Saturday, February 23, 2013

The Week Ahead: GDP++++, plus Bernanke

The government's second attempt to calculate the 4th quarter gross domestic product headlines the week, but there are a collection of other heavy hitters: New home sales, durable goods orders, personal income and outlays and the much watched manufacturing index from an industry group.

The gross domestic product will be released at 8:30 a.m. Eastern on Thursday. Altogether, the government makes three estimates for a quarters GDP; the final will be out in late March.

Generally, the second and third reports are refinements of rather than revolutions overturning the initial estimate, but I watch them closely, just in case.

The Realtors will report new home sales at 10 a.m. on Tuesday. This is the smaller part of the market; the governments existing home sales statistics are the broader measure. However, with a large number of new houses left unsold by the Great Recession, the new home sales figures are an indicator of how well that inventory is being reduced.

Durable goods orders, out at 8:30 a.m. on Wednesday, are in many ways a measure of consumer sentiment: To what extent are families and companies sufficiently confident that they are willing to commit to big-ticket purchases.

Personal income and outlays will be released at 8:30 a.m. on Friday. They are the answer to the perennial question, "How'ya doin'?" From income and outlays come the savings rate: How much are way spending and how much are we socking away for a rainy day.

Also Friday, the Institute of Supply Management releases its ISM manufacturing index, the result of a surve of more than 300 manufacturing companies. Released at 10 a.m.

And Fed Chair Ben Bernanke delivers his semi-annual face-off with the Congressional committees. In my book, it's more fun that pro-wrestling!

And, potentially, the end of the world as we know it. The across-the-board spending cuts voted by Congress are scheduled to kick in on Friday. The Obama administration is making the case for serious consequences should it happen. The Congressional Republicans are saying, basically, Oh, pshaw! No big deal!!

Leading indicators (in descending 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, at 4:30 p.m. Thursday.

Vendor performance, also called the delivery times index, from the ISM's manufacturing survey , at 10 a.m. Friday.

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

Average weekly initial jobless claims, at 8:30 a.m. Thursday.

Index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 9:55 a.m. Friday.

Other reports of interest:

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

Tuesday: The S&P Case-Shiller home price index, which tracks prices in 20 metro areas, at 9 a.m., and the government's consumer confidence index at 10 a.m. Bernanke testifies before the Senate Banking Committee at 10 a.m.

Wednesday: Pending home sales -- contracted but not closed -- at 10 a.m. and petroleum inventories at 10:30 a.m. Bernanke testifies before the House Financial Services Committee at 10 a.m.

Thursday: The Chicago Purchasing Managers index of business conditions in Chicagoland, at 9:45 a.m.

Friday: Motor vehicle sales throughout the day, the Purchasing Managers' index just before 9 a.m. and construction spending at 10 a.m.

I also follow the Baltic dry index, released daily, tracking the volume of global maritime shipments of coal, iron ore, grain and other raw materials.


Chicago Fed Pres. Charles Evans, a member of the Federal Open Market Committee, speaks on Thursday.

An FOMC alternate, Dallas Fed Pres. Richard Fisher, also makes an appearance on Thursday.

Trading calendar

By my rules, we're at that awkward point where it's late for March option spreads having short legs and early for the April spreads. So trading I'm trading June options for single calls and puts and the long vertical spreads through Thursday. From Friday, I'll start trading March short vertical spreads. Of course, shares are good at any time.

Good trading!

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