Sunday, February 12, 2012

The Week Ahead: Inflation

Traders will get a look at inflation figures this week, both wholesale and retail. Traditionally, they are studied hard to gain insight into how much the Federal Reserve will tighten credit. But with the Fed committed to an accommodative policy into 2014, odds are good that week's figures will be, basically, free of impact.

For my own trading, I'm far more interested in the expiration of February options next weekend -- Friday is the last trading day -- and the release of the leading indicators.

Day by day:

Monday -- No econ releases.

Tuesday -- Retail sales at 8:30 a.m. Eastern.

Wednesday -- Industrial production at 9:15 a.m., and release of the most recent Federal Open Market Committee meeting at 2 p.m.

Thursday -- The producer price index, jobless claims and housing starts at 8:30 a.m., followed by the Philadelphia Fed survey at 10 a.m., the last being a highly respected regional survey that tracks well with national activity.

Friday -- The consumer price index at 8:30 a.m., and leading indicators at 10 a.m.

Federal Reserve Chairman Ben Bernanke addresses a community banking conference sponsored by the FDIC at 9 a.m. Thursday.

Lesser Fedsters on the calendar: Philadelphia Fed Pres. Charles Plosser gives a speech at 8:45 a.m. Tuesday and Dallas Fed Pres. Richard Fisher at 9:15 a.m. Wednesday.

Both make economic policy from their seats on the Federal Open Market Committee, and both are members of the Gang of Three, who dissented last year in votes on expanding the money supply to encourage economic growth. (The  third Gang member is Minneapolis Fed Pres. Narayana Kocherlakota.)

The best part about FOMC minutes, such as those to be released on Wednesday, is skimming down to the voting results at the end and seeing who's playing hardball and who's playing nice.

Fisher and Plosser both took office under Pres. George W. Bush. Fisher has ties to former secretary of state Henry Kissinger's advisory firm. Plosser has consulted for a number of corporate household names, such as hase Manhattan Bank, Eastman Kodak Co., Wyatt Co., ViaHealth Inc., RGS Energy Group Inc. and Chase Manhattan Bank. He also co-chaired the Shadow Open Market Committee, which second-guessed the Fed’s monetary policy.

Practical trading: By my rules, as of Monday I can trade March vertical, calendar, diagonal and butterfly spreads, iron condors and covered calls, and May singles and straddles. Of course, shares are good at any time.

Good trading!

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