February 22, 2002
A W E E K LY F I N A N C I A L D I G E S T
Economy Gathering Speed,
Markets Gathering Dust
Canadian Retail Sales Surge in Q4;
GDP Likely Rose
Leading Indicators Point North
Low Expectations for Japan’s Coming
Anti-Deflation Measures
Sags
Dr. Sherry Cooper
3
WEEKLY HIGHLIGHTS
4
RETURNING TO EQUITY RETURNS
7
KEY FOR NEXT WEEK
CHIEF ECONOMIST
Douglas Porter
Dr. Russell Sheldon
INSIDE
SENIOR ECONOMISTS
David Watt
FINANCIAL ECONOMIST
Jennifer Lee
ECONOMIST
Marco Fedele
Ryan McGaw
ECONOMIC ANALYSTS
www.bmonesbittburns.com/economics
1-800-613-0205
A
WEEKLY ECONOMIC NEWS
GOOD NEWS
Retail Sales +1.6% (Dec.)—
and ex. autos +0.8%
BAD NEWS
Manufacturing Shipments -1.8% (Dec.)
CANADA
Trade Surplus widened to $4.5 bln (Dec.)
Manufacturing New Orders -2.5% (Dec.)
B.C. deficit projected to widen to $4.4 bln
(FY03)
Wholesale Trade +0.3% (Dec.)
EconoPulse +1.9% (Jan.)
Leading Indicator +0.9% (Jan.)
Housing Starts +6.3% to 1.68 mln a.r. (Jan.)
Building Permits +3.1% to 1.71 mln a.r. (Jan.)
Initial Claims +10,000 to 383,000 (Feb. 16 wk)
USA
Consumer Prices +0.2% (Jan.) taking y/y rate to
just 1.1%
Redbook +0.8% (Feb. 16 wk)
Trade Deficit narrowed to $25.3 bln (Dec.)
Leading Indicator +0.6% (Jan.)
Philly Fed Index +1.3 pts to 16.0 (Feb.)
Retail Sales +2.0% y/y (Dec.)
Jobless Rate +0.5 ppt to 3.0% (Jan.)
MEXICO
Wholesale Sales -8.8% y/y (Dec.)
Tokyo Dept Store Sales -1.4% y/y (Dec.)
JAPAN
Euroland—Industrial Production +0.8% (Dec.)
Euroland—Trade Surplus widened to €8.7 bln
(Dec.)
Germany—Wholesale Prices +1.2% (Jan.)
EUROLAND
France—Real GDP -0.1% q/q (Q4 P)
Italy—Consumer Confidence +4 pts to
127.3 (Feb.)
France—Consumer Spending -0.4% (Jan.)
Italy—Industrial Orders -8.6% y/y (Dec.)
Public Sector Budget Surplus £12.2 bln (Jan.)
Retail Sales -0.3% (Jan.)
U.K.
Wage Costs slowed to +0.7% q/q (Q4)
Germany—Construction Orders -9.8% (Dec.)
Trade Deficit widened to £3.1 bln (Dec.)
AUSTRALIA
Indications of stronger growth and a move toward price stability are good news for the economy
February 22, 2002
PAGE 2 of 10
A
WEEKLY HIGHLIGHTS
Dousing the Recession Flame
Evidence continues to build that North American
activity is on the mend, and economists are busily
revising their forecasts for first-quarter growth higher.
A resilient consumer, a red-hot housing sector, a
steep yield curve, lower energy costs, and modest
fiscal stimulus have all played a role in righting the
economic ship. However, equity markets remain on
stormy seas, with questions over the quality of earnings spreading further afield, and concerns over a
possible credit crunch casting another dark cloud.
All major stock markets retreated again this week,
with particular weakness in the beleaguered tech
and telecom sectors. The Nasdaq fell nearly 5% on
the week to its lowest level since Halloween.
The renewed weakness in stocks threatens to undermine the budding revival in U.S. consumer confidence. It may also lend credence to the view that
output growth will fade after a first-quarter pop, as
consumer spending loses steam and capital spending fails to offer support. Still, most economic indicators are now on the way higher, with next week likely
to see an upward revision to Q4 GDP from the initial
+0.2% estimate and Q1 growth projected to be close
to 3%. The housing sector remains on the boil, as
starts jumped 6.3% in January, with a helping hand
from warm weather. Early reports from February
suggest that chain store sales remain healthy, jobless
claims are still trending lower, and even manufacturing is recovering (according to the Philly Fed). The
index of leading indicators is pointing to sustained
healthy growth, posting a string of strong gains over
the past three months.
