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A decent amount of economic data comes due this holiday shortened week, but I do not expect it to include any sort of news that might correct the divergence between recent economic data and stock market trends.

The most important reports on the week may be those that could contend with or complement the Q4 GDP contraction just reported. I believe the Federal Open Market Committee (FOMC) meeting minutes, scheduled to be released on Wednesday afternoon, play big this week. Investors are keen to see the Fed stay soft on rates and high on asset purchases, to keep U.S. expansion supported. Then the Leading Economic Indicators (LEI) set for Thursday release has a chance to show improvement in economic conditions in January, versus the Q4 disappointment. Economists are looking for that improvement, with the consensus of economists surveyed by Bloomberg seeing a 0.3% gain in January. The index was up in December as well, but the figure was skewed by Hurricane Sandy.

A good bit of real estate data is set for release this week as well. My feeling is that good news is priced into real estate relative shares these days, so that any disappointment could prove meaningful. The Housing Market Index, which measures builder sentiment, was reported this morning. It has been flirting with 50.0, the point where builder sentiment breaks even. However, the data disappointed economists, with the index falling to 46, from 47, missing the consensus expectation for an improvement to 48.

We'll get some more specific perspective from Toll Brothers (TOL), the only brand in luxury building, when it reports earnings on Wednesday. Wednesday also offers Housing Starts data, and while the pace of starts is seen slowing slightly, the rate of builder permits is expected to improve. The final housing report on the week will be the Existing Home Sales report, scheduled for Thursday. It is seen holding about steady with the previous month. Housing has been a keystone for investor sentiment, and it will need to be solid this week to continue supportive for shares.

There will also be a bit of manufacturing news and pricing information released this week. Both the Producer & Consumer Price Indexes will be reported, and on the core level (excluding food and energy), not much sign of inflation is expected. That's great news, allowing the Fed to keep to its course. On the manufacturing front, just after the New York Fed Survey break through from a week before, the Philly Fed Report is expected to break into expansionary territory for the regional manufacturing measure. Also, Markit Economics will report its PMI Manufacturing Index Flash, and it's expected to continue to show an expanding American manufacturing sector. On that front, we'll get important reports from key industrials Boeing (BA) and Fluor (FLR). Obviously, Boeing will have some explaining to do with regard to its recent Dreamliner issues. This week also offers the Barclays (BCS) Industrials Select Conference, highlighting presentations from industrials Tyco International (TYC), Praxair (PX) and Danaher (DHR) among others.

Consumer Sentiment gets its weekly check up via the Bloomberg Consumer Comfort Index, but the market will glean far more from Wal-Mart's (WMT) earnings report Thursday. Wal-Mart's market share is so massive that I believe it's a useful economic barometer for consumer trends. There will be some more information on the consumer front made available via the Consumer Analysts Group of New York Conference, which will feature presentations by Coca-Cola (KO), PepsiCo (PEP), Procter & Gamble (PG) and ConAgra Foods (CAG).

Stocks are up solidly on the year, with the SPDR S&P 500 (SPY), SPDR Dow Jones Industrials (DIA) and the PowerShares QQQ (QQQ) higher from 4% to 7%, but we have likely reached a point where verification of the economy will be required to help stocks higher. In conclusion, this week's economic data might not be enough to offer reason to recalibrate or to gain confidence, but the FOMC minutes should be influential and could play either role. Given the latest GDP data, lack of currently obvious inflation and the unemployment situation (with the real rate of unemployment likely 11.8%), I would expect the Fed to remain supportive.

Source: The Economic Week Ahead