The Week Ahead: Retail, industry, prices, Europe

For this week I'm tempted to look grave and portentously intone, joining the Greek chorus of analysts, "In light of the Spanish bank bailout, Watch Europe."

While there is no doubt that Europe is the dragging anchor slowing the global economy's progress across the stormy seas of expansion (as an aficionado of over-wrought metaphors, I'm rather proud of that one), "Watch Europe" has been profitable advice for every week the past couple of years.

So our real choices for the lead theme of the week are retail sales, industrial production and two price reports.

The Commerce Department's retail sales report will be released Wednesday at 8:30 a.m. Eastern. The consensus is that the index will decline a bit as a symptom of a slowing economy.

The Federal Reserve's industrial production index will be released Friday at 9:15 a.m. The consensus here is no growth (or decline) in light of a slowing... Well, you get the picture.

I'm less interested in the two price reports -- producer prices on Wednesday and consumer prices on Thursday, both at 8:30 a.m. -- because there hasn't been significant inflation for a long time. With the economy slowing, low to no inflation becomes even more likely.

In fact, the consensus for both producer and consumer prices is a decline -- deflation.

Leading indicators released during the week:

Thursday: Two weekly reports, jobless claims at 8:30 a.m. and the money supply at 4:30 p.m.

Friday: The Reuters/University of Michigan consumer sentiment report at 9:55 a.m. The leading portion of this monthly report is the index of consumer expectations.

Leading indicators based on the markets are the S&P 500 index and the interest-rate spread between 10-year Treasuries and the Fed Funds rate.

Other reports of note:

Tuesday: Import and export prices, at 8:30 a.m. and the Treasury budget (the deficit) at 2 p.m.

Wednesday: Business inventories at 10 a.m., petroleum inventories at 10:30 a.m. and a 10-year Treasury note auction at 1 p.m.

Friday: Treasury's international capital, which tracks the the flow of foreign money into and out of the U.S., at 9 a.m. I think of this as a report on foreign investor confidence, both in the U.S. economy and their own economies.

Practical trading:

By my rules, as of Monday I can trade July vertical and butterfly spreads along with iron condors,  and September single options and straddles. The short legs of my diagonal and calendar spreads will expire in July. Of course, shares are good at any time.

Friday is the last day to trade June options, and I shall be rolling or closing positions Monday and Tuesday.

Good trading!