Lot's of "super" stuff on the radar screen, starting with yesterday's
Super Bowl. But to be sure, it will not all be super as in good.
* As a growing number of investors have come to learn the hard way in
recent years, intellectual honesty is often in short supply at CNBC and at the
other outlets in the regular propaganda loop. Thus, it will be intriguing to
see today how CNBC and others spin yesterday's victory by the New England
Patriots. Based on the so-called "Super Bowl effect," the PATS' victory is clearly
a bearish outcome. Nevertheless, the folks who would have you invest in
stocks based on football games will find some way that bearish is really bullish.
They always do, don't they?
* Then at 10:30 AM (ET) today, Office of Management and Budget Director
Josh Bolten will hold a press conference to unveil the Administration's FY-2005
budget proposals. Fiscal conservatives should skip breakfast but still have
handy at least two barf bags -- one for the FY-2004 update, one for what is
projected for FY-2005.
The Bush Administration have resorted to a strategy widely used during
the plethora of Clinton scandals a few years back. The Bush folks leaked some
of the more grotesque budget numbers going into the weekend, which is an
attempt to mitigate their full horror when "officially" unveiled today.
Word has it that OMB will project a FY-2004 deficit of around $520
billion. This compares with an original estimate of a "mere" $307 billion when
first proposed last February. And just a few days ago, the Congressional Budget
Office upped its 2004 deficit estimate to $477 billion -- $43 billion less
than the rumored OMB projection. Moreover, CBO estimated a FY-2005 deficit of
$362 billion, which will certainly be far below the figure OMB releases today.
One of the culprits in the higher deficit estimates will be the huge
miss in cost projections for the just-passed Medicare reform legislation. CBO
is carrying a 10-year estimate (through 2013) of $395 billion. The ten-year
figure OMB will release today is said to be around $534 billion.
* Tomorrow, Democrats have their first "Super Tuesday." Seven states
hold either primaries or caucuses. While I do not mean to slight the other five
states, the two I consider most important are the primaries being conducted in
Missouri and South Carolina. Of the seven contests, Missouri has the most
delegates to be won. Meanwhile, South Carolina becomes the first test of who in
the current Democrat field has the most appeal in a southern state.
At present, polls show John Kerry far out in front in Missouri, with
John Edwards having a lead in South Carolina. (While Edwards holds a US Senate
seat in North Carolina, he was born in 1953 in Seneca, SC.)
There are stories floating around that Democrats have been considering
a strategy that would not contest the South very strenuously in November.
However, given the region's large population and total electoral votes, I suspect
such a strategy is not only foolish, it will not be adopted. Which makes
tomorrow's overall outcome potentially more important, since it could represent
the beginning of a serious move to fashion a Kerry/Edwards ticket.
-----------------------------
Tomorrow's Democrat
Political Activity
-----------------------------
Date State Caucus Primary
-----------------------------
02/03 AZ x
02/03 DE x
02/03 MO x
02/03 NM x
02/03 ND x
02/03 OK x
02/03 SC x
-----------------------------
* On Wednesday, the Treasury will announce the terms of its February
refunding operation, with the auctions to be held next week. This refunding is
likely to be sizable by historical standards, because of: (1) burgeoning federal
discretionary spending, and (2) the larger-than-usual amount of tax refunds
for which the Treasury must provide.
Heretofore, Wall Street bulls have portrayed the spike in refunds this
year (attributable to how last year's tax cuts were configured) as a solely
positive event. "Lots of extra money to keep consumers consuming," has been the
battle cry. Unfortunately, this is money the Treasury does not have, but
must now go raise in the open market.
* On Thursday, the Bank of England concludes its two-day February policy
meeting. It is widely expected that the BOE's Monetary Policy Committee will
vote to raise the bank's Repurchase Rate by 25 basis points, from 3.75% to 4%.
The BOE hiked this key rate for the first time in a long time in
November (from 3.5% to 3.75%). At the time, I opined that this was something of a
watershed event, since I saw as part of its design an attempt to rein in the
behavior of the Greenspan Gang here in the United States. In addition, the
Reserve Bank of Australia has raised its key administered rate twice over the last
few months. I believe this influence was at least partially responsible for
the FOMC's decision last week to modify the language it has been using
regarding the possible timing of a rate increase in the US.
* On Friday, the Labor Department will release employment data covering
January. The consensus estimate is for no change in the unemployment rate
(currently at 5.7%), but for a large increase in payroll-employment jobs --
upwards of 170,000. In addition, there will be the usual revisions to prior data.
Based on the experience of recent months, the entire report could prove
tricky, vis a vis expectations. But the revisions in particular could be a
problem this time around.
Last month, Labor reported a mere 1,000 gain in payroll jobs during
December, while revising downward the number of jobs created in November October.
Historically, the Labor Department has not had great success in handling
seasonal hiring in the retail sector. And this problem has been in evidence at
"both ends," so to speak -- getting temporary employees into and out of the
numbers.
The monthly employment data have potential to cause sizable stirs in
the market. Therefore, it is important to go into Friday's release with
awareness of this seasonal problem. |
