Sunday, November 25, 2012

The Week Ahead: Durables, Income, Outlays, Savings

Durable goods orders on Tuesday and personal income and outlays on Friday, both at 8:30 a.m. Eastern, bracket the week's economic reports.

Durable goods, which tracks big-ticket items, is a measure of how confident businesses and people are that they can buy expensive stuff and put it to productive use. If durables are doing good, that bodes well for the broad economy.

From income and outlays is derived the personal savings rate, a key measure of our willingness to shop till we drop.

In between, and of lesser significance, look for new home sales on Wednesday at 10 a.m. and the second try, the preliminary, at the 3rd quarter gross domestic product, on Thursday at 8:30 a.m. The GDP is a revision of last month's release and will be low impact unless the first version got the numbers horribly wrong.

Leading indicators out this week (in order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, moved to Friday 4:30 p.m. because of the holiday, from the Federal Reserve.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Wednesday, a day earlier than usual because of the holiday.

Other reports of interest:

Monday: The Dallas Federal Reserve manufacturing survey of Texas businesses, 10:30 a.m.

Tuesday: S&P Case-Shiller home price index, the lone housing report that recognizes that all real-estate markets are local, at 9 a.m., ahd the Conference Board's consumer confidence report at 10 .m.

Wednesday: Petroleum inventories at 10:30 a.m. and the Federal Reserve's Beige Book, a report on conditions in each Fed region, at 2 p.m.

Thursday: The Realtors' pending home sales index -- deals signed but not yet closed -- at 10 a.m.

Friday: The Chicago purchasing managers' index, tracking conditions in Chicagoland, at 9:45 a.m.

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


Federal Reserve Chairman Ben Bernanke gives opening remarks on Tuesday at 8:30 a.m. at the National Fed Challenge, an event for high-school students that teaches them to think like a Fedster. Can this truly be good for youthful minds?

Three members of the Federal Open Market Committee, responsible for setting monetary policy, also take to the podiums: Atlanta Fed Pres. Dennis Lockhart on Tuesday and Cleveland Fed Pres. Santra Pianalto and Fed Gov. Daniel Tarullo on Wednesday, 

Trading calendar

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

Good trading!

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