This week will widely be seen on Wall Street as the week before most important Fed meeting in years. The action in the financial markets this week will be driven primarily by how market participants believe the Fed will move next week. Though the actual FOMC statement doesn't come until the 18th, there are plenty of things to watch this week that could help either influence the FOMC or help us read into the thoughts of FOMC board members.
On Monday we have four different Fed officials speaking at various events across the country. There is absolutely no doubt that these speeches will be listened to very closely by traders. Everyone involved with the financial markets will be looking for any potential hints as to which way the FOMC is leaning. Tuesday brings the U.S. trade deficit numbers, which will certainly be watched by investors. Just as it was last week, Friday will once again be the major day of economic data. On Friday, both the retail sales and preliminary consumer sentiment numbers are due on. The market is looking for retail sales ex-autos to move up by 0.2%, after July's increase of 0.3%. The consumer sentiment number is likely the one that could most move the market since it plunged last month, but this month the market is expecting basically no change from August's number.
The earnings front is very light this week, with truly no scheduled earnings announcements from major companies. The thing I think investors should look for this week is whether we see some more high-profile companies come out and reduce their profit outlooks just as Harley-Davidson did last week. The more reductions in profit outlooks we see, the more likely it is that the consumer is beginning to slow down. If the consumer slows down in a considerable way, this market is liable to hit the skids, but if the consumer continues to stay afloat the financial markets could well be in for a nice rebound later in the year.
The FOMC meeting on the 18th is the headliner story of the week, even though it doesn't occur until next week. The Federal Reserve will certainly be watching the aforementioned economic data this week, and individual investors would do well to do the same.
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