We want to start by saying that the tragedy and devastation that’s occurring in Houston is horrific and our hearts and prayers go out to all those affected. We realize that this is impacting families and individuals but we also want to look at it from a market standpoint in the economy and how it’s going to impact consumers, as well as how it’s going to expand. Overnight gas futures rose over 7%, that’s a quick jump. With the holiday week coming up there will be a lot of people driving. There are estimates that gas prices will go up as much as $0.25 a gallon. This will be temporary but will impact the data coming out later this week relating to consumer data. Something we will need to watch closely is how this impact will expand to the consumer market.
Central bankers around the world met at Jackson Hole, WY as they usually do each August, including Janet Yellen. What we have noticed about this, that you might of missed, is that Yellen is still very married to the regulatory control within the fed, specifically Dodd-Frank. Yellen’s term is up In February and that could suggest that she is on a direct collision course with President Trump, who is trying to regulate Dodd-Frank out. In other words, when February hits, he could make a change to her position. In result, this increases the uncertainty.
Now that corporate earnings season is winding down the market will likely follow economic reports very closely. As consumer confidence has been going up spending is going down. We need spending to catch up with consumer confidence. A lot of the reason spending has been down is because of income. Jobs have been good but income has been flat. We will see an income report released on Thursday. We also expect GDP to be revised upwards somewhere around 2.8 to 2.9. It would be ideal to see GDP rise to around 3 to 3.5, that indicates a strong growing economy. On Friday we have the jobs report and manufacturing. There is a lot to look at this week as the market will follow these reports and it’s also important to keep an eye on the low volume going into the holiday weekend.
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