2018 EXCERPTS FROM PRIOR WEEKS BELOW:
Tax changes enacted late last year and the recent federal budget agreement, taken
together, were expected to provide a significant boost to output over the next few years.
However, participants generally regarded the magnitude and timing of the economic effects
of the fiscal policy changes as uncertain, partly because there have been few historical
examples of expansionary fiscal policy being implemented when the economy was operating at
a high level of resource utilization.
Participants agreed that the longer-run normal federal funds rate was likely lower than in the past, in part because of secular forces that had put downward pressure on real interest rates. Several participants expressed the judgment that it would likely become appropriate at some point for the Committee to set the federal funds rate above its longer-run normal value for a time. Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.
The Economic schedule is filled with FOMC speakers, as well as central bankers from other countries, given the joint Spring meetings of the World Bank Group & IMF. That Joint Meeting is always accompanied by meetings of other groups timed to take advantage of the central bankers from around the world who intend to participate in the schedule. In truth, both the World Bank & IMF host their own, individual, spring meetings starting the 17th, then join for the Joint meetings on the 19th22nd.
Speaking of meetings, future meetings of the House of Representatives will look drastically different, a year from now. Republican members are planning to retire in record numbers, the Speaker of the House, as well. So I wondered how much a representative makes for living away from home, for months at a time, aside from the perks like staff salary allowances, and housing allowances. Whats it worth in pensions to have put up with all the muck and dirt slung at the House. Paul Ryans pending retirement income is quite modest, after 20 years, and explains why a former House or Senate member would set out on the speaker circuit, and write a book.
At 48, Paul Ryan can claim his pension in 2 years, collecting a Federal Employees Retirement System pension of nearly $85K p/annum, $76K of which is for his 20 years of service as Congressman, another $6,493 for toiling as a staffer in Congress. FERS contributions have been mandatory since 1984. When hes older, Ryan will be able to collect Social Security, as well, plus whatever hes put away in the Congressional equivalent of a 401(K) plan, a Thrift Savings Plan. Of course, Ryan will make real money once his one-year "cooling off" period ends, that period the Congressional equivalent of a non-compete. Afterwards, he can make 6-figures as a lobbyist, consultant, or any other job he may be offered. Evidently, Congress anticipated the pot at the end of the rainbow, as speakers, boards of directors, and other more lucrative possibilities, when setting such a small pension for members. How else to justify explain such a puny pension after 20 years of flying back & forth to Wisconsin, and 3 years as the leader of the US House?
The Economic Calendar also includes the typical monthly releases; Housing data Monday & Tuesday, as well as March Retail Sales Monday, which analysts expect to reverse weakness in Jan & Feb, tax-refund related delays to some spending. Canadas monetary policy committee meets Wednesday, the countrys data expected to be released throughout the week, Friday March CPI & Feb Retail Sales. Most interesting, perhaps, Fed Gov Quarles testimony in Congress, Tuesday and Thursday, the first appointed point person on banking supervision and regulation in yearsa position that never got filled under Obama.
The biggest week of earnings, so far, starts Monday, with Bank of America, Netflix, & Charles Schwab 3 highlights. In the past, Bank Earnings usually lifted markets that were, shortly thereafter, brought down by successive reports from the rest of industry. This time, banks reported strong earnings, last week, none of which seemed to please the streetnot even when accompanied by strong outlooks.
Tuesday could prove another important day for earnings, with Goldman Sachs, CSX Railroad, Interactive Brokers, IBM, Johnson & Johnson, Kinder Morgan, Lam Research, Omnicon, United Airlines, and UnitedHealth set to report. Wednesday, note American Express, Morgan Stanley, Robert Half Associates, Steel Dynamics, Textron, & US Bank Corp.
On Thursday, note Alliance Data, Bk of NY Mellon, Blackstone, Keybanc, Philip Morris, PPG, Quest Diagnostics, & Taiwan Semiconductor, leading into Friday: Baker-Hughes a GE Company, GE, Honeywell, Kansas City Southern (Rail), Manpower, Procter & Gamble, Regions Financial, Schlumberger, Stanley Works, State Street, SunTrust, & Waste Management, a hefty cross section of every sector but Utilities & REITs, which are yet to come. The week, in short, will clear out the last of the most important financials to report, ex-insurers.
Former FBI director James Comey interview debuts Sunday, at 10pm on 20/20, with George Stephanopoulos lobbing the questions. Tuesday his book, "A Higher Loyalty" launches, and I sure hope its better than Wolfes "Fire & Fury," because thats a terrible book, very poorly written.
What about Industry & I-bank Events? The schedule dries up during the heart of earnings season, and especially when the IMF & World Bank are set to take center stage. The biggest conference, AACR, the American Association of Cancer Research Annual Meeting is usually a highlight of the spring. It was surprising that analysts werent stepping out more, last week, bulling the biotechs & pharma companies scheduled to have research unveiled. Amgen sent a press release about studies to be revealed at AACR, while Gilead did the same on NASH, at HIV & Co-Infections in Whistler, the Liver Meeting in Paris France, and the British Society of Haematology in the UK. Also notable this week, the International Home Furnishings Market, in High Point. Cruise Lines should be in focus as Cruise3Sixty gets underway in Ft Lauderdale. Norwegian is the latest to provide a horrible experience to passengers, renovating a vessel were people were on a $10K cruise. Then, there are people who keep falling off cruise ships, usually because they were drunk as skunks, and trips where rape committed by cruise employees are hush-hushed. If you want to subject yourself to lawlessness, a cruise is an easy way to accomplish that, the noro and roto viruses often the least of passenger worries.
The Denver Gold Group is hosting the European Gold Forum in Zurich, just as gold is finding some favor. Bigger still, Business Aviation Asia, in Shanghaiwhich Im typing just as "60 Minutes" is finishing its hack of AllegiantAir. Watch the Farm Equipment Manufacturers Supply Chain Summit, given Trump is working on offsets to tariffs & repercussions, which should be a highlight. HIDA, the healthcare distributors e-Commerce Conference strikes me as a rebuttal to the possibility that Amazon could enter the field, even though theres never, before, been an eCommerce event for the healthcare distributors. Then, again, I cant remember a world congress on Osteoporosis, Osteoarthritis & Musculoskeletal Diseases in Poland, before. Or, you could just sneak away to Indio California, and let loose at Coachella.
Meantime, if youre still long, be looking for levels to get out. The Trump honeymoon is dead, and even a great earnings season wont be sufficient to drive stocks up.
ECONOMIC: (Highlights, only, below. Full International Economic Calendar here)
© Sandi Lynne 2018 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security. The opinions expressed are the authors, alone, and should be just one factor in more complete due diligence.