Tuesday's Economic Calendar: Taking the Nation's Pulse

There are several top tier releases scheduled on today's economic calendar. The day starts with the German IFO business climate index at 04:00. The next two releases are from the U.S. at 10:00 and consist of consumer confidence and new home sales. For the grand finale, the Federal Open Market Committee will be releasing the meeting minutes at 14:00.

The German IFO business climate index is an assessment of current business situations and expectations for the next six months and is expected to come in at 97.1. This report is a way for institutions to gauge sentiment in the business sector of the economy.

The consumer confidence and new home sales from the United States at 10:00 also helps gauge consumer sentiment, as it builds an economic picture of how service based economies will fair over the coming months. If consumers are spending more, the economy has room to expand. The consumer confidence is expected by analysts to rise to 1.1 points to 53.0 while new home sales are expected to remain unchanged from last month’s reading of 530K.

The Federal Open Market Committee [FOMC] meeting minutes will be released at 14:00, this release is expected to cause a tremendous amount of volatility as the markets react to what is revealed. These minutes give some of the best insight into the monetary policy decision-making process and what the FED thinks about economic developments in and outside of the United States. These minutes generally come out three weeks after the committee meets so the market tends to discount some of the information. If the tone is said to be “hawkish” then it means there is a higher likelihood of future rate increases, whereas a “dovish” tone suggests that inflation is in check and future rate increases aren’t likely.

 

Comments

[Matt Blackman:]

The only problem is that if you had been following the Fed (and Bernanke's) lead over the last year, you would have had your head handed to you. Bernanke completely underestimated the impact of falling housing price and in fact was tracking lagging home price data (annual median prices) and confidently declared more than a year ago that home prices were stable. Then when the severity of the problems facing the housing market became evident, publicly dismissed the economic impact of falling mortgage equity withdrawals. He also completely missed the coming credit crunch. We all know now just how flawed those views were and how those who followed the Fed's lead to stay invested or invest more, got hurt.

Those who took the Fed drop in interest rates when they dropped the Fed funds rate from 5.25% to 2% as a stock buying signal got hammered. (See Are We Being Fed Winked? at tradesystemguru.com/co.../ )

The moral? The Fed can sometimes provide useful information in their statements but more often than not, they are way behind the eight ball, especially in a declining economy. The reason? Because like many mainstream economists, they rely on flawed fundamental data. (See tradesystemguru.com/co... )

2008 Aug 26 03:05 PM