We have in front of us a big week. This may determine the course of the next year or so in the stock market, the economy, and in politics.
A lot is about to happen. Let’s run it down, day by day.
Wednesday, 7 March. The stock market will react to the resignation of Gary Cohn, Trump’s key economic adviser, has resigned. When the news first hit, DJIA futures were down over 400 points or 1.6%. That doesn’t mean it will be down that much at the open, but it does mean there will be a rocky day.
Wednesday, 7 March. The ADP employment report for February will be announced. Last month it was ahead of the BLS official report, so if that trend continues we may be looking at a very large increase again.
Thursday, 8 March. We learn the size of the next 10yr Treasury note offering. The last offering in February was for $24 billion, but that was before the debt ceiling increase. If it is far north of that, we will have some measure of the size of the debt that needs to be financed.
Friday, 9 March. The Bureau of Labor Statistics will announce the February Employment Report. Investors are betting that the January report, which had a net gain of 200k jobs and a 2.9% annual rate of increase in worker’s salaries. Expect it to be, if anything, higher. We will know more once we have the ADP report.
Tuesday 13 March. The Consumer Price Index for February will be announced. Core CPI increased by 1.8% in January year over year, but look for that to rise to a solid 2.0%. Increases in fuel cost are being absorbed slowly by the general economy, and are not going down soon.
Tuesday, 13 March. The auction of 10yr Treasury notes is held, telling us a lot about where interest rates are going for the next month.
Tuesday 13 March. The special election in Pennsylvania’s 18th district will be held. If Democrat Conor Lamb wins, or even comes close, expect even more panic in the White House. We probably will not know a thing until early Wednesday morning.
The big day is Tuesday, for sure. But there are a lot of places for potentially bad news for the stock market all through the week. It’s also entirely possible that talk of a trade war will only accelerate as we get closer to the special election, which Trump is determined to not lose.
How will all of this determine the next year? Right now, it appears that the people nominally in charge of this nation are flailing wildly. Tax cuts are probably nothing more than an attempt to buy the 2018 election by putting more money out there and turbocharging the economy. But there is time for it to sink in and the Fed to respond, which they will likely have to. Add to that the ill-timed talk of a trade war, probably for the same reason, and we have many recipes for disaster.
So where does this leave us? A lot of uneasy feeling heading into an election which will probably determine just how unhinged the administration becomes. This has nothing to do with Robert Mueller, of course, it’s about how the government and the economy are being managed.
Poorly, that is.
This week we will learn a lot more about the pressures on the Administration, the Federal Reserve, and the markets. If all of them can get through this week without something big happening, it will be a miracle.
Don’t bet on miracles. This is a tough week.