Canadian results are similarly painting a brightening picture. While not quite as real-time as the U.S.
data, retail sales in Canada absolutely knocked the
doors down in December, and soared at an astonishing 29.5% annual rate over the last three months
of the year in volume terms. The merchandise
trade picture also remained surprisingly healthy
in Q4, despite soft U.S. demand and weaker commodity prices. The strong retail and trade results
helped wash away a disappointing drop in manufacturing shipments and orders at the end of last
year. Canada’s leading indicators have also taken a
February 22, 2002
10:30 a.m.
sudden turn for the good, with the 0.9% January
jump a typical end-of-recession signal.
While the economy is in the process of turning
around, the rebound will not come quick enough to
readily repair North American budget balances.
Even without any new stimulus measures, the CBO
now expects Washington to post a deficit of US$21
billion in the current fiscal year. In the first four
months of the year, finances were already running
about $70 billion behind last year, which saw a fullyear surplus of $127 billion. Ottawa now appears
headed for a small surplus on the order of about $5
billion in the fiscal year that ends in March, but it
will be very close to balance in FY02/03. The provinces are almost certain to move even more deeply
into deficit in the coming fiscal year. British Columbia kicked off this year’s budget season with deep
spending cuts and a sales tax hike, aimed at reeling
in a projected $4.4 billion shortfall.
Despite the deteriorating fiscal landscape and prospects of economic recovery, bond yields are drifting
lower owing to lacklustre equity markets and receding inflation. Headline U.S. consumer price inflation slipped to just 1.1% in January, matching the
slowest pace since 1965. Another source of support
for Treasuries is the potential for even deeper problems in Japan. While the Nikkei rebounded 3.1%
this week and the government plans to unveil measures to combat deflation next Wednesday, the latest
1% drop in the yen to almost ¥134/US$ is a more
telling indicator of Japan’s prospects.
Leading Indicators—A Double Jump
(3-mnth % chng)
United States
Canada
3
3
2
2
1
1
0
0
-1
-1
00
01
02
00
01
02
PAGE 3 of 10
A
SPECIAL FEATURE
Returning to Equity Returns
Douglas Porter, David Watt
“I would expect now to see long-run returns (in
stocks) in the neighbourhood of 7% after costs.
Not bad at all—that is, unless you’re still deriving
your expectations from the 1990s.” Warren
Buffett, December 2001.
Chart 1
It has almost become conventional wisdom
that future equity market returns will not replicate the performance of recent decades. While
this may be true in nominal terms, the long-run
historical record holds important lessons for
expected real returns in Canada. There has
been nothing particularly extraordinary about
Canadian stock market returns in recent decades—indeed, total returns on the TSE have
barely topped bond market returns over the
past 30 years, with much greater volatility
(Chart 1). While the TSE did have strong returns from 1995 to 2000, bonds dominated the
early 1990s as yields fell sharply, and the
economy struggled to recover from a deep and
prolonged recession.
2,000
An Historical Look at Canadian Returns
(1972 = 100)
3,000
Avg Annual %
Returns
TSE
10.3*
Bonds 10.1
Bills
8.5
Inflation 5.2
2,500
1,500
TSE 300
Bonds
1,000
500
0
72
78
84
90
Dividend growth will be constrained by the
outlook for corporate profits. While corporate
profits have dropped sharply in the past year,
they have just receded to around their long-run
average as a share of GDP (Chart 3). Thus, profits
across the entire economy are not particularly
depressed on an historical basis and are not
spring-loaded for a major snapback in the years
February 22, 2002
02
* Based on geometric mean. The arithmetic mean return was 12.2%.
Chart 2
Yields Trending Lower
(percent)
10
TSE 300 Real
Earnings Yield*
8
Real Return Long-term
Bond Yield
6
Between January 1972 and January 2002, an
investment of $100 in stocks would have returned an average of 10.3%, compared to 10.1%
in bonds, or about 5% in real terms. To build an
estimate of future long-term returns three things
are needed: a risk free rate, the growth rate of
earnings/dividends, and the dividend yield. Two
of these are already in place. The risk-free rate of
return can be derived from real return GoC
bonds, which are currently yielding 3¾%. The
dividend yield for the TSE 300 has risen recently, but remains quite low by historical standards at just under 1¾% (Chart 2).
