The schedule of economic releases for the week of September 2nd is as follows:
- Monday: US Holiday: Labor Day, All Markets Closed
- Tuesday: PMI Manufacturing Index, ISM Mfg Index, Construction Spending, 3-Month Bill Auction, and 6-Month Bill Auction
- Wednesday: Motor Vehicle Sales, MBA Purchase Applications, ICSC-Goldman Store Sales, International Trade, 4-Week Bill Auction, Beige Book, John Williams, and Narayana Kocherlakota speak
- Thursday: Challenger Job-Cut Report, ADP Employment, Gallup US Payroll to Population, Weekly Jobless Claims, Productivity and Costs, Factory Orders, ISM Non-Mfg Index, Fed Balance Sheet, and Narayana Kocherlakota speaks
- Friday: Employment Situation, Treasury STRIPS, Charles Evans, and Esther George speak
I spoke with Arthur Cashin, Managing Director of Floor Operations at UBS Financial Services, and frequent CNBC commentator, about what he will be watching most closely next week. During the holiday shortened week, Cashin will focus on a few important pieces of economic data, including the overall market, August employment report, weekly jobless claims, possible military action in Syria, and the debt ceiling vote.
There are a number of headwinds facing the equity markets in the fall, including tapering talks, turmoil in emerging markets currencies, geopolitical events in the middle east, the debt ceiling vote, and budget negotiations in Washington. Away from the calendar, emerging market currencies are a huge concern for the Federal Reserve. This will put an enormous amount of pressure on Chairman, Ben Bernanke and company to rethink their intention to roll back QE3. The instability in the Middle East, particularly in Syria will add pressure on Chairman Ben Bernanke as the geopolitical scene makes for a less stable world. In addition, there are a number of Federal Reserve speakers on the speaking circuit. Cashin will be interested to hear what message they will relay to financial markets about the central banks’ plans for scaling back its asset purchase program.
Employment Data
This will be the final piece of data the Federal Reserve will look at before it announces its tapering program. The central bank is currently purchasing $85 billion of asset backed securities a month, and Cashin is forecasting the agency will begin to cut back on its stimulus program. Going back the last two weeks, the employment data and the durable goods orders have been uneven and sketchy, so it will be hard for Federal Reserve Chief, Ben Bernanke to keep a straight face when announcing that the tapering decision is data driven. Cashin added, other key employment data that will get the attention of market participants include weekly jobless claims, ADP employment, and Challenger job-cut report, which will be a gauge for the employment report on Friday.
Military Action in Syria
Cashin is very concerned with geo-political events around the globe, particularly in Egypt and Syria. The US is currently mulling over possible military action against the Assad regime. Cashin is concerned that a strike on the ammunition depot could release chemical weapons and hurt or kill more people in the vicinity. Syria is not a crude oil producing nation, but it could ignite and disrupt crude prices globally.
Debt Ceiling Vote
According to Treasury Secretary Jack Lew, President, Barack Obama is not going to negotiate the debt ceiling vote. Speaker John Boehner has also indicated he is not going to raise the debt limit without entitlement cuts. Cashin is concerned that this is setting itself up for a nasty battle in Washington and will put additional pressure on the equity markets along with fears the Federal Reserve will begin tapering in September.
