whether the follow through is there. Certainly, the Fed news seems to be fueling some “easy money” trades in the very short term — gold up, oil up, stocks up, dollar down, etc.

  24. js commented on Jan 31

    Whoever thinks this Fed is going to restrain anything without being forced is kidding themself. Low real rates are here to stay as long as they can pull it off. That is how monetary policy is run across the world these days.

  25. js commented on Jan 31

    Another thing. The “inflaiton remains at elevated levels” phrase was dropped. It is close enough to be considered in their “comfort zone.” The FOMC doesn’t care about inflation now that the doves have been pushed out.

  26. ryyjjyyr commented on Jan 31

    Macro man:

    “Moreover, I have yet to hear an adequate explantion from anyone here or on Wall Street what makes America so special that a housing downturn will lead to an implosion of the economy when it failed to do so in the UK, Australia, or New Zealand.”

    Good point. But in these Anglo Saxon countries, the increase in housing prices has led to a corresponding drop in household savings rate. Some articles from the Reserve Bank of Australia indicate that this is because savings take the form of financial assets now and understate true savings.

    Why is this important? I don’t have all the answers but surely traditional savings (cash )acts as a buffer in bad times. Savings in financial assets in the form of both stockmarket and real estate may magnify the bad times given that they are positively correlated in any downturn.

    So housing may not matter now but it seems that these just increases the risks of a sharper downturn later.

    Of course I have not done enough work on this to estimate the ideal savings and mix (cash or financial). Perhaps the Anglo Saxon countries got the rate and mix right. However higher risks due to lower savings rates is something to consider.

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