96
4
2
TSE 300 Dividend Yield
0
92
94
96
98
00
02
* Projected earnings—one year ahead
Chart 3
Canadian Profits in Line with Historical Norm
(Pre-tax profits as a share of nominal GDP)
16
14
Average since
1970 = 9.9%
12
10
8
6
4
70
74
78
82
86
90
94
98
02
Shaded areas indicate periods of Canadian recession.
PAGE 4 of 10
A
SPECIAL FEATURE
ahead. By the same token, dividends are also
unlikely to grow much more strongly than the
economy as a whole in the medium term.
In a similar vein, despite the plus-30% drop in
prices from the September 2000 peak, most
standard measures do not suggest that the TSE
300 is currently undervalued. Price-to-earnings and price-to-book value are both at the
upper end of their long-term trends, while the
dividend yield is at the low end. And, applying
the so-called Fed model (which compares 10year bond yields to the projected earnings yield),
suggests that the TSE is currently slightly overvalued (Chart 4). Finally, the TSE 300 is currently a bit below its 200-day moving average.
Starting with the assumption that equity prices
and profits are not particularly depressed or
inflated, assessing the medium-term outlook
for equity returns can be based on standard
considerations. One approach is to add an
equity risk premium to expected bond returns.
Since 1972, the backward-looking equity risk
premium in Canada was near zero, as bond
returns almost equalled total stock returns.
However, this dismal performance was partly a
function of extraordinarily high real interest
rates over much of the period.
The equity risk premium equals dividend
growth less the risk-free rate of return plus the
dividend yield. Under various scenarios and
assuming that future dividend growth will be
roughly in line with real earnings growth and
our projection for long-term GDP growth of
about 3%, a reasonable range for the future
equity risk premium would be between 1¼%to-1¾%. Tacking this on to the real return
bond yield of 3¾% yields a projected inflation-adjusted return on equities of between
5% and 5½%.
Contrary to being wildly below the long-term
average return for Canadian equities, this projected real return happens to be very close to the
average over the past 30 or 40 years (Chart 5).
Real returns did trend higher over much of the
February 22, 2002
1990s, a fact that may have been obscured by the
much lower average inflation in the decade.
Even after the wild ride on equity markets over
the past few years, it is therefore likely that real
equity returns over the medium term will closely
resemble their historical norm.
For investors, the only major shift required in
the years ahead is adjusting to the reality of
sustained 2% inflation, and not an adjustment
to expected real equity returns in Canada. As a
result, we are left with the unglamorous, but not
disheartening conclusion that in the future,
equities are likely to return between 7% and 8%.
This coincidentally matches Mr. Buffett’s projections for U.S. stock returns over the next
decade—and who would argue with him?
Chart 4
Stocks Still Not Cheap
(percent : as of February 21, 2002)
TSE 300 Valuation Model
60
Overvalued
40
20
13.7%
0
-20
Undervalued
90
92
94
96
98
00
02
10-yr Bond Yield ÷ Equity Index Projected Earnings Yield -1
Shaded areas indicate periods of Canadian recession.
