Saturday, March 10, 2012

The Week Ahead: Fed and Prices

(I shall be back from my travels in Asia on Wednesday and, within the confines of massive jet lag, my posting schedule will return to normal.)

The week will be dominated by the Federal Open Market Committee and the latest inflation (deflation?) numbers, an appropriate pairing in the arena of High Economics.

The FOMC meets on Tuesday and announces results at 2:15 p.m. Eastern. As the economic recovery proceeds apace, the question becomes, when will the Fed ease off on easing and indeed, begin to tighten. A Paul Krugman would keep the stimulus rolling. Conservatives will say, with a degree of hysteria, OMG! Tighten now, before inflationary doom strikes!

On Wednesday at 9 a.m., Fed Chairman Bernanke addresses an independent bankers' conference. Whether he will commit news or not remains to be seen, but I always follow Bernanke's remarks with intense interest.

And then, it is on to the price numbers: The producer price index on Thursday at 8:30 a.m., and the consumer price index on Friday, same time. The Fed has set an annual consumer inflation target of 2%, or about 0.16% a month, not counting compounding.

Other events of note:

Monday: Treasury budget, 2 p.m.

Tuesday: Retail sales, 8:30 a.m.

Wednesday, Import and export prices at 8:30 a.m., and petroleum inventories at 10:30 a.m.

Thursday: Jobless claims at 8:30 a.m., the Philadelphia Fed Survey at 10 a.m. and natural gas at 10:30 a.m.

The Philly Fed survey looks at manufacturing in the mid-Atlantic region but stands as a good indicator of manufacturing nationally. It is an indicator of how the recovery is coming along.

Friday: Industrial production at 9:15 a.m. and consumer sentiment at 9:55 a.m.

By my rules, as of Monday I can trade April diagonal, butterfly, calendar and vertical spreads, iron condors and covered calls, and June single options and straddles. Of course, shares are good at any time.

Good trading!

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