WASHINGTON (MaceNews) – Beware what look like quiet weeks ahead, like the upcoming week when the Earth’s northern pole tilts to the max toward the sun.
The summer solstice means that after 3:32 Monday morning the days start getting shorter in our hemisphere and the diminishing daylight is appropriate for a time of what seems like diminishing visibility into the future of the U.S. economy.
How can that be, with a good earnings season anticipated, plenty of pent-up demand and continuing government checks to fuel explosive demand?
The week just past when lumber prices plummeted 17% and copper prices dropped 8%, when the U.S. 10-year yield seemed determined to thumb its nose at the mini-taper tantrum – perhaps taper sniffles – by dropping back to its lowest since early March at week’s end, all reminds that conventional wisdom is being challenged.
That inflation surge now seems so less threatening as more forecasters look past it to the fall when there could be wrenching lurch into disinflation, falling demand, evaporating stimulus, vanishing supply bottlenecks and the prospects of an abrupt growth slowdown.
A fringe fantasy? While analysts were projecting more than a hint of accelerated tightening on to Federal Reserve Chair Jay Powell’s Wednesday remarks, most overlooked was his first use of a word that acknowledged a different scenario: “overcorrect.”
St. Louis Fed’s President Jim Bullard’s spate of media opportunism on CNBC at the end of the week exacerbated the fears of some tightening as early as late next year, when he’ll be an FOMC voter.
Yet what may have been a rate-hike head fake distracts from what the rocket scientists in the world’s credit market seem to be saying with a benchmark yield as low as 1.440%, that underlying reality is deflationary, overlaid with a short squeeze on supply that makes any overheating the “transitory” component that counts more than the temporary speedup of prices.
For some observers, what Powell was really doing was spreading velvet over his gritty determination to ride zero rates into his sunset as chair in February 2022 regardless and if reappointed, push them into 2023 even as market anxiety pushes him increasingly in the other direction – unless employment skyrockets sooner. Meanwhile, the Fed’s balance sheet assets have topped $8 trillion for the first time.
The week ahead’s data won’t shed any light on the future. Existing home sales and new home sales for last month will only reinforce the picture of a constricted housing pipeline that as often said before, is priming the first-time buyer generations for a political revolt later in the decade.
The 2nd revision of first-quarter GDP will carry no new insights. The various GDPNows are all over the map for the second quarter. An expected rebound in personal income from April’s 13% hiccup means nothing for the current month. The durables goods orders update will simply deepen the perception that manufacturing pricing power is back. The only fresh data will be the weekly tally of applications for benefits from the newly laid off, a number that seems to be plateauing more than declining. The entire list of the upcoming week’s data points is below:
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, June 21 – 8:30a ET ChiFed Nat’l Activity Index (May +0.24)
Monday, June 21 – Dallas Fed’s Kaplan speaks
Monday, June 21 – St. Louis Fed’s Bullard speaks
Monday, June 21 – 3p ET NYFed’s Williams, MBCA
Tuesday, June 22 – 8:55a ET Johnson-Redbook wkly retail sales (prvs +16.4%)
Tuesday, June 22 – 10a ET US NAR May existing home sales (May -2.7%)
Tuesday, June 22 – 10a ET RichmondFed Mfg Index (May 18, Apr 17)
Tuesday, June 22 – 11a ET SanFran Fed’s Daly speaks, Peterson Inst
Tuesday, June 22 – 2p ET Fed’s Powell testimony/Covid
Wednesday, June 23 – 7a ET US MBA’s wkly mortgage apps (prvs +4.2%)
Wednesday, June 23 – 8:30a ET 1Q US current acct (4Q -$188.5 bln)
Wednesday, June 23 – 9:45a ET US Markit May composite, mfg, svcs indexes
Wednesday, June 23 – 9:10a ET Fed Gov Bowman speaks on comm develop
Wednesday, June 23 – Boston Fed’s Rosengren speaks
Wednesday, June 23 – 10a ET US May new-home sales (Apr -5.9%)
Wednesday, June 23 – 10:30a US EIA wkly oil stocks (prvs -7.4 mln bls)
Wednesday, June 23 – 11a ET Atl Fed’s Bostic speaks, not monpol
Thursday, June 24 – 8:30a ET 2nd Revision US 1Q GDP (prvs +6.4%)
Thursday, June 24 – 8:30a ET Wkly jobless benefit claims (prvs +412K)
Thursday, June 24 – 8:30a ET US May durable goods orders (Apr -1.3%)
Thursday, June 24 – 8:30a ET Advance May US trade in goods (Apr -$85.2 bln)
Thursday, June 24 – 9:30a ET Atl Fed’s Bostic on panel OMFIF
Thursday, June 24 – 11a ET NYFed’s Williams speaks
Thursday, June 24 – St. Louis Fed’s Bullard speaks
Thursday, June 24 – Dallas Fed’s Kaplan speaks
Thursday, June 24 – Philly Fed’s Harker speaks
Thursday, June 24 – 9:30a ET Philly Fed’s Harker on panel (with Bostic)
Thursday, June 24 – 11A ET Kansas City June Fed Mfg Index (May 26)
Friday, June 24 – 8:30a ET US May Personal Income (Apr -13.1%)
Friday, June 24 – 10a ET UMich final May consumer sentiment (Apr 86.3; prelim 82.8))
Friday, June 24 – Cleveland Fed’s Mester speaks
Friday, June 24 – 1p ET Boston Fed’s Rosengren speaks
Friday, June 24 – NYFed’s Williams speaks
Friday, June 24 – 1p ET Baker-Hughes oil rig count (prvs US 470)
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Contact this writer: denny@macenews.com.
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