Chart 5
Real Stock Returns—Close to Average
TSE 300 (annualized total real returns, 5-yr avg : percent)
25
20
Average since
1965 = 5.6%
15
10
5
0
-5
-10
65
70
75
80
85
90
95
00
PAGE 5 of 10
A
ECONOMIC & FINANCIAL MARKET OUTLOOK
2001
I
2002
II
III
IV
I
II
Annual
III
IV
2000
2001
2002
CANADA
Real GDP (q/q % chng : ar)
1.7
0.6
-0.8
Consumer Price Index (y/y % chng)
2.8
3.6
2.7
1.0 “
1.8 “
2.6 “
2.2 “
3.0 “
4.4
1.5 “
1.5 “
1.1
1.1
0.4
0.8
1.8
2.7
2.5
1.0
Unemployment Rate (%)
6.9
7.0
7.2
7.7
8.1
8.4
8.2
8.1
6.8
7.2
8.2
Housing Starts (000s : ar)
161
165
156
172
171
155
158
157
153
163
160
Current Account Balance ($blns : ar)
54.5
36.0
22.1
22.5 “
11.7 “
10.2 “
12.0 “
14.1 “
26.9
33.8 “
12.0 “
BoC Bank Rate
5.66
4.87
4.37
2.92
2.29
2.25
2.25
2.50 “
5.73
4.46
2.32
3-month Treasury Bill
4.98
4.37
3.80
2.31
1.93
2.00
2.05
2.15
5.44
3.87
2.03
10-year Bond
5.38
5.70
5.55
5.28
5.35
5.30
5.40
5.45
5.94
5.48
5.38
90-day
4
63
51
37
27
30
25
25
-55
39
27
10-year
33
43
57
51
35
40
35
30
-9
46
35
Real GDP (q/q % chng : ar)
1.3
0.3
-1.3
0.2
3.0 “
2.5 ”
1.5 “
2.9 ”
4.1
1.1
1.5 “
Consumer Price Index (y/y % chng)
3.4
3.4
2.7
1.9
1.3 “
1.1 “
1.4 “
1.9 “
3.4
2.8
1.4 “
Unemployment Rate (%)
4.2
4.5
4.8
5.6
5.8 ”
6.2 ”
6.2 ”
5.9 ”
4.0
4.8
Housing Starts (mlns : ar)
1.63
1.62
1.60
1.57
1.57 “
1.54
1.57
1.55
1.57
1.61
Current Account Balance ($blns : ar)
-447
-430
-380
-407 “
-422
-418
-427
-433
-445
-416 “ -425
Interest Rates
(average for the quarter : %)
Canada/U.S. Interest Rate Spreads
(average for the quarter : bps)
UNITED STATES
6.0 ”
1.56
Interest Rates
(average for the quarter : %)
Fed Funds Target Rate
5.60
4.33
3.55
2.08
1.75
1.75
1.75
2.00 “
6.24
3.89
1.81
3-month Treasury Bill
4.94
3.74
3.29
1.94
1.66
1.70
1.80
1.90
5.99
3.48
1.77
10-year Note
5.05
5.27
4.98
4.77
5.00
4.90
5.05
5.15
6.03
5.02
5.02
Exchange Rates
(average for the quarter)
US¢/C$
65.5
64.9
64.7
63.3
62.6
62.4
63.3
64.4
67.4
64.6
63.2
C$/US$
1.527
1.540
1.545
1.581
1.597
1.602
1.580
1.552
1.485
1.548
1.583
118
123
121
124
134
136
133
132
108
121
134
¥/US$
US$/Euro
0.92
0.87
0.89
0.90
0.88
0.90
0.91
0.89
0.92
0.90
0.90
US$/£
1.46
1.42
1.44
1.44
1.43
1.43
1.45
1.42
1.52
1.44
1.43
Note: Blocked areas represent BMO Nesbitt Burns forecasts
Up and down arrows indicate changes to the forecast “”
February 22, 2002
PAGE 6 of 10
KEY FOR NEXT WEEK
CANADA
UNITED STATES
Real GDP—Q4
A big rebound in consumer spending and a blazing
housing market are likely to produce a small increase in Canadian GDP in Q4. Following the first
quarterly decline in nine years in Q3 (down 0.8%),
it now appears that GDP rose at around a 1% annual
rate in Q4. Growth for all of 2001 is expected to have
slipped to just 1.5% from 4.4% in the prior year.
Acting as a restraint on growth, business investment probably fell sharply and inventories likely
plummeted, as firms cut stockpiles aggressively.
The combination of robust final sales growth and a
deep drop in inventories sets the stage for a broader
recovery in 2002. However, it is unlikely that consumer spending can maintain the blistering pace of
Q4, especially with employment trends cooling and
auto incentives now less generous.
The GDP deflator is expected to retreat for the
third quarter in a row, although not as deeply as
the Q3 decline of 4.8% annualized. Lower energy
prices are projected to pull the deflator down at
an annualized 3.2% rate in Q4. However, final
domestic demand prices are expected to continue
edging higher.
