This is going to be a very interesting week in the market. We have a lot of political issues that could pressure the market and hamper the positive energy coming out of a very good season of earnings.
The countdown is on for what is going to come of the debt talks. It's frustrating for all Americans no matter what party you align with. We have a debt problem and we can only solve it with spending cuts and/or raising taxes. We have tax loop holes, and unnecessary military involvement around the world but it stills come back to poor domestic budget issues. Whether you want to blame this administration or the previous we need to change our thinking in this country. I don't want to ramble on this too much, but the longer this debt issue plays out the more volatile it will make the market. Watch this closely because it could move the market and move the rates.
Let's look at some of the economic data points on the calendar for this week.
Tues. 9AM Case/Schiller Index: The S&P/Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S. The composite indexes and the regional indexes are seen by the markets as measuring changes in existing home prices and are based on single-family home resales. The key composite series are for the longer-running, original 10-city composite series and the newer and expanded 20-city composite. I can't imagine this will be too positive if positive at all.
Tue. 10AM New Home Sales: New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.
Thur. 10AM Pending Home Sales: The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. As such, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. With rates low maybe we have a good number on Thursday morning.
Friday 930AM GDP: Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. This is a very important number. Most are anticipating a weak number and it could be as low as 1%. The economic after shocks of Japanese earth quake will show up on Friday.
My Opinion:
This is a huge week for the market. There is a lot of housing data on tap and most importantly the GDP report on Friday. Keep your fingers crossed that we are above 2% on this number or the market could really turn downward. We also have to pay attention to the mess in Washington to see what is going to come of the debt ceiling negotiations. I think rates will move up on better than expected earnings, but if the economic data that comes out of this week is soft look for a huge pull back in the market and interest rates. Wednesday's Durable Goods order and Fridays' GDP numbers are to be closely watched.
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