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Trading Radar: GDP, Non-Farm Payrolls, and ECB Rate Decision Will Move Markets


Today's financial recap and tomorrow's financial outlook.

Equity prices made a rounding peak on Wednesday of this week. The monetary policy statement from the FOMC was slightly more hawkish than had been expected by the markets. Equity and bond prices suffered as a result. Economic data throughout the week was mostly worse than expected, but the regional Chicago and national ISM manufacturing surveys showed exceptionally strong growth.

Looking ahead to next week there are four major economic data releases. On Tuesday is the national ISM services survey. The employment component of this survey is highly correlated with the non-farm payrolls report scheduled for Friday. Another is the advance estimate of third quarter GDP on Thursday morning. This report was initially scheduled for release this past week. Economists are expecting 1.9% real annualized GDP growth and 3.3% nominal growth. If those estimates are correct, nominal growth from a year ago will be 2.7%.

September's personal income and spending report is due out on Friday, which could alter the next estimate of third quarter GDP. Consumer spending is expected to increase moderately, but auto sales and retail sales were low for the month so the risk is for a miss to the downside. Lastly, Friday will bring the October non-farm payrolls report. Estimates have been taken down to a net growth of 128,000 after last month missed at 148,000 versus 180,000 economist estimates. The ADP private payrolls report showed 130,000 net growth in October. The ADP report is typically 7,000 to 9,000 less than nonfarm private payroll growth.

The ECB's monthly rate decision is on Thursday. Following a four-year low in consumer inflation growth this past week a number of investment banks speculated that the ECB would take action to ease financial condition through a rate cut or new long-term collateralized bank loans. Two months ago, Mario Draghi became the first central banker in a long, long time to downplay positive economic data as being due to "seasonally good weather." Typically, companies blame seasonally bad weather for poor earnings figures, so this was definitely a first.

Earnings season has mostly come to a close for major companies. Notable reports for the next week include Walt Disney (NYSE:DIS), Tesla (NASDAQ:TSLA), Chesapeake Energy (NYSE:CHK), Qualcomm (NASDAQ:QCOM), Whole Foods Market (NASDAQ:WFM), CBS (NYSE:CBS), (NASDAQ:PCLN), and Lions Gate (NYSE:LGF).

Monday, November 4

US Economics (Time Zone: EDT)

09:45 ISM New York – prior 53.6
10:00 Factory Orders Aug & Sep – Sep consensus 1.8%
11:00 Fed to purchase $3b-$4b notes in 6 to 7-year range
11:30 Treasury selling $33b 3-month bills, $29b 6-month bills


11:40am Board of Governors Powell speaks in San Fran
4:00pm Rosengren speaks in Boston

Global Economics (Time Zone: GMT)

00:30 AUD Retail Sales
09:00 EUR Eurozone manufacturing PMI (final estimate)
09:30 GBP Construction PMI


Kellogg (K)

Office Depot (ODP)
OfficeMax (OMX)
Goodrich Petroleum (GDP)
Marathon Oil (MRO)
Pioneer Natural Resources (PNR)
Plains All American Pipeline (PAA)
Hertz Global (HTZ)
CF Industries (CF)
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No positions in stocks mentioned.

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