Given the recent increase in market volatility, next week’s housing and industrial production data may prove critical in supporting a direction either higher or lower.  In addition to the data to be released next week, FOMC minutes are also to be in focus on Wednesday. Will there by any surprises?

The printing press continues, with an actual end date in the near future: QE2’s conclusion in June. At the same time, the EU has been forced not to raise rates as the needs of Greece, and it’s fellow indebted states, need additional support to prevent default.

Here is the preview of market expectations, and our take:

  • Housing Starts – Market @ 565K; Cow @ 500K
  • Industrial Production – Market @ 0.5%; Cow @ 0.6%
  • Initial Claims (unemployment) – Market @ 420K; Cow @ 450K
  • Existing Home Sales – Market @ 5.22MM; Cow @ 5.10MM

What’s becoming increasingly critical is the unrest in the middle east, and the potential of demands for freedom spilling over and escalating in Saudi Arabia.  Skyrocketing oil prices could easily exceed the highs from 3 years ago.  What’s even more concerning is the lack of leadership from the Obama administration on these issues.

Of course, in the near term, crude oil prices are on their way down.  The downward trend is a consequence of the increase in margin requirements by the CME. WTI may approach $90, should there be no impact from the Mississippi river flooding to key refineries in Louisiana.

Finally, the continued focus on windfall profits taxation on corporations, and expanding personal income taxes by the Democrats will only serve to affect the psychology of the market and of the general public.  Nothing tangible can be done in these areas, as it would require the approval of the conservative controlled House of Representatives. They key timeline for now is the expiration of the extension of the Bush tax cuts.  Hope for a conservative Senate in 2012?