It’s Monday and the expectation is that this week the items to watch for are, now pay attention as the first of these is something, well, not so new and the other two, are, well, not so new either and all are speculations as to what might be coming.
- The only question is when the Fed will begin ‘tapering’ its asset purchases, now $85 billion a month. Investors will therefore be poring over the minutes of the central bank’s July 30/31 deliberations for clues on whether the first move could come as early as September.
- Housing dominates this week’s U.S. data releases. Economists expect a rise in existing home sales for July but a pullback in new home sales after a jump in June.
- August’s PMI manufacturing survey for China conducted for HSBC is likely to confirm that though the index stayed below the 50 mark, the world’s second-largest economy is picking up from an early-year trough.
“Likely this” and “maybe not that” appears to be the way to real understanding in the market. I guess if you are trying to get ahead of the market, this type of “information” is, well, helpful, but if you are trying to understand the market and then make your bets according to what you actually know, then this type of speculation is, well, amusing.
What you should be using to understand the market are the facts, those things which are reported after an event actually occurs.
- The government reported that worker productivity in the U.S. for second quarter of 2013 rose by +0.9%, which was above the consensus for a reading of +0.5% and Q1’s rate of -1.7%.
Now, what makes the above fact important and relevant, way more important and relevant than the minutes of the Fed meeting in July, is that it actually tells us something about what might be coming. Specifically, worker production directly relates to employment, a reality that ultimately has far more impact on the longer-term state of the market than housing starts, the minutes from the Fed meetings, or China’s PMI at or near 50.
As well, the assessment below gives us a far clearer picture of what is coming than any one or all of the three speculations in the first paragraph.
- Retail sales have been resilient despite tax increases; the rolling six-month average of job growth has risen significantly; and the housing market is holding up despite a recent rise in mortgage rates as bond markets price in reduced Fed stimulus.
Yup, the above is a far more helpful analytical tool than what the economists or financial analysts think will happen. After all, they are just speculating, educated guesses for sure, but, nevertheless, speculation. As I said, if you are trying to truly understand the market so your educated guesses are, actually, educated, then go with the facts. Go with what you know.
Finally, here is a statistic that you might find interesting for a variety of reasons, not the least of which is it fortifies the belief that the US Congress does not actually work for the best interests of Americans as a whole. As it comes from an article about LEGAL insider trading, meaning the members of the US Congress can and do trade on insider information legally, it should inspire some sort of reaction on your part, since much of the money comes from investing in the stock market.
- According to data from the Center for Responsive Politics, 249 of the 535 members of Congress are millionaires. That’s 47%. For comparison, about 5% of American households are worth more than $1 million.
Don’t expect much upside from the market this week. I know, I know, I am speculating, but given the expectations already laid out for this week about the Fed, China, and housing, it is hard to see an upside, right?
Trade in the day; Invest in your life …
