What a week to say the least…Starting Monday morning it seemed like the financial world was ending..Then fast forward to Thursday and people were in love with stocks again. If you just look at the US data we had some great news this week. Durable orders came in strong along with nice revisions and Q2 GDP was revised up to 3.7%. We also got another great weekly claims print of 271K. In the report put out by the DOL, I like to look at the states that have the largest increases and decreases. Of interest this week, was that Texas actually reported one of the largest decreases in benefits claims. Certainly nice to see, given how dependent Texas is on energy production.
Now we have the Fed’s preferred inflation gauge, PCE, coming up this morning. PCE is calculated by the BEA and they use data from http://www.census.gov. This actually places some emphasis on the most recent retail sales data which showed healthy revenue gains (adjusted basis) on a MoM and YoY basis. Another item to look at are the differences between PCE and CPI in category weighting. PCE places more emphasis on healthcare and less on shelter. Latest CPI data showed medical care services at 2.3% year over year with shelter components well north of 3%. Since shelter is outpacing healthcare, PCE could come in under CPI. Historically, PCE has tended to be under CPI so that could be the case again today.That being said, you never what can happen. Having gone through all the line items in PCE, I would think we get a firm number today.
Have a great weekend and get ready for NFP next week!!!