-- Posted Sunday, 2 November 2008 | Digg This Article
| Source: GoldSeek.com
By Joseph Brusuelas
Financial Markets Summary For The Week of November 3-7 2008
The first week of November will see another heavy week of data releases on the calendar that will feature the first significant look at the data from the real economy in October, when the credit markets seized up. The primary market-moving event will be the Friday publication of the October estimate of non-farm payrolls that we expect to contract by -225K. The week will kick off with the release of the October ISM survey of manufacturing conditions nationwide, total vehicle sales and the construction spending report for September. The following day will see the factory orders report for September published. Wednesday will see the ISM non-manufacturing survey released and Thursday will see the weekly jobless claims data and the Q3;08 non-farm productivity estimate announced. The week will conclude the release of pending home sales, consumer credit and wholesale inventories for September.
Fed Talk
Dallas Fed President Fisher will address the economic outlook on Tuesday, FOMC Governor Warsh will speak topic TBA on Thursday and the week will conclude with a glimpse into the economic outlook by Atlanta Fed President Lockhart on Friday.
Domestic Vehicle Sales (October) Monday: Throughout Day
The initial estimate of Q3’08 GDP data implied that real personal disposable income contracted at a rate of -8.7%. This should provide another heavy dose of bad news for the auto industry, which as seen demand for its products severely diminished. Our forecast implies that domestic vehicle sales will increase by 9.1mln on an annual basis and that total vehicle sales will see a total of 12.0mln sold over that same time frame, with significant risk to the downside.
ISM Manufacturing (October) Monday 10:00 AM
Before credit markets seized up in October activity in the manufacturing sector was already well on its way towards signaling a national recession. The combination of the problems in the credit markets, the strike at Boeing and declining demand form the external sector should be sufficient to knock the headline estimate of national manufacturing activity to 41.5
Factory Orders (September) Tuesday 10:00 AM
The noticeable decline in industrial production on the back of falling demand from abroad and the strike at Boeing should be the primary catalyst behind what we think will be a -1.5% decline in factory orders for the month. Of interest, will be the forward looking indicator of growth inside the non-defense ex-aircraft category, which should provide a clear indication of an economy decelerating before the intensification of the credit crisis.
ISM Non-Manufacturing (October) Wednesday 10:00 AM
The service sector on the back of weak income and bleak job prospects among consumers, grew at an anemic rate of 0.6% according to the advance estimate of Q3’08 GDP. We expect that the service sector will continue to show signs of stress in October, when according to the latest consumer sentiment survey individuals have clear become quit bearish on the economy and their own individual economic situations. We expect the headline to fall to 47.9
Jobless Claims (Week Ending October 25) Thursday 08:30 AM
The week ending October 25 should start to pick up some of the recent reductions in the workforce and drive the headline higher back towards 485k. The return to work of workers in South Texas in the aftermath of Hurricane Ike will offset the ongoing culling of the workforce but that impact will continue to diminish and set the stage for a move above 500k on a continuing basis over the next few months.
Non-Farm Payrolls (October) Friday 08:30 AM
The October payrolls data should capture the pick-up of layoffs throughout the economy that have begun to build and will be a feature of the economic landscape over the next two years. The layoffs in the auto sector should be the primary catalyst for an increase in job destruction in the manufacturing sector, along with job losses in trade, retail, and financial and business services. The destruction of employment opportunities in the household estimate should send the unemployment rate up to 6.3% and the establishment estimate should show a loss of -225K.
Pending Home Sales (September) Friday 10:00 AM
Purchases of new and existing homes picked up during the traditional summer buying season on the back of favorable developments in the interest rate environment and further declines in the median price of homes. However, given the upcoming pending home sales report should see significant retrenchment due to funding problems due to the begging of problems in the credit markets and the visible increase in uncertainty over employment prospects for workers.
Joseph Brusuelas
Chief Economist
Merk Investments
Merk Investments LLC is the manager of Merk Mutual Funds, including the Merk Asian Currency Fund and the Merk Hard Currency Fund. The Merk Asian Currency Fund invests in a basket of Asian currencies. Asian currencies the Fund may invest in include, but are not limited to, the currencies of China, Hong Kong, Japan, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.
The Merk Hard Currency Fund invests in a basket of hard currencies. Hard currencies are currencies backed by sound monetary policy; sound monetary policy focuses on price stability.
The Funds may be appropriate for you if you are pursuing a long-term goal with a hard or Asian currency component to your portfolio; are willing to tolerate the risks associated with investments in foreign currencies; or are looking for a way to potentially mitigate downside risk in or profit from a secular bear market. For more information on the Funds and to download a prospectus, please visit www.merkfund.com.
Investors should consider the investment objectives, risks and charges and expenses of the Merk Funds carefully before investing. This and other information is in the prospectus, a copy of which may be obtained by visiting the Funds' website at www.merkfund.com or calling 866-MERK FUND. Please read the prospectus carefully before you invest.
The Funds primarily invest in foreign currencies and as such, changes in currency exchange rates will affect the value of what the Funds own and the price of the Funds' shares. Investing in foreign instruments bears a greater risk than investing in domestic instruments for reasons such as volatility of currency exchange rates and, in some cases, limited geographic focus, political and economic instability, and relatively illiquid markets. The Funds are subject to interest rate risk which is the risk that debt securities in the Funds' portfolio will decline in value because of increases in market interest rates. The Funds may also invest in derivative securities which can be volatile and involve various types and degrees of risk. As a non-diversified fund, the Merk Hard Currency Fund will be subject to more investment risk and potential for volatility than a diversified fund because its portfolio may, at times, focus on a limited number of issuers. For a more complete discussion of these and other Fund risks please refer to the Funds' prospectuses.
This report was prepared by Merk Investments LLC, and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute investment advise nor a solicitation or an offer to buy or sell any products or services. Foreside Fund Services, LLC, distributor.
-- Posted Sunday, 2 November 2008 | Digg This Article | Source: GoldSeek.com
