Here Are The Major Economic Events To Watch During This High Stakes Week  *If the U.S. government remains shut down, several of the scheduled economic releases listed below will be cancelled.
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The U.S. government is in its 13th day of shutdown as Congress continues to fail America. And that means the public U.S. data agencies will be canceling or delaying their economic reports. "Some reports that would normally be published this week haven’t yet been compiled suggesting delays even following a shutdown resolution," said Citi's Peter D'Antonio. "Going forward, some surveys may not take place, potentially creating permanent gaps in the data records for this period." Meanwhile, the very scary debt ceiling is only days away. Here's your Monday Scouting Report: Top Story - The Debt Ceiling: Unless Congress can finally put together a deal, the U.S. will hit the debt ceiling on Thursday, Oct. 17. At this point, the U.S. Treasury will no longer be able to borrow money by issuing bonds. And within weeks, its cash balance will be depleted as the government continues to pay its liabilities.
"Our own estimate implies that the Treasury could conceivably continue to make its scheduled payments until the end of October," said Goldman Sachs' Alec Phillips. "However, the Treasury’s cash balance is likely to be so low after about October 25 that, depending on revenue fluctuations, the cash balance could be depleted on any day."
"This would be a very rapidly spreading, fatal disease," warned Deutsche Bank CEO Anshu Jain saying that a U.S. debt default would be "utterly catastrophic." Economic Calendar (*These releases will be delayed if the U.S. government is shut down.)
- Columbus Day (Monday): Banks are closed in observance of Columbus Day. However, Federal Reserve Chairman Ben Bernanke will be speaking at 8 p.m. ET.
- Empire State Manufacturing (Tuesday): Economists estimate the New York Fed's index climbed to 7.0 in October from 6.3 in September. "With the headline number based on general conditions rather than on direct activity measures, a pickup in October seems unlikely given only moderate economic growth and the government shutdown and debt ceiling debate’s potential to weigh on business sentiment," warned Wells Fargo's John Silvia.
- *Consumer Price Index (Wednesday): Economists estimate that CPI and core CPI climbed by 0.2%. "Retail gasoline prices fell less than normal seasonality in September, and a rebound in natural gas prices points to some flattening out after recent weakness in utility costs, so a modest gain in energy prices should provide a slight lift to headline CPI," said Morgan Stanley's Ted Wieseman. "Pipeline indications for core goods prices remain generally soft, but industry data point to firming in new and used car prices. On the services side, steady gains should continue in the key owners’ equivalent rent and rent categories. Industry figures suggested softer hotel pricing, but a sharp drop in airfares in CPI in recent months looks too weak relative to industry PRASM trends, so we look for a rebound this month"
- Housing Market Index (Wednesday): Economists estimate that the NAHB's homebuilder confidence index was unchanged at 58 in October. "The pace of housing starts has not been keeping up with increases in sentiment in recent months, and, as a result, we expect sentiment to taper off a bit until we see a stronger pickup in construction activity," said Barclays' Dean Maki.
- Fed Beige Book (Wednesday): The Fed's Beige Book of economic anecdotes will be released at 2 p.m. ET. "We will be looking for any indication that the lead up to – and start of – the government shutdown impeded on business activity," said Credit Suisse's Neal Soss. "Such anecdotes may push back the timing of any cutback in Fed asset purchases. At least one FOMC member, Atlanta Fed President Dennis Lockhart, already has said that September’s no-taper decision “now is vindicated by the developments” in DC."
- Initial Unemployment Insurance Claims (Thursday): Economists estimate jobless claims fell to 330,000 during the week ending Oct. 12 from 374,000 the week prior. "Initial jobless claims probably fell back after special factors – a spike in CA claims related to the Labor Day computer upgrade backlog and roughly 15,000 filings of non-federal workers impacted by the partial federal government shutdown – prompted a surge in the previous week," said Citi's Peter D'Antonio. "In this release, we will receive another glimpse of the shutdown fallout with the publication of the October 5 data for Federal claimants... While the defense department recalled most of its civilian workforce – who represented nearly half of all furloughed workers – as of October 5, there probably will be a swell in this series if the shutdown persists for many more weeks."
- *Housing Starts (Thursday): Economists estimate that starts accelerated to 913,000 at an annualized rate. "Single-family starts should drop as our CS housing analysts’ September survey of real estate agents was softer on the month," said Credit Suisse's Soss. "Also, single-family starts caught up to single-family permits last month suggesting little short-run backlog. The volatile multifamily component could increase in September as permits ran ahead of starts in August. Limiting the upside, however, are furloughs due to the sequester at the Department of Housing and Urban Development (HUD). These HUD headwinds on multi-family activity should continue through Q3."
- *Industrial Production (Thursday): Economists estimate production growth slowed to 0.4% in September. "Auto assemblies pulled back slightly after surging to a six-year high in August, but strength in the ISM production index points to a good gain in ex-autos factory production," said Morgan Stanley's Wieseman. "A rebound in utility output after substantial weather-related weakness in recent months and another good gain in drilling should also add to headline IP."
- Philadelphia Fed Survey (Thursday): Economists estimate the widely followed Philly Fed survey fell to 15.0 in October from 22.3 in September. "The headline Philly Fed business conditions index has been wildly out of synch with the details of the report," said Citi's D'Antonio. "The recent 22.3% reading is equivalent to an ISM reading above 61, while the ISM weighted figure was just 53.6. Our forecast has the headline falling back in line with the rest of the survey and other measures of activity."
- *Delayed data: Eventually, the government data agencies may publish reports on August construction spending, August factory orders, September employment, August trade balance, August job openings, September producer prices, and September retail sales.
Market Commentary "The likelihood of a deal to lift the debt ceiling and end the shutdown before October 18th has increased, but only for a deal of limited scope and duration," said Deutsche Bank's David Bianco. "Such a deal is not the deal investors wished for and it will put the burden on 3Q earnings and macro data to push the S&P to 1750 or higher by yearend." We have a "high stakes week ahead," he said.
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