Looking Ahead: Week of August 27 through 31

With the manufacturing sector wavering, investors are looking to the the consumer sector to boost the recovery. Key updates include personal income and spending along with consumer sentiment. Housing has shown some new life and Case-Shiller will update on home prices. There are mixed reviews on whether the Fed will implement QE3 at its September FOMC meeting, but this week’s Beige Book may offer hints. GDP gets revised but that is old news unless the revision is substantial. Fed Chairman Ben Bernanke speaks Friday at the Kansas City Fed’s annual Fed conference (internal Fed event) and he could hint at another round of quantitative easing.

Looking Ahead: Week of August 20 through 24

The recovery is gaining strength, albeit slowly. Housing finally is rising out of its recession rut and is on a modest uptrend. The consumer sector may not be retreating as feared.  However, manufacturing data have been unclear—this sector may or may not be flattening in the near term. But overall, the economy is doing somewhat better—although that fiscal cliff is still looming.

Housing permits were up in July. Reports on existing and on new homes will indicate if homebuilder optimism is justified. Manufacturing reports have been mixed and the July durables report may add clarity.  Notably, the mid-week release of Fed FOMC minutes could lift or dampen belief in a Fed move at its September FOMC meeting.

Reflection on traders and Olympians

Not unlike Olympians, investors must train themselves to control their emotions. This training begins with the development of an underlying macro philosophy one has of the market. This philosophy leads to a better understanding of one’s own risk tolerance. From there, investors can form an investment strategy and develop a set of suitable and sustainable investment rules (risk management). Lastly, but definitely not least, follow those rules. That’s it -- now perfect it!

Training, as much as it may seem like it, is not the most difficult part; the biggest challenge is accurate self-assessment. This is even more burdensome since no one likes to admit that they’re wrong.  “It wasn’t my fault, the market did so-and-so.”  But owning and learning from one's mistakes is a skill that -- if used, if understood, and if not discounted -- becomes the greatest tool an investor can have.

Looking Ahead: Week of August 13 through 17

The latest numbers were limited and mixed.  The best news was that exports are still growing.  This is good for the manufacturing sector.  The productivity numbers put company profit growth on the fence.  With unit labor costs trending low, a boost in output and revenues could lead to upside potential for profits.  But lack of output growth leaves profits languishing—bearing in mind that expectations for profits are rather low.

The consumer and manufacturing sectors have been wavering and we get news on those fronts.  The highlight of the week likely is an update on consumer spending with the retail sales report. Consumer sentiment also prints.  Manufacturing news posts with Empire State, industrial production, and Philly Fed.  Housing recently has shown modest improvement and the housing starts report could indicate if that trend continues.

Looking Ahead: Week of August 6 through 10

Equities rebounded on Friday after Thursday’s losses and turned the week into a positive one for most of the indexes followed here. In the Asia Pacific region, only the Nikkei (down 0.1 percent) slipped on the week. All European indexes despite the day to day volatility managed to gain on the week. In North America, the S%P/TSX Composite (down 0.9 percent) and the Bolsa (down 1.2 percent) were unable to recoup all of the week’s prior losses. Gains ranged from 0.2 percent (All Ordinaries and Dow) to 3.9 percent (FTSE MIB).

The reasons for Friday’s rebound were the better than anticipated U.S. employment report and second thoughts about ECB President Mario Draghi’s comments at his post meeting press conference Thursday.

Looking Ahead: Week of August 6 through 10 

A light week of economic news is highlighted by consumer credit and international trade.  Confidence numbers are not great but credit data are hard numbers and could point to moderate consumer strength. Meanwhile, trade data are a big question mark due to weakness in Europe and slowing growth in Asia.  But lower oil prices are likely to come into play.