Weekly Market Outlook – May 16, 2016
The market may have started the previous week on a bullish foot, but it certainly didn’t end the week on one. Not only did the S&P 500 (SPX) (SPY) log three straight losing days to end last week’s trading, but it broke below a key support level it couldn’t really afford to break. Stocks still aren’t past the point of no return yet, but it’s alarmingly close.
We’ll dissect the odds below after running down last week’s and this week’s major economic headlines.
Economic Data
Not a lot of economic news worth exploring from last week. The only items of real interest were both unveiled on Friday… last month’s producer price inflation rate, and April’s retail sales.
As for producer inflation — which will serve as something of a preview for this week’s consumer inflation news — wasn’t quite as brisk as supposed. Overall PPI was up 0.2% versus expectations for a 0.3% uptick, but core PPI (sans food and energy costs) was only up the expected 0.1%. On an annualized basis, overall PPI is only 0.1%, and a mere 0.9% on a core basis.
Producer Price Inflation Chart
Source: Thomson Reuters
As for retail sales, April’s consumer spending was a pleasant surprise. Spending grew 1.3% overall, and was still higher by 0.8% after taking automobile sales out of the equations. Retail sales are not growing “leaps and bounds,” but they are making steady forward progress in all categories, now including gasoline/filling stations.
Retail Sales Chart
Source: Thomson Reuters
Everything else is on the following grid:
Economic Calendar
Source: Briefing.com
This week will be a little busier, and Wednesday’s release of the minutes from the most recent FOMC meeting will likely be the centerpiece. It’s not a scheduled interest rate decision date, though Janet Yellen could use it as such if merited. It’s not apt to happen though. If anything, Yellen is apt to be looking to delay a rate hike as long as possible because … last month’s consumer inflation rate is apt to be on the tame side. The pros are calling for a 0.4% increase overall, and a 0.2% increase on a core basis. Annualized inflation rates are now 0.85% overall, and 2.2% on a core (ex-food and ex-energy) basis.
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