The Fed and the future

Daily update

Investors await this week’s Federal Reserve meeting, less for the decision (a cut is expected) and more for signals about the Fed’s worries for the future. The latest initial jobless claims data showed a weakening labor market, but some of those layoffs may be temporary unemployment (one automaker temporarily laid off workers because of a parts shortage, for instance). Temporary unemployment is more easily smoothed over by consumers.
The Fed may also consider corporate investment trends. US President Trump used social media to post a plea for foreign direct investment into the US. US factory construction peaked last year, and South Korean media reports about treatment of Korean nationals may deter investment. Direct investment matters to growth, and could potentially counter some of the US dollar’s declining share in foreign exchange reserves.
The Eurozone publishes July trade balance figures. These are going to be distorted by the uncertain international trade policy environment (US companies potentially stockpiling European-made goods, etc.). The relevance is more political than economic.
German August wholesale prices are not a major market focus, but fell compared to July. A monthly decline has been the norm this year. The US offers a business sentiment poll (200 New York manufacturers give their views).