@ The White House
In the morning, the President will receive the Presidential Daily Briefing in the Oval Office.
Later in the morning, as part of "Live from the White House," the President will participate in interviews in the Cabinet Room on his blueprint for a secure energy future with local TV anchors from the following markets: Los Angeles, Denver, Austin, Des Moines, Orlando, Cincinnati, Las Vegas, and Pittsburgh.
In the afternoon, the President will meet with local elected leaders representing the National League of Cities.
@ Wall Street
The economic recovery continues to pass crucial tests of its sustainability. Job growth exceeded 200K in February; the ISM services gage showed accelerated expansion; and credit markets are starting to thaw on both the supply and demand side. With businesses leaning increasingly on labor hours instead of productivity gains to boost output, economic growth should be more balanced "if still subdued" this year, benefiting jobs and incomes. Meanwhile, the Greek debt swap is moving forward with sufficient participation from private creditors while the Fed contemplates sterilized bond purchases to lift the housing market. But we´re not out of the woods yet. Soon enough, we´ll learn how much of the recent improvements were weather-related as we move from a warm winter to a "par-for-the-course" spring. Consumers will have a chance to respond to higher gasoline prices and in the background, the Eurozone debt crisis will continue. Nevertheless, double-dip recession odds are receding to 20% in the latest IHS macro forecast. Economic growth this year will still be weak, but perhaps more assured.
This coming week (March 12-16), the focus pivots from Greece to the Fed. After prospects for QE3 were seemingly dashed by Bernanke in his Congressional testimony, further easing in the form of sterilized bond purchases is back on the table. But the tea-leaves indicate that the upcoming Fed meeting on March 13 will be an uneventful one. That means no change to the forward rate guidance, no QE3, and no additional duration twist to the balance sheet. The Fed wants to give markets more time to absorb the big steps it took at the January meeting "the extension of the forward rate guidance through 2014 and the publication of Fed members" interest rate projections. Additionally, Bernanke wants more time to determine whether the pickup in jobs in recent months is a genuine signal that the economy has entered a new accelerated growth phase. Currently, the Chairman remains unconvinced and the prevailing view at the Fed is that unemployment will stay above 8% this year with inflation below 2%. Talk of sterilized bond purchases makes QE3 more likely this year, but not at this meeting.
On the data front, strong auto sales and gas prices likely boosted retail sales in February, but even discretionary categories are expected to post healthy gains. CPI and PPI inflation likely accelerated in February thanks to the spike in energy, but with little pass-through to core inflation. Consumer sentiment is expected to have improved in early March, with the increase in gas prices dwarfed by better consumer fundamentals. Industrial production likely increased in February, with a rebound at utilities offsetting a modest decline in vehicles production. Unemployment claims numbers may get extra scrutiny as the downward trend seems to have halted recently. This past week´s increase to 362K is probably just normal week-to-week volatility, but could be a first sign of trouble for the jobs market.
