The Week Ahead: Aug. 29-Sept. 2, 2011

August 29, 2011 01:19 AM
 

via a special arrangement with Informa Economics, Inc.

FOMC minutes | Fed speeches | Employment report


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


This is the week of the year when – absent an earthquake and/or a hurricane – Washington is very quiet. It's the week when many take or continue on vacation. And it is the last week before lawmakers come back from their summer "recess".

There are some important economic reports and events on tap this week. One is Tuesday's release of Federal Open Market Committee (FOMC) meeting notes from the Fed's Aug. 9 monetary policy meeting. It could provide some hints of Fed action ahead – in addition to any signals observers think they gleaned from Fed Chairman Ben Bernanke's address last Friday at Jackson Hole, Wyoming.

Bernanke last Friday hinted that the Federal Reserve will do more to support the stalling U.S. economy, saying the central bank "is prepared to employ its tools as appropriate to promote a stronger recovery" and will extend its September monetary policy meeting to two days "to allow a fuller discussion." But unlike last year, Bernanke offered no detailed discussion of the Fed’s easing options. "The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus," Bernanke said. "We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September."

Bernanke specifically noted concern about long-term unemployment, saying that it could leave a "major scar" on the US economy. He also criticized fiscal policymakers, suggesting their arguments about the debt ceiling had most likely harmed growth. "Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank," he said.

The Fed Chairman said recent data suggested first-half growth was slower than expected, noting that "temporary factors can account for only a portion of the economic weakness that we have observed" He added that the Fed had cut its growth forecasts and expected inflation to settle at or below the Fed’s target.

He also said the Fed’s recent guidance that short-term interest rates are likely to remain exceptionally low until mid-2013 and added that it is the most likely outcome rather than a certainty. "In what the committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low levels for at least two more years," Bernanke said.

The other important economic release comes Friday, with the employment report, one of the most important indicators of economic well being, or the the lack thereof.

With the focus again on possible Federal Reserve action ahead, speeches from Fed members take on added significance. Several occur this week.

On Tuesday, Minneapolis Fed President Narayana Kocherlakota speaks – he was a dissenter at the Aug. 9 FOMC meeting. He speaks at midday on "The Economic Outlook and a Reconsideration of Leverage Incentives" at a conference for state treasurers in Bismarck, N.D.

On Wednesday, Atlanta Fed President Dennis Lockhart speaks in Lafayette, La., on the impact of energy, housing, banking, employment, politics and foreign markets on the U.S. economy.

On Thursday, Fed Governor Elizabeth Duke gives a midday speech on "Rebalancing the Housing Market" at a Fed conference in Washington, D.C.

The focus on the world economy will continue, especially with the recent blunt talk from International Monetary Fund (IMF) Managing Director Christine Lagarde at the Fed's annual retreat in Wyoming.

In 'a dangerous new phase.' "We risk seeing the fragile recovery derailed," the former French finance minister said. Those risks have been aggravated, she said, by the public's sense that top policy makers aren't adequately addressing the problems they face. "We are in a dangerous new phase," she said. She called on leaders of major central banks to keep interest-rate policies "highly accommodative," a clear reference to the European Central Bank, which has begun to raise rates. But she also directed a clear shot at politicians, as did Bernanke last week in Wyoming.

Meanwhile, European Central Bank (ECB) President Jean-Claude Trichet speaks Monday when he could give possible hints on how the ECB plans for dealing with the lingering European crisis. Trichet dismissed any idea that Europe could face a liquidity shortage during his Jackson Hole address, saying efforts to combat the financial crisis would prevent such an outcome. "The idea that we could have a liquidity problem in Europe" is "plain wrong," Trichet said.

On the agriculture front, traders will as usual focus on Monday's Crop Progress report, and the weather – especially for needed rain for key soybean states.

From USDA comes a Tuesday report from the Economic Research Service: Farm Sector & Household Income Forecast.


Key reports and events on tap this week include:

Monday, Aug. 29

Economic reports: Selected Interest Rates (Federal Reserve) | Personal Income and Outlays | Pending Home Sales Index.
USDA reports:
Export inspections (AMS) | Crop Progress (NASS).

Tuesday, Aug. 30

Clean energy conference: The National Clean Energy Summit takes place in Las Vegas, aiming to outline the path to using sustainable energy through solar, wind and geothermal sources and its economic potential. Speakers include Vice President Joe Biden, and industry executives.
Federal Reserve: Minneapolis Fed President Narayana Kocherlakota speaks midday on "The Economic Outlook and a Reconsideration of Leverage Incentives" at a conference for state treasurers in Bismarck, N.D.
Energy reports: Weekly National Petroleum Report (API) | OPEC monthly oil-market report.
Economic reports: ICSC-Goldman Store Sales | S&P Case-Shiller HPI | Consumer Confidence | State Street Investor Confidence Index | FOMC Minutes.
USDA reports: Farm Sector & Household Income Forecast (ERS) | Peanut Stocks and Processing (NASS).

Wednesday, Aug. 31

Federal Reserve: Atlanta Fed President Dennis Lockhart speaks in Lafayette, La., on the impact of energy, housing, banking, employment, politics and foreign markets on the US economy.
Energy reports: Weekly Petroleum Status Report (EIA) | Weekly ethanol plant production (EIA).
Economic reports: Weekly mortgage applications (Labor Dept.) | ADP Employment Report | Chicago PMI | Factory Orders.
USDA reports: Broiler Hatchery (NASS) | Egg Products (NASS) | Agricultural Prices (NASS) | Outlook for US Agricultural Trade (ERS).

Thursday, Sep. 1

Federal Reserve: Fed Governor Elizabeth Duke gives a midday speech on "Rebalancing the Housing Market" at a Fed conference in Washington, D.C.
Transportation: Weekly Traffic of Major Railroads (Assn. Of American Railroads).
Energy reports: Weekly US underground natural gas stocks (EIA).
Economic reports: Motor Vehicle Sales | Jobless Claims (Labor Dept.) | Weekly Mortgage Rates (Freddie Mac) | ICI weekly money market mutual fund data | Productivity and Costs | ISM Non-Mfg. Index | Construction Spending.
USDA reports: Export Sales (FAS) | Grain Transportation Report (AMS) | Dairy Products (NASS).

Friday, Sept. 2

Economic reports: Employment.
USDA reports: Dairy Products Prices (NASS) | Peanut Prices (NASS) | Vegetables (NASS).


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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