This one is a bit late owing to this morning’s round of media bashing but it’s still important to cover (to say the least). The Fed meets Thursday our time and the question of whether or not more milky wilkies (quantitative easing) will be forthcoming will be important for markets. Let’s take a look.
All of Friday’s US data undershot. First. the Empire State Manufacturing Index missed big, printing 2.3 versus expectations of 12.5:
It’s not as low as the last two year’s swoons, which triggered QE2 and Operation Twist but it’s getting there pretty fast. Next up was industrial production which shrank 0.1% versus expectations of .1%:
Still a better result than 2011 but looking to have rolled over from last year’s up trend.
Next was the SIC’s Manufacturing Production for May looked quite sick at -0.4% versus survey of 0.1%, with a nasty trend developing:
Then the University of Michigan consumer confidence survey missed at 74.1 versus 77.5 expected:
As you can see, this brought to an end the recent good run for consumer confidence. Consumers clearly have been enjoying some relief, and the indexes lower frame may actually be permanent given the structural shift in US economic growth drivers, as it is here. So I’d give this one to the bulls for now.
So, in sum, pretty mangy data. Not yet panic stations but I wouldn’t want to add any kind of tightening to an already weak economy. My base case for the Fed meeting, then, would be a signal for the continuation of Operation Twist unless something horrible happens in Europe in the mean time.
