Sunday, April 29, 2012

Week Ahead: Jobs

This is jobs week on the econ calendar, when the most political of the economic indicators, the unemployment rate, hits the headlines.

A release with such a wide following comes with previews, giving traders a chance to try to get a jump on the official numbers.

The payroll company ADP releases its employment report at 8:15 a.m. Eastern on Wednesday, preceded at 7:30 a.m. by the Challenger report on layoffs.

The Labor Department will publish its weekly report on jobless claims at 8:30 a.m. on Thursday. announces its employment index sometime on Friday.

The main event, the government's employment situation report, happens Friday at 8:30 a.m. The two numbers to watch for are: 1) the change in nonfarm payrolls, and 2) the unemployment rate.

Traders watch the payrolls, and the political world watches the unemployment rate.

Last time around, 120,000 nonfarm jobs were added to the national inventory. A significant change here can be a market movers.

The unemployment rate stood at 8.2%.

Another number to look at is private sector jobs vs. government payrolls. In recent months it is government hiring that has been a drag on overall job growth.

Also of note in this busy week:

Monday: Personal income and outlays at 8:30 a.m. This includes the ever-fascinating savings rate, which says much about consumers' willingness and ability to spend us back to prosperity. Also, the Chicago purchasing managers index at 9:45 a.m. and the Dallas Federal Reserve Bank's survey of Texas manufacturing at 10:30 a.m.

Tuesday: The Institute of Supply Management's national manufacturing index at 10 a.m., along with Commerce Department's construction spending report. Motor vehicle sales will be released throughout the day.

Wednesday: Factory orders at 10 a.m. and petroleum inventories at 10:30 a.m.

Thursday: Productivity and labor costs at 8:30 a.m., followed by the Institute of Supply Management's non-manufacturing index at 10 a.m.

Federal Open Market Committee members Jeffrey Lacker, head of the Richmond Federal Reserve Bank, and San Francisco Fed Pres. John Williams speak on Tuesday, Lacker again on Wednesday and Williams on Friday, and FOMC alternate Charles Plosser on Tuesday.

Three Fed officials -- FOMC members Williams and Atlanta Fed Pres. Dennis Lockhart and FOMC alternate Plosser -- have joint appearance at the University of California, Santa Barbara at 11 a.m. Thursday.

Practical trading:

By my rules, as of Monday I can trade June calendar and vertical spreads, and August single options and straddles. Of course, shares are good at any time.

Good trading!

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