After seeing the thoughts of FOMC members 3 weeks ago in the minutes released yesterday and comments from Rosengren, Fisher, Williams and Lockhart since, Evans and Bullard are now chiming in to the debate. Evans maintained his belief that more action is needed and he said specifically that “I don’t need to see any more data to know that.” Bullard is more circumspect and doesn’t think current economic and market conditions lend itself easily to full blown QE. So, if he does prefer more action, he doesn’t seem likely to support something big right now and he also said the minutes are somewhat stale considering what’s happened since. With the S&P’s near multi yr highs, commodity prices just shy of their highest level since early April and some better than expected economic data points since the last FOMC meeting, its very possible that Bernanke will wait for the Aug payroll report before making a decision, thus making Jackson Hole a possible non event.
Initial Jobless Claims totaled 372k, 7k above estimates and up from a revised 368k last week (from 366k). It’s the 1st week above 370k since mid July but that data was distorted as we all know. The 4 week average, helping to smooth out the trend, was 368k vs 364k last week and 369k the week prior. Continuing Claims, delayed by a week, was up by 4k but Extended Benefits, delayed by two weeks, fell by 48k. In response to the data, Bullard on cnbc said that the current state of the economy with under 400k jobless claims, 150k increase in payrolls, and 2% GDP growth is middling growth and to this “I wouldn’t take a decision right now” on further Fed action. He also said if the committee were to act, middling growth does NOT deserve big action as a recession would.
In Asia, China’s flash HSBC mfr’g PMI fell to the lowest level since Nov ’11 at 47.8, remaining below 50 for the 10th straight month. In Europe, the mfr’g and services composite index for the euro zone was little changed in Aug at 46.6, below 50 for the 11th month in the past 12.
In the AAII individual investor sentiment data, bulls rose almost 5 pts to 42 and Bears fell 2.2 pts to 25.9, both back to levels last seen in March.