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Market Insights

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For the week of October 19th

10/19/2009

Earnings reports highlight the upcoming week, but investors should also keep a watchful eye on a variety of economic reports to be released. The economic reports of earlier this month were disappointing and somewhat confusing. However,lost in last week's litany of earnings was the release of much better economic news. I would view last week's economic releases as supportive for continued modest growth in the economy.

Monday October 19

NAHB Housing Market Index - 1pm EST

This report provides insight regarding homebuilder confidence, somewhat similar to a consumer confidence report. As you can see in the chart below, the index has improved each month from a trough seven months ago. However, we are a long way away from the Goldilocks levels above 60.


Source: Bloomberg

Tuesday October 20

PPI, Housing Starts, Building Permits 8:30am EST

First, let's look at the Labor Department's report on wholesale prices for the month of September as reflected in the PPI. The August report showed a 1.7% increase month-on-month, buoyed by rising gasoline prices. Year-on-Year prices were down 4.3%. Don't expect much change to the YOY number, clearly down again. MOM should be somewhat benign as gasoline prices were generally flat for the month of September. Next month's report should show a bigger jump MOM, given the surge in gasoline prices for the month of October.

Next, the housing market is recovering from the abyss; however, as displayed in the chart below, not exhibiting any signs of a significant lift-off.




Source Bloomberg

Wednesday October 21

Oil Inventory Report 10:30am Eastern

Energy prices are jumping! Product inventories, Distillates and Reformulated Gasoline, are on the decline and "fueling" the rise in all energy prices.

Fed's Beige Book

Wednesday afternoon at 2pm the regional economy report comes out. The FOMC meets in early November and will use this report in formulating its' forward policy and statement.

Thursday October 22

The index of Leading Economic indicators 10am Eastern

Looking for 6 in a row, as in the sixth consecutive improving month. Behind the improvements are improving consumer outlooks on the economy and market, housing stabilization and claims for jobless benefits shrinking.

Friday October 23

Existing Home Sales 10am Eastern

The benefit of the governments first time home buyers $8,000 tax credit has improved Existing Home Sales in the past few months. However, last month this number was rather disappointing as purchases decline 2.7%. Without question the improvement in this number over the past few months is attributed to the government program. Given the program is set to expire before the end of 2009 I remain very cautious on the overall Housing front.

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