Sunday, October 11, 2015

The Week Ahead: 'Flation, retail, industry, Beige

The value of money -- inflation and deflation -- lead the week's economic reporting, with the producer price index out Wednesday and its headline-grabbing sibling the consumer price index out Thursday, each at 8:30 a.m. New York time.

The Federal Reserve's money policy people, of course, pay closer attention to the more flashy reports' obscure cousin, hidden under the stairs as the gross domestic product deflator. So while the PPI and CPI each have a chance of impacting the markets, the deflator is far more influential.

Two sector reports are also on the calendar: Retail sales on Wednesday at 8:30 a.m. and industrial production on Friday at 9:15 a.m.

Look also for the Philadelphia Federal Reserve Bank business outlook survey the tracks manufacturing in the bank's region, to be published Thursday at 10 a.m.

Plus, for those in search of a a good read, the Federal Reserve will publish its ever-popular Beige Book on Wednesday at 2 p.m. The book, a narrative of business conditions nationally and in each of the Fed's 12 districts, is never a market mover, but it gives context and insight into the Mind of the Fed, whose every passing thought ought to be of concern to every rational trader.

Friday is a government and bank holiday in the United States, but not for the U.S. markets, which will be open for business as usual.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial claims for unemployment from the jobless claims report on Thursday at 8:30 a.m.

The index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 10 a.m. Friday.

Events arranged by day:

Tuesday: The Treasury budget at 2 p.m.

Wednesday: The producer price index and retail sales  at 8:30 a.m., business inventories at 10 a.m. and the Federal Reserve Beige Book at 2 p.m.

Thursday: The consumer price index and jobless claims and the Empire State manufacturing survey of conditions in New York, each at 8:30 a.m., the Philadelphia Federal Reserve Bank business outlook survey at 10 a.m., petroleum inventories at 11 a.m. and the M2 money supply at 4:30 p.m.

Friday: Industrial production at 9:15 a.m., the job openings and labor turnover survey and the Reuters/University of Michigan consumer sentiment survey at 10 a.m. and Treasury international capital at 4 p.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.29%.

Treasury Debt

Bills
  • 4-week: Announcement Tuesday 11 a.m., auction Wednesday 11:30 a.m., settlement Thursday.
  • 3-month: Auction Tuesday 11:30 a.m., announcement Thursday 11 a.m.
  • 6-month: Auction Tuesday 11:30 a.m., announcement Thursday 11 a.m.
  • 52-week: Auction Wednesday 11:30 a.m.
Notes
  • 3-year: Settlement Thursday.
  • 10-year: Settlement Thursday.
Bonds
  • 30-year: Settlement Thursday.
TIPS
  • 30-year: Announcement Thursday 11 a.m.
Fedsters

The Federal Reserve Beige Book, out Wednesday at 2 p.m., never fails to bring the Fedsters flocking to their podiums.

Fed Gov Lael Brainard, a member of the Federal Open Market Committee, addresses the National Association for Business Economics at Monday at 4:30 p.m. His topic: Economic Outlook and Monetary Policy.

Other FOMC members having scheduled appearances are Chicago Fed Pres. Charles Evans and Atlanta Fed Pres. Dennis Lockhart, both on Monday, New York Fed Pres. William Dudley on Thursday.

Two FOMC alternates will speak: St. Louis Fed Pres. James Bullard on Tuesday, Cleveland Fed Pres. Loretta Mester on Thursday

Analytical universe

This week I shall be analyzing new bull and bear signals among 517 large-cap stocks and exchange-traded funds.

Good trading.



-- Tim Bovee, Portland, Oregon, Oct. 11, 2015

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