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In late August every year, the Federal Reserve Bank of Kansas City holds a national and international central bank gathering in Jackson Hole, Wyoming.
The KC Fed has been holding this summer meeting since 1978, while the conference moved permanently to Jackson Hole in 1982. Relocating this summer confab started as a way to get then Fed Chairman Paul Volcker — a big fly fishing enthusiast — to come to this then-remote monetary affairs conference and speak. The idea proved to be a popular one. The standing of this conference has grown and grown since.
Check out a Bloomberg-produced video for a look behind the scenes.
FYI. The Jackson Hole resort remains open to the public throughout this meeting. There is also a PDF online the KC Fed wrote titled “In Late August”…
Held from Thursday, August 25th to the 27th, the 2016 Jackson Hole conference features in-depth research by monetary practitioners and gives up TV interviews with these movers and shakers — all coming from that stunning locale as a backdrop.
The topic this year is — “Designing Resilient Monetary Policy Frameworks for the Future.” The organizers don’t post the contents of the meeting until August 25th.
Resilient monetary policy frameworks, huh? That drums up a range of ideas.
Monetary policy – many already at zero or negative rates — must still be well-positioned to deal with any number of crazy macro scenes in the coming years. Those scenarios could be: a sudden inflation ramp up from all the cheap QE money, a big stock market crash, a big global recession, or a new debt crisis. Et cetera. Let your imagination run wild.
Vice Chairman Stanley Fischer spoke to the Aspen Institute on Sunday, August 21st. That Colorado alpine locale is another terrific spot to fly fish and enjoy the late summer in the Rockies. He shared with us the U.S. central bank is already close to meeting its main stabilization goals. U.S. inflation is near its 2% annual target. The U.S. unemployment rate is at 4.9%, near a level called frictional or ‘natural.’ That sounds rosy.
However, don’t be lulled to sleep. This KC meeting is looking well beyond a 25 or 50 basis point U.S. rate hike that Stan is alluding to.
This KC meeting is on more significant unintended consequences down the road. Central bankers are a conservative bunch. They are getting prepared to deal with any number or combination of financial shocks and political events.
That makes sense to me, and it should make sense to you.
Zacks #1 Rank stocks to look into—
Nvidia NVDA is a large $32 billion market cap semiconductor company with a Zacks VGM score of B. However, at $62 a share, the stock is not cheap. The Forward P/E is 34 and the PEG ratio is a high 3.3. The semiconductor industry remains hot at 20 out of 265 in the Zacks industry ranks.
Arcelor-Mittal MT is a large $19 billion market cap steel producer with a Zack VGM score of A. The steel industry remains hot at 61 out of 265 in the Zacks industry ranks. At $6.36, the current share price is low.
Toray TRYIY is a large $16 billion textile products maker headquartered in Japan. This industrial products company specializes in using nanotechnology in organic synthetic chemistry, polymer chemistry, and biochemistry. It is a leader in carbon fiber.
With a Zacks VGM score of B, and rising earnings estimates, Toray stock has been on a tear. I would wait until it pulls back to buy. The forward P/E is a little high at 19.53 now, for this type of industrial company.
Here are the key Global/Macro data this week—
On Monday, a big meeting on a tiny island near Naples, Italy among major European powers about Brexit opens the global week ahead. This tiny island was where a key writer on early European federal ideas was held in a prison, at one point.
The start of Brazil PM Rousseff’s impeachment trial starts on Thursday.
German IFO indexes are out on Thursday too.
There are final GDP growth rates to inspect from Mexico, Germany, France, and the U.K. None looks too out of line with the earlier estimates.
On Monday, Merkel, Hollande, Renzi and Tusk meet on Brexit in Italy.
Taiwan’s unemployment rate is 3.96%
Mexico’s GDP growth (not seasonally adjusted and revised) looks to be +2.3% y/y, with nominal GDP up +5.2% y/y. The more important proxy GDP for Mexico in the latest quarter looks to be +1.8% y/y.
On Tuesday, the unemployment rate in Finland looks to be 9.3%.
The U.K.’s CBI industrial trend looks to be down -2%, which is better than the prior -4.0%.
The Central Bank of Turkey should leave its borrowing rate at 7.5%, but may cut its lending rate 25 bps to 8.5% from 8.75%.
Brazil’s business confidence could hit 90 from a prior 86.9. Capacity utilization could be 74.5, up from 74.3. Those are both improvements where they are needed.
Mexico’s retail sales should be up +5% y/y, which is down from the prior +8.6% y/y rate.
The US flash manufacturing PMI should be 59.9.
The unemployment rate in Argentina is 6.5%.
On Wednesday, the German final GDP growth rate should be +1.8% y/y.
The preliminary manufacturing PMI for Germany looks to be 53.8 with German services PMI at 54.4.
The Eurozone composite PMI should be 53.3, in line with the prior 53.2.
On Thursday, the start of Brazil’s Rousseff impeachment trial begins. Clearly, they waited for that to start after the Olympics.
Sweden’s unemployment rate should be 7.6%.
Spain’s final GDP growth rate should be +3.2% y/y.
The key IFO Germany indices come out. Business confidence looks to be 108 from a 108.3 prior. Current conditions looks to be 114.3 from 114.7. Expectation looks to be 101.7 from 102.2.
US durable goods order should bounce back to +4.5% m/m from a -3.9% m/m reading last month. Ex-transport, the durable goods data look for +0.5% after a -0.4% m/m prior.
On Friday, France’s GDP growth rate should be +1.4% y/y. The INSEE consumer confidence index for France should be 96.
For the U.K., the 2nd estimate for GDP growth should be +2.2% y/y.
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