Prices, AKA inflation, or maybe deflation or possibly stagflation -- no one is entirely sure what sort of 'flation reigns supreme these days -- will come in two installments: The producer price index on Tuesday and the consumer price index on Wednesday, both at 8:30 a.m. Eastern.
The consumer price index generally gets headlines, although with inflation so low -- it was at zero percent last month -- the headlines are in general barely worth a glance, unless the consensus estimate is beaten by a significant margin.
Lower prices prompt higher sales, which show up in the government's retail sales figures, out at 8:30 a.m. on Tuesday. This is a key component in the shop-till-we-drop school of economics, which says that only robust consumer spending can keep us from the doldrums.
Higher sales can be a component in decision making by industrial managers, which shows up in industrial production statistics released on Wednesday at 9:15 a.m. This Federal Reserve report has a wealth of information to help analysts judge whether industry is ramping up production in anticipation of a recovery or sagging down into the doldrums (see above).
And if consumers are happily shopping and industrialists busily manufacturing, then can be the builders lag far behind in their building? Housing starts will be announced at 8:30 a.m. on Thursday. A house is started when the first shovel hits the dirt. Builders don't start new houses unless they think they can sell them, so the figure is in many ways an assessment of builder thinking.
Leading indicators out this week:
Average weekly initial jobless claims will be reported at 8:30 a.m. Thursday.
Traders should also keep an eye on these financial leading indicators: The M2 money supply, out Thursday at 4:30 p.m. from the Federal Reserve, and two reported continually during market hours: The S&P 500 index and the interest rate spread between 10-year Treasuries and the federal funds rate.
The index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 9:55 a.m. on Friday.
And also on Friday, at 10 a.m., my favorite look-ahead of the economic reporting cycle: The Conference Board's index of leading economic indicators, a collection of leading indicators, such as those listed in this section, smushed into an index.
Since August the leading indicators have been in a long-term rise since their recession low in 2008. However, the month-over-month change has been stairstepping downward since November and in May and again in July dipped into negative territory.
The leading indicators are broadly accurate in depicting the future course of the economy, although not sufficiently accurate for detailed trading. If the leading indicators should start to decline in a serious way, I would take that into account as I formulate my strategies.
With all of that, I also like to keep an eye on the Baltic dry index of world shipping, updated daily.
Other reports of interest:
Tuesday: Business inventories at 10 a.m.
Wednesday: The Fed's Empire State manfacturing survey at 8:30 a.m. (conditions in New York), Treasury's international capital at 9 a.m.,(foreign inflows and outflows of capital), the housing market index at 10 a.m. (homebuilders' assessment), and petroleum inventories at 10:30 a.m.
Thursday: The Philadelphia Fed survey of business conditions in the mid-Atlantic region, at 10 a.m.
Friday: The Institute of Supply Management's non-manufacturing index at 10 a.m.
By my rules, as of Monday I can trade September vertical, calendar and butterfly spreads, iron condors and the long legs of diagonal spreads, as well as November single options and straddles. Of course, shares are good at any time.