Jackson Hole, Data Deluge on Tap Next Week

Seemingly endless turmoil in Eastern Europe once again spooked Wall Street on Friday, sending the benchmark equity indexes gyrating. But a jam-packed corporate and economic calendar next week could help shift the spotlight back to America.

Federal Reserve officials are set to descend on Jackson Hole, Wyo., during the latter part of the week for the central bank’s annual economic symposium. In the past, Fed officials have used the powwow to hint at new directions for monetary policy. Indeed, former Fed chief Ben Bernanke used the opportunity in 2010 to hint that QE2 – a key leg in the Fed’s vast bond-buying program – was likely on the way.

This year’s program is dryly entitled “Re-Evaluating Labor Market Dynamics.” Janet Yellen is widely expected to make the keynote address there Friday, her first since takings the reins at the powerful central bank.

Kris Dawsey, an economist at Goldman Sachs, said in a note to clients Friday Yellen is likely to strike a dovish tone, as has been her norm. Dawsey said she’ll likely note that while headline unemployment has been falling recently, and remains well off the 2009 high of 10%, other indicators suggest there remains considerable slack in the jobs market. That would imply the Fed can keep rates at historic lows for the time being without worrying about the economy overheating.

“I do think this could be an important speech that shows just how dovish the Yellen Fed is,” said Michael Block, chief strategist at Rhino Trading Partners.

Block added that minutes from the Fed’s July meeting that come out Wednesday “will be interesting” to get a broader look at how Fed policymakers view inflation risks broadly. Price gauges released recently have pointed to upticks in inflation, but not the runaway price surges about which some hawkish central bankers have fretted.

In fact, a reading on producer prices Friday was downright tame. A more closely-watched gauge of consumer prices is due out Tuesday. Economists polled by Thomson Reuters are expecting prices to have risen 2% in July from the same month in 2013, compared to a 2.1% pace in June.

Elsewhere on the economic calendar is a trio of reports on the housing market: The pace of starts of new home construction probably jumped 8.6% in July after sliding 9.3% the month prior. Permits to build new homes, seen as a leading indicator, likely rose 3.7%, reversing a 4.2% dip in June, economists said. Lastly, a gauge of home re-sales is expected to have ticked 0.3% lower in July, after a 2.6% advance the month prior.

The housing market has benefited from historically-low interest rates, but an especially harsh winter, coupled with continued tightness in the mortgage market have weighed on the industry.

Rounding out the docket, there are two key reports due out on the factory sector: The Philadelphia Federal Reserve’s gauge of mid-Atlantic manufacturing activity, and Markit’s manufacturing PMI. The data follow a very disappointing manufacturing report this week from the New York Federal Reserve.

Looking at corporate news, home-improvement giants Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) are set to report quarterly results. The two have gotten a lift from rising home prices, since they tend to spur consumers to renovate and upgrade their homes.

Blue-chip PC maker Hewlett-Packard unveils its latest results, as well. Meanwhile, earnings from retailers Target (NYSE:TGT), Gap (NYSE:GPS) and TJX Companies (NYSE:TJX) will provide a snapshot of the struggling sector.