There's A Ton Of Economic Data Coming This Week And The Expectations Aren't Great



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Last week was unusually quiet for the economy, even as the stock market rallied to an all-time high.

This week’s schedule, however, is loaded with April and May economic data. By Friday, we should have a pretty good sense of whether or not the economy decelerated going into the second quarter.

For the most part, economists are expecting a month-over-month slowdown.

Top Stories

  • Bernanke Heading For The Exits?: The Wall Street Journal’s Jon Hilsenrathreports that the Federal Reserve is having discussions about how it should taper its easy monetary policy, which has been stimulating the economy since the financial crisis. “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations,” wrote Hilsenrath. “Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.”
  • How Much Does Bloomberg’s  Reporters Know?: Last week ended with a stunning story about how Bloomberg reporters may be leveraging private data about terminal usage to break stories. The terminal is the most widely-used and arguably the most important source of news on Wall Street. Everyone will want to know exactly what Bloomberg management knew, and what is and isn’t actually private client information.

Economic Calendar

  • Retail Sales (Monday): Economists estimate that retail sales slipped by 0.3% in April and by 0.1% excluding autos and gas.  “Another price-induced dive in gasoline service station receipts, combined with anticipated falloffs in motor vehicle and building materials purchases, probably pared retail and food services sales by 0.6% in April, eclipsing the 0.4% slide posted in the previous month,” says Societe Generale’s Brian Jones who is more bearish than the consensus.
  • Industrial Production (Wednesday): Economists estimate that industrial production fell by 0.2% in April.   “We expect industrial production to rise 0.2% month-over-month (mum) in April,” says Bank of America Merrill Lynch’s Michael Hanson who is a bit more bullish than the consensus.  “That would build on the 0.4% mum gain recorded in March. If our forecast proves correct, the capacity utilization rate will settle at 78.5%. Manufacturing production, which makes up roughly 77% of total industrial production, is expected to rise 0.1%.”
  • Consumer Price Index (Thursday): Economists estimate that CPI slipped by 0.3% in April.  However, they estimate that CPI excluding food and energy climbed by 0.2%.  “Price pressures on consumers receded in March, as a reversal in energy prices drove the CPI lower,” says Wells Fargo’s John Silvia.  “Energy prices fell 2.6 per cent during the month, on a 4.4 per cent drop in gasoline prices. Retail gasoline prices have continued to trend downward since spiking in February and will likely continue to drive headline inflation lower.” “On Wednesday, we will get a look at price pressures through the  production pipeline with the PPI report,” added Silvia. “We expect headline producer  prices to decline 0.4 per cent in April, with core prices rising 0.2 per cent.”
  • Housing Starts (Thursday): Economists estimate we’ll see April housing starts at the 969,000 level, with building permits at 945,000. “Starts should retrace some of March’s multi-family led surge, while permits are projected to rise modestly, while permits are projected to ris modestly,” says Deutsche Bank’s Joe LaVorgna. “We remain bullish on residential construction, and consider the near-term weakness as a temporary pause in an otherwise firming recovery.”  On the matter of housing, the May NAHB index of homebuilder sentiment will be released Wednesday and is expected to increase to 43 from 42 in April.
  • University Of Michigan Consumer Sentiment (Friday): Economists estimate that the May reading will inch up to 78.0 from 76.4 in April.  “Confidence measures have split, with the Rasmussen and Bloomberg measures reaching cycle highs but the University of Michigan, Conference Board, and IBD/TIPP still weak,” says UBS’s Sam Coffin. “For the University of Michigan index, we see no catalyst in early May for a significant pickup in the expectations component.”

Market Update

The S&P 500 started last week at 1,614, an all-time closing high at the time. And it ended the week at 1,633, the current all-time closing high.

This is notable because at the beginning of the year, the most bullish strategist on Wall Street’s sell-side had a 2013 year-end target of 1,615.

So, that advice stunk.  Even worse is Wall Street’s current advice is internally conflicting.

According to forecasts compiled by FactSet, strategists currently expect the S&P 500 to head lower 1,579 in 12 months. Meanwhile, analysts expect stocks to go up to 1,724.

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