Current Account Surplus—Q4
A surprise widening of Canada’s trade surplus in
the fourth quarter points to a slight increase in the
current account surplus for Q4. While tourism
inflows were hit hard in the wake of Sept. 11, net
interest payments are also dropping sharply as
interest rates tumble. On the merchandise front,
imports fell even more steeply than exports, bumping up the surplus to an annualized $50.5 billion in
the quarter. We look for the current account surplus to edge up to a $22.5 billion annual pace in
Q4, bringing the full-year surplus to a record of
around $33 billion.
Our
Forecast
Real GDP (a.r.)
+1.0%
GDP Deflator (a.r.)
-3.2%
Current Account Surplus (a.r.) $22.5 bln
Consensus
Call
Q3
+0.8%
-1.0%
$23.2 bln
-0.8%
-4.8%
$22.1 bln
February 22, 2002
A
Fed Chairman Greenspan is back before Congress
this week. The testimony should continue to walk
the fine line Greenspan has maintained since he
“corrected” the market’s initial negative interpretation of his view a few weeks ago. He is likely to
stress a recovery has taken firm root, but that
financial problems and lagging capital spending
will keep the pickup from overheating anytime
soon. The message will be the economy is doing
okay, but is not out of the woods, leaving markets
to stew over how long it will be before they tighten
policy. (Quite a while, in our view.)
As far as economic data go, the week is likely to
focus upon the mystery of the misplaced recession.
GDP might be massively restated higher in Q4, with
growth possibly topping the 1% mark. The trajectory into Q1 makes 3% growth possible this quarter.
This will leave the folks at the National Bureau of
Economic Research, who rushed into a recession
call, in a quandary. If the slowdown was a recession,
it was certainly the mildest on record.
ISM Index—February
The other highlight of the week could be the healing
of the manufacturing sector. ISM (NAPM) seems
likely to toy with the breakeven 50 mark. And,
especially if Boeing’s big Irish order shows up in
this month’s statistics, we may get a sizable rise in
durable goods bookings to boot. All told, we are
happy we were calling for lower bond yields early
this year but have to confess that we were right for
the wrong reasons. The economy is looking better.
Our
Forecast
Consensus
Call
January
50.5
45.0
51.0
41.5
49.9
43.9
ISM Index
Prices-Paid
JAPAN
The government will unveil its plans to combat 2½
years of deflation on Wednesday. The plan will
focus on boosting equity values, disposing of bad
loans on the banks’ balance sheets and tax reform.
Given the history of the government’s actions, we
do not expect any radical changes.
PAGE 7 of 10
A
FINANCIAL MARKETS UPDATE
Change from: (basis points)
4 weeks ago
Dec. 31/01
Feb. 22 *
Feb. 15
Week Ago
2.00
2.25
3.75
2.00
2.25
3.75
0
0
0
0
0
0
-25
-25
-25
1.77
1.25
4.75
1.81
1.25
4.75
-4
0
0
-3
0
0
25
0
0
2.03
1.75
0.00
3.36
4.05
2.03
1.73
0.00
3.35
4.05
0
2
0
0
0
6
5
0
-2
3
11
3
-1
6
-4
5.28
4.84
1.53
4.93
4.94
5.30
4.87
1.50
4.92
4.92
-2
-4
3
0
2
-19
-24
6
-5
-7
(% change)
-7
-22
16
-7
-12
62.82
1.592
133.78
0.88
1.43
51.37
62.90
1.590
132.56
0.87
1.43
51.75
-0.1
—
0.9
0.2
-0.1
-0.8
1.2
—
-0.4
1.1
1.5
-0.6
0.0
—
1.6
-1.5
-1.7
0.9
191.64
20.77
293.35
191.58
21.50
300.40
0.0
-3.4
-2.3
0.9
5.3
5.1
0.5
4.7
6.1
7423
1082
1718
423
10357
4763
5035
4244
30061
7515
1104
1805
428
10048
4863
5183
4377
30709
-1.2
-2.0
-4.8
-1.1
3.1
-2.0
-2.8
-3.0
-2.1
-3.1
-4.5
-11.3
-4.0
2.1
-7.6
-3.0
-5.4
-6.2
-3.4
-5.7
-11.9
-4.5
-1.8
-7.7
-3.5
-8.2
-6.8
Canadian Money Market
Call Money
Bank Rate
Prime Rate
U.S. Money Market
Fed Funds (effective)
Discount Rate
Prime Rate
3-Month Rates
Canada
United States
Japan
Germany
United Kingdom
Bond Markets
10-year Bond
Canada
United States
Japan
Germany
United Kingdom
Currencies
US¢/C$
C$/US$
¥/US$
US$/Euro
US$/£
US¢/A$
Commodities
CRB Futures Index
Oil (latest contract)
Gold
Equities
TSE 300
S&P 500
Nasdaq
S&P/TSE 60
Nikkei
Frankfurt DAX
London FT100
France CAC40
Italy Milan MIB30
* as of 10:20 a.m.
