Calendar week 07/18~07/22 2016
The Calendar
We have a rather light week for economic data, with an emphasis on housing news. While I watch everything, I highlight only the most important items in WTWA. It is important to focus.
The “A” List
- Housing starts and building permits (T). An important sector, but a modest decline is expected in starts. I am more interested in permits.
- Leading indicators (Th). A rebound expected in a series widely followed as a recession signal.
- Initial claims (Th). The best concurrent indicator for employment trends.
The “B” List
- Existing home sales (Th). Less important for the economy than new construction, but a good read on the overall market.
- Philly Fed (Th). Attracting more information as the earliest data with a label from the prior month.
- Crude inventories (W). Often has a significant impact on oil markets, a focal point for traders of everything.
The big story will still be corporate earnings, as reporting season moves into full swing. The Republican Convention will grab plenty of news. FedSpeak will die down after last week’s thirteen appearances.
And of course, we can expect more updates on international crises.
What can derail the rally in stocks?
Feel free to join the discussion in the comments, but I see several worry themes:
- Terrorism. The world is a nasty place and seems to be getting worse.
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Economic concerns.
- Deflation – signaled by falling commodity prices, especially cheap oil. Or alternatively–
- Inflation – signaled by rising commodity prices, especially higher oil prices.
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Politics.
- Trump would be a disaster for the U.S. and world economies.
- Clinton would be a disaster for the U.S. and world economies.
- Uncertainty. Not knowing who will be elected is a disaster for the U.S. and world economies.
- Central banks. They painted themselves into a curve, merely delaying the inevitable economic disaster. (I actually heard one of the Fast Money guys use one of mixed metaphors about the Fed. Maybe it was an accident, but he certainly didn’t cite the OldProf!)
- Market valuation. Markets are too expensive. All of them. Investors cannot expect any reasonable return over the next twelve years (except gold, of course).
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Technical indicators.
- Stocks were declining – lacking leadership.
- Stocks are now overbought and frothy.
- Stocks are stuck in a trading range.
- There was a Hindenburg omen – when was that?
- Weak and mistaken leadership worldwide.
- Delayed Brexit effects.
- Global hot spots – South China Sea, Korea
