The week’s main economic event came and went on Wednesday, but Thursday will feature a rush of retail earnings, the second major piece of the economic puzzle this week.
Results expected Thursday include numbers from Kohl’s (KSS), Gap (GPS), and Nordstrom (JWN). The economic calendar will be a bit lighter, with just the weekly report on initial jobless claims and the FHFA home price index set to cross the tape.
On Wednesday afternoon, the Federal Reserve released the minutes from its latest meeting which, on balance, didn’t do much to change market expectations that the Fed will not be raising interest rates in March.
“The minutes to the January FOMC meeting, in our view, provide little new information relative to what we learned from the FOMC statement and Chair Yellen’s recent testimony before Congress on the economic outlook,” writes Barclays economist Michael Gapen.
“Our main take-away is that the monetary policy outlook is still largely based on pre-election assumptions that have been slow to evolve, given the lack of policy details from the administration.”
The sentence that stuck out to some was the Fed saying, “In discussing the outlook for monetary policy over the period ahead, many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.” (Emphasis added.)
Markets, again, were little-changed following the release. And as Neil Dutta, an economist at Renaissance Macro, said, “We view the FOMC minutes as a neutral event.”
What the Fed won’t say
Ahead of the release of the Fed minutes, markets were wondering, idly, if the Fed would say the word we all can’t stop saying in its release: Trump.
The Fed, which has in recent years and particularly since the election stepped up its emphasis that it is politically independent, certainly knows better than to have the President’s name feature in its publicly-released discussion of monetary policy.
But there is, of course, no way to discuss the future of the economy without somehow referencing what Trump has or has not done.
On the prospects for infrastructure spending, the minutes said, “Market participants continued to report substantial uncertainty about potential changes in fiscal, regulatory, and other government policies.”
As for how the prospect for fiscal spending is impacting markets, the Fed said, “However, equity prices remained notably higher than just before the November elections, apparently reflecting investors’ expectations that fiscal and other policy changes would boost corporate profits and economic activity in the medium term.”
Since the election, however, hardly anything has been heard from the White House on the topic of infrastructure spending, and given the increasingly imperiled state of the administration’s signature economic plan — tax reform — a major infrastructure (read: spending) deal seems increasingly distant.
As for how things like changes in immigration or trade policies could impact the economy, the Fed was far more vague.
The minutes said, “Participants again emphasized their considerable uncertainty about the prospects for changes in fiscal and other government policies as well as about the timing and magnitude of the net effects of such changes on economic activity.” (Emphasis added.)
And that’s it: “other government policies.”
In March, Fed Chair Janet Yellen will face questions from reporters for an hour after its latest policy decision is released. Certainly, whatever is or is not happening in the White House then will be a major topic of conversation. But at least when the Fed has the time to prepare and craft its public communications, “Trump” is not something we’re reading. Or seem likely to.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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