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Look forward at November 11, 2019 week: Data mainly on inflation, Chair Powell’s testimony before the JEC

A look forward at the November 11 week shows it off to a slow start with a federal holiday on Monday for Veterans Day. This marks the start of the cold weather holidays. Retailers are going to try to jumpstart holiday shopping with a three-day weekend promotional period. Outside of federal government, the holiday is observed unevenly with many offices opting to give time off on the day after Thanksgiving instead of on the actual day.

This is also the time of year when Fed officials start to exit the public engagement calendar. That really won’t seriously kick in until the Thanksgiving week, especially since the outlook for monetary policy could benefit from a little clarification on the part of FOMC participants. Comments from individual policymakers may get less attention with Chair Jerome Powell scheduled to appear before the Joint Economic Committee on Wednesday, November 13 at 11:00 ET to testify about “The Economic Outlook”. Powell will get a grilling about why the Fed has signaled that monetary policy is on hold. He’ll be able to present a solid case for the strength of the labor market and the resilience of the economy in the face of risks and uncertainties. This is likely to be the last major appearance this year. The communications blackout period around the December 10-11 FOMC meeting will go into effect at midnight on Saturday, November 30.

Data on inflation in October will be prominent in the week. The Consumer Price Index is set for 8:30 on Wednesday, Final Demand PPI at 8:30 ET on Thursday, and the Import Price Index at 8:30 ET on Friday. There’s going to be few enough sources of upward price pressures evident in the numbers. Commodities prices will continue to reflect the lack of momentum higher – especially for energy – while services costs will remain the main source of increases. I note that the October PPI data will be accompanied by the annual quality adjustment numbers for cars and light trucks.

The Atlanta Fed’s Business Inflation Expectations for November at 10:00 ET on Wednesday will point to anticipation of continued low price pressures in the face of similar weakness in commodities costs.

Retail sales for October at 8:30 ET on Friday may well look like a poor start for consumer spending in the fourth quarter, especially in light of the surprising 0.3% decline reported for September. That number will be revised and it could well be higher, but it won’t change that the third quarter ended on a down note. Any hint that the fourth quarter might prove to be disappointing is going to be worrisome for the outlook for GDP. However, the headline it should be read with caution given the weakness in motor vehicle sales that may be related to the strike at GM rather than that consumers have suddenly pulled back on car buying; November sales could rebound. There are also soft gasoline prices that may mean a lower dollar value of sales rather than less purchasing of gas. Consumers’ penchant for spending on Halloween goods and goodies may not be fully captured, although the timing means that many celebrations actually took place several days before the 31st and thus should be included in the report.

The November New York Fed Empire State Survey of Manufacturing at 8:30 ET on Friday is the first of the monthly surveys for the factory sector. It is not the best harbinger for the ISM Manufacturing Index but if it is significantly different from the modest readings of recent months, it could alert to a change in the underlying momentum for manufacturing in either direction.

Industrial production for October at 9:15 ET on Friday should get a boost from manufacturing as production resumed at GM after the strike finished, although that was relatively late in the month and may be more visible in the November data.

The NFIB Small Business Optimism Index for October at 6:00 ET on Tuesday may ride uncomfortably close to the 100-mark after falling to 101.8 in September. The index hasn’t been below that since 98.4 in November 2016. It could signal that economic conditions are back to unspectacular, modest growth rather than deterioration in the fundamentals.

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