The Week Ahead: Can Employment Continue As The Economic Engine?
Jeff Miller | Apr 30, 2017 01:31AM ET
Market data has remained mixed. The weak Q1 GDP is not consistent with some of the most important measures. This week I expect pundits to be asking:
Will the jobs report signal continued strength?
Personal Note
In response to reader interest I am trying to do an abbreviated WTWA when I am away. I will include the update of indicators and a few ideas about what I am watching. Some noted that this would also provide a forum for some of our “regulars” to congregate.
h2 Theme Recap/h2In my last WTWA I predicted a week of rebuilding the wall of worry. Some problems have been avoided, even if not completely solved. There are always new ones, and we did get some of that discussion last week.
h3 The Story in One Chart/h3I always start my personal review of the week by looking at a chart of the S&P 500 performance for the week. Once again, there was little change for the week.
Whatever the news, the net market effect was (once again) very small.
h3 The News/h3Each week I break down events into good and bad. Often there is an “ugly” and on rare occasion something very positive. My working definition of “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!
The Good
The best news is the strength of the earnings rebound. This is true both for year-over-year results and forward expectations. (Brian Gilmartin ).
While the government shutdown deadline was merely extended for a week, I am encouraged by the handling of this issue. The market hated this uncertainty on the past.
The Bad
The soft GDP numbers and uptick in initial jobless claims (not the time reflected in Friday’s payroll report) were the worst news.
The Ugly
Still North Korea.
What to Watch For
Everyone wants to evaluate the Trump agenda, especially reflecting on the first 100 days. I do not expect movement on any of the big issues without some participation by Democrats.
The key economic reports are ISM, the ADP private employment, and the official employment report. It is a big week for data.
Get The News You Want
While there is no change expected from the FOMC meeting (and no press conference), everyone will be watching for hints on the pace of rate hikes.
h2 Quant Corner/h2We follow some regular featured sources and the best other quant news from the week.
Risk Analysis
Whether you are a trader or an investor, you need to understand risk. Think first about your risk. Only then should you consider possible rewards. I monitor many quantitative reports and highlight the best methods in this weekly update.
The Indicator Snapshot
The Featured Sources:
Bob Dieli: The “C Score” which is a weekly estimate of his Enhanced Aggregate Spread (the most accurate real-time recession forecasting method over the last few decades). His subscribers get Monthly reports including both an economic overview of the economy and employment.
Holmes: Our cautious and clever watchdog, who sniffs out opportunity like a great detective, but emphasizes guarding assets.
RecessionAlert: Many Twitter Feed .
Georg Vrba: The regularly analyzes Bob Dieli’s enhanced aggregate spread, considering when it might first give a recession signal. His interpretation suggests the probability creeping higher, but still after nine months.
Brian Gilmartin: Analysis of expected earnings for the overall market as well as coverage of many individual companies.
Doug Short: His Big Four chart is the single best method to monitor the key indicators used by the National Bureau of Economic Research in recession dating. The latest update now includes the employment data.
h3 Final Thoughts/h3Here is an update on my “Trump Matrix.” Last week’s timber tariff decision shows why it is important to track what the administration can easily accomplish versus what requires cooperation with other governments or Congress.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.