Crown Forex

Major Market Mover: ADP, GDP, To The FOMC...
All the wait, all the wondering, all the speculations, all will materialize today, as the U.S. economy takes over markets, and start pumping its famous class A fun-damentals, starting form ADP report, to the GDP Growth, passing through PCE and PMI, and Closing with FOMC Decision.

The U.S. economy is the superstar today, collecting all sectors in the economy together and just giving investors the answers of all their questions in batch processing kind of way, leaving markets afterwards in the hands of investors ana-lyzing and interpreting every single number that was issued today...

The start will be with the ADP employment report, the first clue on the jobs mar-ket status in April, the reading that is getting closer month after month to the ac-tual nonfarm payrolls figure, yet still it is not that trust worthy and not a major market mover like the actual nonfarm payrolls count. The report is expected to reveal that the private sector in the economy added has shed 60,000 jobs in April after adding 8,000 in March, pointing for a worse labor market in the second quarter 2008.

The second report today might be the most important, as the department of commerce announces the advanced reading for the 1st quarter gross domestic product, where most analysts expects the economy to grow on the slowest pace in 5 years by 0.4%, following 0.6% growth in the 4th quarter, and confirming all expectations that the economy is actually in a recession, and without any doubts this situation can not be reversed by a magical word, it needs a lot of time for the growth to get back on track.

According to the last FOMC meeting and minutes, the economy might even con-tract a bit in the first half of the year, so maybe even those expectations are a bit optimistic, but whatever it was, all factors are giving us the answers we need for the question... is the U.S. economy in a recession??! We just need to see the growth of the 1st quarter...

Personal spending is expected to grew on a slower pace as well, why not when all we can hear nowadays is higher food and energy prices, more financial turmoil, more losses, deeper housing slump, fewer jobs, and really bad consumer confi-dence, it is no wonder that both consumer and business spending will drop. Spending is expected to grow 0.7% in the 1st quarter 2008 according to the ad-vanced reading, following a 2.3% growth in the 4th quarter 2007.

Later, Chicago purchasing managers index is expected to show a deeper contrac-tion in April, reaching to 48.0, giving another confirmation that businesses are not doing well in the economy, and it is not expected to do so anytime soon.

And eventually, and after a two days meeting, the federal open market commit-tee will announce their decision on the feds funds target rate, and what might a more beautiful closure for such a beautiful day than a rate decision, and the odds are spreaded between a quarter point cut-which is the highest possibility- and a steady rate decision, and the odds are 80% to 20%...

Yet the most important thing is the what the FOMC statement might say today about the economy and the hints it might give on the future of interest rate, be-cause the trick here is that a lot of analysts are thinking that a 2.00% benchmark rate is enough to stimulate economic growth, while other believes in a 1.75%, and I count myself as one of those, but what the feds might say about it is the most important thing, and what language changes we get from it might be the major market mover for today as it might change the odds for the next FOMC meeting's decision.

And by that, we close our day, our busy hectic way and then we go back to our families, thinking and analyzing every single number, and then start building a new more clear vision about the U.S. economy, not forgetting that we still have the jobs' report on Friday that might give us another contribution on the state of the economy...