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THE WEEK AHEAD

04/11/2010

Asset prices continue to slowly move higher as we begin the next earnings season. Investors need also pay attention to the Greece / ECB drama and some domestic economic events. Let's quickly highlight those events.

Wednesday, April 14, Chairman Bernanke testifies to the Joint Economic Committee of Congress @ 10am.

I perceive some mild dissent within the Fed chambers over the use of the term "extended period of time".  Last Wednesday's comments by Thomas Hoenig, Kansas City Fed Chief, briefly fostered a mild afternoon selloff in the market.

Keep in mind that the Federal Reserve next meets April 28. This will be their last meeting until June 23 which creates a mild dilemma for the markets and Fed itself. Those hawkish members like Hoenig want language to suggest a less "easy money" policy. I believe the dovish members would like to give the hawks some movement, BUT THEY CAN'T. The meeting schedule doesn't allow for it. We do not get another Unemployment report before the April 28 meeting. If the meeting was one week later, the hawks might have gained some ground but another improving report is mandatory before they can make any significant language changes. The anticipation of the June meeting might "rattle" the markets in mid-to-late May, just like last year.

In addition to Chairman Bernanke on Wednesday, we also will hear about the Consumer Price Index, which I expect to uptick to around 2.5% on rising Energy costs.  

Source: Bloomberg 

Friday April 16 Housing Starts: I suspect the ever so slight improvement will begin to moderate now in the absence of government support. If there is one economic data point I remain particularly bearish on, this is it!

Source: Bloomberg

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