Friday, February 8, 2013

The Week Ahead: Industry and retail

Retail sales and industrial production are the main drivers of the week in economic reports. Together they cover the spectrum of what's necessary for the economic recovery to continue.

The government's retail sales report, the product of a survey by the Census Bureau, will be published Wednesday at 8:30 a.m. Eastern. No one goes blind into this report  -- sales by the major chains are released separately and on a more timely schedule -- but nothing can match the government's survey for comprehensiveness.

Retail sales are the mouth of the economic river. If people don't step up to buy, nothing the retailers and manufacturers do will matter.

Far upstream are the companies and people who make things, and that's tracked by the Federal Reserve's industrial production report, published Friday at 9:15 a.m. In some ways this can be seen a the industrial sector's opinion of consumer confidence within their respective sectors.

An old proverb says, "If you build it they will come". The industrial production report has quite the opposite premise: If you think they will come, you will build it.

Also, this is options expiration week. February options trade for the last time on Friday and expire on Saturday.

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.

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

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

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

Other reports of interest:

Monday: The Treasury budget at 2 p.m.

Tuesday: Import and export prices at 8:30 a.m., business inventories at 10 a.m. and petroleum inventories at 10:30 a.m.

Friday: The Fed's Empire State manufacturing survey of business conditions in New York at 8:30 a.m. and Treasury's international capital report tracking the flow of foreign funds into and out of the United States, at 9 a.m.


Two members of the Federal Open Market Committee have public appearances: Kansas City Fed Pres. Esther George on Tuesday and St. Louis Fed Pres. James Bullard on Wednesday and Thursday.

An FOMC alternate, Cleveland Fed Pres. Sandra Pianalto, makes an appearance on Tuesday.

Trading calendar

By my rules, as of Monday I'm using March options for the short vertical spreads and May options for single calls and puts and the long vertical spreads. Of course, shares are good at any time.

Good trading!

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