Stock Market Watch

U.S. Economic Calendar Event Update – Feb 20

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These are the U.S. economic calendar events for Wednesday, February 20, 2013. All times are EST.

MBA Purchase Index for the week ending on 02/16 are scheduled to be released at 7:00 AM. The prior period for MBA Purchase Index had a result of -6.4%. This event has a low effect on US markets.

Building Permits for Jan are scheduled to be released at 8:30 AM. Analysts are estimating a result of 918K. The prior period for Building Permits had a result of 903K. This event has a moderate effect on US markets.

Housing Starts for Jan are scheduled to be released at 8:30 AM. Analysts are estimating a result of 914K. The prior period for Housing Starts had a result of 954K. This event has a moderate effect on US markets.

PPI for Jan are scheduled to be released at 8:30 AM. Analysts are estimating a result of 0.3%. The prior period for PPI had a result of -0.2%. This event has a major effect on US markets.

Core PPI for Jan are scheduled to be released at 8:30 AM. Analysts are estimating a result of 0.1%. The prior period for Core PPI had a result of 0.1%. This event has a moderate effect on US markets.

FOMC Minutes for the week ending on 1/30 are scheduled to be released at 2:00 PM. This event has a major effect on US markets.

At the release of important events, US equity markets (INDEXSP:.INX) can make major moves. Be sure to keep an eye on S&P (NYSEARCA:SPY), Nasdaq (NYSEARCA:QQQ) and Dow Jones (NYSEARCA:DIA) at the time of announcements.

Here is some more information about the events discussion in this article.

MBA Purchase Index: Gauges demand for mortgage application in the US . Tracking new home mortgages and refinances, MBA Mortgage Applications Survey serves at a current indicator for the US housing market. Growth in mortgages suggests a healthy housing market. Due to the multiplier effect housing has on the rest of the economy, rising activity suggests increased household income and economic expansion. The headline figure is the weekly percentage change in the MBA Mortgage Applications figure. Among the various indices measured in the survey, the purchase index and refinancing index most accurately reflect where the housing market is headed. The purchasing index measures the change in existing home sales in all mortgage applications, while the refinance index measures the mortgage refinancing activity in all mortgage applications.

Building Permits: Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Permits lead starts, but permits are not required in all regions of the country, and the level of permits therefore tends to be less than the level of starts over time.

The monthly national report is broken down by region: Northeast, Midwest, South, and West. Briefing recommends analyzing the regional data because they are subject to a high degree of volatility. The high volatility can be attributed to weather changes and/or natural disasters. For example, an unexpectedly high level of rain in South could delay housing starts for the region.

Housing Starts: Housing Starts are a measure of the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing.

PPI: The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).

At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.

Core PPI: The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).

At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate. Though the market reaction is determined by the month/month changes, year/year changes are also noted by analysts. The index is not revised on a monthly basis, but annual revisions to seasonal adjustment factors can produce small adjustments to past releases.

FOMC Minutes: The Federal Open Market Committee (FOMC) began publishing the minutes for its monetary policy meetings in 2005. The detailed minutes from these meetings give some of the best insight into the monetary policy decision making process and what the FED thinks about economic developments inside and outside of the US . Markets tend to focus most of their attention on the key points discussed during the meeting that suggest future interest rate changes. For example if the minutes state that high energy costs and a rapidly expanding housing market are fueling inflation, then markets participants will tend to monitor these key sectors closely in order to gauge the likelihood of a rate increases in the future. Because minutes come out three weeks after the FOMC meets, markets will discount some information in the report. Market participants tend to read into the overall mood the Federal Reserve gives during the meeting. If the FOMC is cautious about the inflationary outlook for the economy (characterized as “Hawkish”), then the market has a higher likelihood of future rate increases. If the Bank is optimistic (“Dovish”) it suggests to markets that inflation is in check and that future rate increases are less likely.

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Alex Fredricks
Post Written By: Alex Fredricks
Alex Fredricks has a degree in business and is an avid day-trader. Alex’s experience and love for the game of the markets is shown not only in his posts, but the post he helps edit for other authors on our staff.

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Alex Fredricks

Alex Fredricks has a degree in business and is an avid day-trader. Alex's experience and love for the game of the markets is shown not only in his posts, but the post he helps edit for other authors on our staff.

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