A BIG DATA WEEK

By: Kent Engelke | Capitol Securities

NY Fed President William Dudley stated that three interest hikes in 2017 is a “reasonable” projection. As we all know the Fed hiked rates once already and most are anticipating another increase by June. Dudley stated “there’s not this huge rush that we have to tighten monetary policy quickly because the economy in clearly not overheating.”

Will Dudley change his perspective in the intermediate future? A price gauge based on personal consumption expenditures excluding food and energy rose 1.75% in February from a year earlier, marking the highest level of so so-called core inflation since July 2014 according to the Commerce Department. Including all items, inflation accelerated to 2.1%, topping the Fed’s 2% target for the first time since 2012.

I reiterate my long held view the odds are over 65% that growth will exceed the 2017 consensus view of 2.5%. Contrary to the view of some, government does not create jobs. Government creates policies conducive to job creation.

Many times I have commented that since 2014 sentiment surveys indicated the biggest risk to business and job creation is government intervention and regulation. Ever since these surveys were initiated, economic concerns were regarded as the greatest concern/hindrance to job creation. I think this change was a major reason why Trump was elected.

Since the President was elected, sentiment surveys have been surging levels that were last experienced 15-18 years ago. The reason — the pledge to roll back taxes and regulations.

If Trump is even modestly successful in reducing regulations by two for every new one introduced, growth could easily exceed 3%, thus making Dudley’s pronouncements off center.

What will this week’s heavy economic calendar suggest? It may offer a clear indication of the strength of the economy. Statistics released include the ISM, durable goods orders, ISM non-manufacturing and various employment surveys with the release of the BLS data on Friday. Moreover, the Minutes from the March 15 FOMC meeting are released.

Last night the foreign markets were up. London was up 0.03%, Paris was down 0.21% and Frankfurt was up 0.23%. China was up 0.38%, Japan was up 0.39% and Hang Sang was up 0.62%.

The Dow should open quiet. The 10-year is unchanged at 2.39%.

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