The Numbers to Watch Before Giving Thanks

11/22/2013 12:01 am EST

Focus: STRATEGIES

Jim Jubak

Founder and Editor, JubakPicks.com

Two crucial numbers' reports are coming out next week, and MoneyShow's Jim Jubak wants you to be on the look out for them, before the turkey lands on your plate.

For the week ahead, this is the week that includes Thanksgiving, what we have is a kind of frontend loaded bit of economic data, and this is important because what everyone's trying to do, what the market is trying to do right now, is to figure out whether the economy is strong enough for the Fed to start tapering off its purchase of, if it buys about $85 billion worth of treasuries and mortgage-backed assets, they've said when the economy gets strong enough, they'll start to cut that down, so the question is, when will the Fed have enough data to see whether the economy is strong enough and what kind of data do they need?

What numbers do they need to say it's strong enough? So, next week, we've got two things. We've got, on Tuesday, we've got housing numbers, housing starts. Really, really important because one of the ways that the Fed has been trying to stimulate the economy is by keeping interest rates low, not just in the short-term, but through this purchase plan, sort of, in the medium term, so that mortgage rates don't go up high and so the houses are affordable, and housing prices go up, and this is their way to push the economy ahead so we get housing starts.

And the numbers right now that—the consensus is that we're going to see about a rate of 891,000 starts. That would be slightly down from September, when we had 915,000, so if those numbers come in roughly the way the consensus has it, the Fed's going to be looking at this and going, “Well, the economy continues to sort of sluggishly move along and we're probably not seeing enough solid growth to let us taper in December.”

The other number that comes out on Wednesday is initial claims. Its initial claims for unemployment. It has sort of settled in a range of 335,000 new claims a week. That's again, exactly, sort of, the muddling along range for the economy. It's decent, but it's not enough to really push down the unemployment rate, and if we get 335,000, consensus right now is looking for, oh somewhere in that range.

We had 339,000 new claims for the week that ended on November 6, so if we're getting in that range, the likelihood is the Fed is going to say, “Hey, the economy is not strong enough to begin a taper.”

This is what we're trying to get our hands on, a taper that begins in December is probably not priced in. Market right now is saying more like March, and that's sort of where—that's what's in current stock prices in these highs, so if we get a surprise and move in December, that's a negative for stocks and that's what people are really sort of worried about, and what you should look for as you get ready to eat your turkey on Thursday.

This is Jim Jubak for the MoneyShow.com Video Network.

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