February 22, 2002
PAGE 8 of 10
ECONOMIC AND FINANCIAL RELEASES
JAPAN
MONDAY FEBRUARY 25
FEBRUARY 25 – MARCH 1
TUESDAY FEBRUARY 26
Merchandise Trade Balance
Jan. 02 (e) +¥500 bln
Jan. 01
-¥96 bln
A
WEDNESDAY FEBRUARY 27
THURSDAY FEBRUARY 28
FRIDAY MARCH 1
Large Scale Retail Sales
Jan. (e) -2.9% y/y
Dec.
-2.5% y/y
Industrial Production
Jan. P (e) +1.0%
Dec.
+1.5%
Unemployment Rate
Jan. (e) 5.7%
Dec.
5.6%
Housing Starts
Jan. (e) -4.8% y/y
Dec.
-12.9% y/y
Consumer Price Index
Jan. (e) unch
-1.5% y/y
Dec.
-0.1%
-1.2% y/y
EUROLAND
BoJ Policy Board Meeting
GERMANY
Consumer Price Index*
Feb (e)
+0.5%
+2.0% y/y
Jan.
+0.9%
+2.1% y/y
GERMANY
Ifo Industry Survey
Feb. (e) 86.6
Jan.
86.3
GERMANY
Real GDP
Q4 (e)
-0.3% q/q
Q3
-0.1% q/q
FRANCE
Unemployment Rate
Jan. (e) 9.1%
Dec.
9.0%
EUROLAND
Purchasing Managers’ Index
Feb. (e) 47.0
Jan.
46.2
Producer Price Index*
Jan. (e) +0.2%
-0.5% y/y
Dec.
-0.3%
+0.1% y/y
FRANCE
Consumer Price Index
Jan. (e) +0.2%
+1.9% y/y
Dec.
+0.1%
+1.4% y/y
EUROLAND
M3 Money Supply (Smoothed)
Jan. (e) +8.0% y/y
Dec.
+7.8% y/y
ITALY
Producer Price Index
Jan. (e) +0.1%
Dec.
-0.1%
Retail Sales
Dec. (e) -0.5%
Nov.
+1.2%
FRANCE
Producer Price Index
Jan. (e) +0.2%
Dec.
-0.3%
EUROLAND
Consumer Price Index
Feb. P (e) +0.2%
+2.2% y/y
Jan. F (e) +0.3%
+2.5% y/y
Dec.
+0.2%
+2.1% y/y
-0.2% y/y
+0.3% y/y
-1.1% y/y
-1.6% y/y
OTHER
U.K.
ITALY
Retail Sales
Dec. (e) +1.8% y/y
Nov.
+1.5% y/y
Real GDP
Q4 R (e) +0.2% q/q +1.9% y/y
Q3
+0.5% q/q +2.2% y/y
MEXICO
Merchandise Trade Deficit
Jan. R (e) $1.3 bln
Dec.
$1.7 bln
-1.2% y/y
-1.3% y/y
GERMANY
Real Wholesale Sales
Jan.
Dec.
-1.6%
-10.2% y/y
+1.1% y/y
+1.3% y/y
ITALY
Real GDP
Q4 (e)
-0.1% q/q +0.9% y/y
Q3
+0.2% q/q +1.9% y/y
Consumer Price Index
Feb. P (e) +0.4%
+2.5% y/y
Jan.
+0.5%
+2.4% y/y
Purchasing Managers’ Index
Feb. (e) 47.1
Jan.
46.4
AUSTRALIA
Goods & Services Trade Deficit
Jan. (e) A$250 mln
Dec.
