Weighing the Week Ahead: Trump V. Yellen Round One

This week featured the Fed Chair’s semi-annual Congressional testimony, and daily speeches by most of her Fed colleagues, would normally display a commander starting theme.  Today is a different day.   Trump Administration in its first few weeks has created a lot of information on many subjects that have gained a lot of hub space if you know what I am saying. have generated daily news on a wide range of topics, each of which draws attention.

Trump v. Yellen, Phase One.

Last week displayed various news, but stocks still appeared to be strong.

In this chart the new high and overall gain is 0.81% for this week even though market new displays mixed results.

On the upside lumber prices rise as JOLTS reveals a good labor market since people use JOLTS as a good indicator.


More so is a great example of chart 4 in 2012, discussing the need for the improvement of labor and the basic counter-clockwise movement after a recession.

Also corporate earnings are slightly great. The results are that earnings are below their expectations, higher revenues, and the outlook is average for the long-term.  This has been a gain that has occurred year-over-year that has not occurred for the past two years.  This is also discussed more by Brian Gilmartin in this chart below.

Now onward to the bad news is that Michigan sentiment slipped towards 95.7 on the preliminary estimate prior from last months which was a little higher. Furthermore, the Michigan report discusses that 29% disliked Trump’s economic policies while 30% do like them.  In the end this total  never reaches the half way point , except for five surveys in 2013 and 2014 that were dominated by negative references due to fiscal cliff crises and debt. Furthermore, these rare spontaneous references to economic policies had  a great effect on the Sentiment Index. A variation of the difference of 37 Index points is due to the to favorable and unfavorable policies. These differences are cause issues due to the Democrat’s Expectations Index indicating recession and the Republican’s Expectations Index is very high dictating greater expansion. While currently distorted by partisanship, the best bet is that the gap will result in a more moderate pace of growth. However, it is widespread knowledge that a negative rather than positive expectation determines spending in the market place.  Therefore, forecasts of consumer expenditures must take into account a higher likelihood of asymmetric downside risks. High frequency indicators are a touch more negative.

 

 

References

Oldproof.  (2017).  Weighing the Week Ahead: Trump V. Yellen Round One.  Retrieved from, http://dashofinsight.com/.

 

 

 

 

 

 

 

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