Summary

The Fed Steps Up The Federal Reserve has a rate meeting this week, with almost universal agreement on Wall Street that no change in rates will result. Still, investors and traders, as usual, will listen carefully to Fed Chairman Jerome Powell when he speaks at the follow-on press conference. The meeting follows a mild CPI report and labor numbers that show a jobs market that is holding steady despite the great shift in U.S. macroeconomic policy. Turning to stocks, escalating tension in the Middle East rattled the markets on Friday. For the week, the Dow Jones Industrial Average lost 1.3%, the S&P 500 dropped 0.4%, and the Nasdaq fell 0. 3%. So far this year, the indices have been flipping back and forth over the flat line. Currently, the Dow is off 1%, the S&P has gained 2%, and the Nasdaq is higher by 0.5%. On the economic calendar, Retail Sales, Industrial Production, and Capacity Utilization are reported on Tuesday; Housing Starts on Wednesday; and Leading Economic Indicators on Friday. The Economic Call of the Week from Argus' Chief Economist Chris Graja, CFA, suggests that investors look at three numbers that are not headliners but have important implications for the economy over the rest of the summer. Here is his list. 'First, within the report on retail sales for May, we expect sales at nonstore retailers, a category that is dominated by e-commerce, to rise by more than headline retail sales, which we expect to be up 4.4% year over year. E-commerce is big (17% of retail and food services) and has been a stalwart. It may also offer a glimpse at spending by wealthier customers who have been driving the economy. The category was up 5.9% over the last three reports. Second, we look for sales at food services and drinking places (restaurants) to come in a little better than our overall retail sales forecast. It is an important number because it should shed light on one of the more-sensitive components within the important services category (which represents 47% of GDP). Food services and accommodations was the only services component that declined in the 1Q GDP report. Third, we are a little more cautious about traffic of prospective home buyers at new home communities, which appears within The National Association of Home Builders/Wells Fargo Housing Market Index. We look at traffic as an indicator of buyer optimism and a leading indicator of new home sales. The traffic index declined to 23 in