A$358 mln
* date approximate
ECONOMIC AND FINANCIAL RELEASES
Bold = BMO Nesbitt Burns Forecast
Italics = Consensus
* date and time approximate
MONDAY FEBRUARY 25
TUESDAY FEBRUARY 26
WEDNESDAY FEBRUARY 27
THURSDAY FEBRUARY 28
8:30 am
8:30 am
8:30 am
8:30 am
Dec. (e)
Nov.
International Securities
Transactions
+$3.0 bln
+$6.8 bln
Jan. (e)
Dec.
Department Store
Sales*
+0.5%
+2.4%
Dec. (e)
Nov.
CANADA
8:30 am
Jan. (e)
Cons.
Dec.
8:30 am
10:00 am Existing Home Sales
Jan. (e) 5.00 mln a.r.
Dec.
5.19 mln a.r.
UNITED STATES
3 & 6-month T-bill
auction $30.0 bln
(New cash $1.0 bln)
Raw
Materials
Prices
+1.5%
+0.1%
-1.4%
Capital Spending
Intentions
8:30 pm
Q4 (e)
Q3
Corporate Profits
-10.0% q/q
-14.4% q/q
8:55 am
Feb. 23
Feb. 16
Jan. (e)
Cons.
Dec.
+0.8%
Industrial
Product
Prices
+0.3%
+0.2%
-0.8%
+6.3%
8:30 am
Redbook
Average Weekly
Earnings
+2.0% y/y
+1.9% y/y
02
01
12:45 pm 3, 6 & 12-month
T-bill auction $8.0 bln
(New cash $0.2 bln)
10:00 am Conference Board
Consumer Confidence
Index
Feb. (e) 96.0
Cons.
96.5
Jan.
97.3
1:00 pm
A
FEBRUARY 25 – MARCH 1
Durable
Goods
Orders
+1.8%
+1.4%
+2.0%
Ex.
Transport
+0.4%
+0.9%
+1.4%
10:00 am New Home Sales
Jan. (e) 930,000 a.r.
Dec.
946,000 a.r.
10:00 am Fed Chairman Alan
Greenspan testifies
on Monetary Policy
and the Economy to
the House Financial
Services Committee
1:00 pm
2-year note
auction $25.0 bln
(New cash $0.7 bln)
Q4 (e)
Cons.
Q3
Real
GDP **
+1.0%
+0.8%
-0.8%
FRIDAY MARCH 1
Chain
Prices **
-3.2%
-1.0%
-4.8%
** chain-weighted basis
8:30 am
Q4 (e)
Cons.
Q3
Current Account Surplus
$22.5 bln a.r.
$23.2 bln a.r.
$22.1 bln a.r.
8:30 am
Real GDP at Basic
Prices
+0.1%
+0.3%
+0.2%
Dec. (e)
Cons.
Nov.
2-year note auction announcement
8:30 am
Q4 P(e)
Cons.
Q3
Q2
Real
GDP
+1.5% a.r.
+0.4% a.r.
+0.2% a.r.
-1.3% a.r.
GDP
Deflator
-0.3% a.r.
-0.3% a.r.
-0.3% a.r.
+2.3% a.r.
8:30 am
Jan. (e)
Cons.
Dec.
Personal
Income
+0.1%
+0.1%
+0.4%
Personal
Spending
+0.3%
+0.3%
-0.2%
8:30 am
Jan. (e)
Dec.
PCE Deflator
+0.1%
-0.2%
9:45 am
University of Michigan
Consumer Sentiment
Index
Feb. F (e) 91.0
Cons.
91.4
Feb. P
90.9
Jan.
93.0
8:30 am Initial Claims
Feb. 23 (e) 385,000 (+2,000)
Feb. 16
383,000 (+10,000)
10:00 am Construction Spending
Jan.
+0.2%
Dec.
+0.2%
10:00 am Chicago PMI
Feb. (e) 47.0
Jan.
45.1
10:00 am
Feb. (e)
Cons.
Jan.
ISM
50.5
51.0
49.9
Prices-Paid
45.0
41.5
43.9
Feb.
Jan.
Auto
Sales
5.4 mln a.r.
5.3 mln a.r.
Truck
Sales
6.9 mln a.r.
7.0 mln a.r.
10:00 am Help-Wanted Index
Jan. (e) 45
Dec.
46
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