Sunday, August 26, 2012

The Week Ahead: GDP, consumer savings, Jackson Hole

This week we get a first look at the 2nd quarter gross domestic product numbers, and also see July's personal income and spending results.

GDP will be released Wednesday at 8:30 a.m. Eastern. It's the first of three increasingly accurate iterations of the 2nd quarter figures. Now, GDP is the great grand-daddy of lagging indicators. But when it falters, it has a huge impact on trader confidence and politics. So it bears watching.

Personal income and outlays are out on Thursday at 8:30 a.m. This is the ultimate consumer-driven-recovery indicator. It tells what we're getting and how much we're spending. Subtract the two, and you'll see how much we're saving. More savings = less shopping-till-we-drop = a more anemic recovery.

Also, the Fed begins its Jackson Hole Economic Policy Symposium.

Leading indicators out this week:

Average weekly initial jobless claims will be reported at 8:30 a.m. Thursday.

The index of consumer sentiment from the University of Michigan/Reuters consumer sentiment study out at 9:55 a.m. Friday. It's important because consumers who lack confidence don't shop till they drop. They pinch pennies, thereby bringing the economy down. Happy consumers bring prosperity.

Manufacturers' new orders for consumer goods at materials, taken from the factory orders report released Friday at 10 a.m.

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.

I also like to keep an eye on the Baltic dry index of world shipping, updated daily.

Other reports of interest:

Monday: The Dallas Federal Reserve Bank's manufacturing survey of Texas, at 10:30 a.m.

Tuesday: The Standard & Poors Case-Shiller home price index, which tracks real estate in 20 metro areas, at 9 a.m.

Wednesday: Pending home sales (that's signed  but not closed) at 10 a.m., petroleum inventories at 10:30 a.m., and Federal Reserve's Beige Book of economic conditions in each region at 2 p.m.

Friday: The Institute of Supply Management's Chicago purchasing manager's index, a survey of conditions in Chicagoland, at 9:45 a.m.


The Kansas City Federal Reserve Bank kicks off its closely watched summer retreat at Jackson Hole Wyoming on Friday. There will be a speech by Fed Chairman Ben Bernanke, Friday at 10:30 a.m.

Also, two on Monday: Cleveland Fed Pres. Sandra Pianalto, a Federal Open Market Committee member, speaks in Ohio at 12:15 p.m., and Chicago Fed Pres. Charles Evans, an FOMC alternate, speaks in Hong Kong at 6:15 p.m.

Trading calendar

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 December single options and straddles. Of course, shares are good at any time.

My schedule

I'm back from my month of travel in East Asia but have been laid low by major jet lag. I expect to resume a normal posting routine this week, unless the jet lag is laggardly in going away. (I have become a strong advocate of a single time zone for the entire world, preferably based on U.S. Pacific time.)

Good trading!

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