Larry’s note: Welcome to Trading with Larry Benedict, the brand new free daily eletter, designed and written to help you make sense of today’s markets. I’m glad you can join us.
My name is Larry Benedict. I’ve been trading the markets for over 30 years. I got my start in 1984, working in the Chicago Board Options Exchange. From there, I moved on to manage my own $800 million hedge fund, where I had 20 profitable years in a row.
But these days, rather than just trading for billionaires, I spend a large part of my time helping regular investors make money from the markets. My goal with these essays is to give you insight on the most interesting areas of the market for traders right now. Let’s get right into it…
Regular readers will know by now that I spend a lot of my time looking beyond the mainstream information.
Not just with stocks, but economic data as well.
From my experience, while things like GDP and inflation data grab plenty of headlines, often the market has already factored in these numbers.
So, when this economic data is released, the markets often react with barely a whimper…
The real money is to be made from getting in early… before the big economic numbers come out.
That’s why I’m always looking out for different ways to gauge the economy and the markets.
And that’s why next week’s economic releases could be really important…
It’s All About the Property Market
There’s little doubt that the biggest economic story next week will be the Fed meeting from September 21-22.
You can be sure there will be lots of commentators pontificating about the Fed’s latest interest rate decision.
However, there’s plenty of other data that I’ll be watching that most investors will gloss over…
For me, next week is all about property – specifically, new home construction.
I’ve been writing a bit about real estate recently…
Earlier this month, I wrote about real estate as an asset class.
We looked at the iShares U.S. Real Estate ETF (IYR) to gauge how the whole sector is performing.
Having spiked earlier this month, we were looking to see if the broad property sector was due for a pullback.
But while next week’s economic data is also about real estate, its focus is very specific: construction. New data regarding building permits and new housing will be released on Tuesday.
To me, this has wide implications…
I wrote about this a couple of weeks ago when we checked out an ETF that specialized in home construction – the iShares U.S. Home Construction ETF (ITB).
As we saw, it’s a sector that’s truly at the crossroads. And that’s why next week’s data is key…
To start, home construction employs millions of Americans. So, a change in demand for new homes can have big implications for the nation’s employment rate.
The sector is also particularly sensitive to inflation…
Because of its high reliance on labor, a blowout in wages – not to mention raw material costs – can be a real driver of inflation. And that can eventually flow through to interest rates…
Of course, an increase in interest rates would likely have huge implications for the stock market.
While nobody is expecting the Fed to hike rates anytime soon, history tells us that we can’t ignore inflation forever.
So, that’s why I’ll be watching new home construction data next week.
What to Expect From the Fed
Speaking of interest rates, just a quick note about the Fed meeting coming up next week…
Right now, you won’t find anyone predicting a change in the Fed’s target rate anytime soon.
However, the story won’t be about the Fed’s interest rate decision – it will be the economic forecasts that come with it.
You see, while the Fed typically meets eight times a year (plus others as required), it releases its economic forecasts in just four of them. And the Federal Open Market Committee (FOMC) meeting next week is one of them.
While others will be wrapped up on interest rates, you can be sure it’s those economic forecasts that will be holding my attention.
After all, just one piece of information can garner all kinds of trading possibilities!
I’ll be sure to let you know if there is anything that stands out.
Editor, Trading With Larry Benedict
P.S. We’re excited to hear what you think of your new eletter, Trading With Larry Benedict. Let us know at [email protected].
As always, I appreciate readers writing in to tell me their thoughts on my writing. Here’s a couple of them…
Good article on the XLI ETF. Very useful information for insight on the market.
– Tyronne J.
I enjoy reading these letters. They are short, easy to follow, and get to the point quickly. They’re not filled with page after page of gobbledygook. Thank you for that.
– Robert L.