Week Ahead: Markets Look to the Fed
"If they do make a change in policy that will be a signal that they lost confidence in their forecast, and the outlook and if that's all they do is make a relatively mild change in reinvestment policy, that's like them saying that things have worsened a lot," Maki said. "We don't think they have to so in that case, they are much better off giving a signal of confidence that they do think the recovery will proceed and make a more major change later if they do get a major negative later on."
Maki thinks the Fed will maintain its cautious outlook and may make a change in its language about inflation. It previously altered its view to say inflation risks had lessened. "With commodities and energy prices up since the last meeting, that doesn't seem appropriate. That's now been revised away," he said.
Mesirow Financial chief U.S. economist Diane Swonk also believes the Fed will hold its fire in this meeting. "I still think they're not going to do anything, although the discussion on doing something will certainly continue, and we have improving financial conditions against the backdrop of a deteriorating economy. So it's tough,
At the end of the day, one of the things the Fed does not want to be known as, is as not trying to do something when it could have if the economy does fall apart. That's something down the road. If things get much worse than they are, and they don't turn around, they certainly will do all that they can," Swonk said.
The important data in the coming week includes retail sales on Friday, but Tilton says it will also be important to watch Thursday's weekly jobless claims, which crept up in the past week.
"If you have another move up, that's going to be a red flag for a lot of people," he said. Jobless claims are expected to be 465,000, down slightly from the past week's 479,000.
Data to watch in the coming week also includes the NFIB small business survey Tuesday. Productivity and costs and wholesale trade are also reported that day. On Wednesday, there is international trade, and import prices are released Thursday. CPI, consumer sentiment and business inventories are reported Friday.
There is still a small group of companies reporting earnings in the coming week. Dish Network, Liberty Media, Scripps Networks, Tyson Food, Clear Channel, McDermott International and Qiagen report Monday.
Disney reports after Tuesday's closing bell, and Cisco , Computer Sciences and Macy's report Wednesday.
Thursday's reports include Kohl's, Estee Lauder, Sara Lee, Urban Outfitters, Autodesk, Nordstrom and Nvidia. JCPenney reports Friday.
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