Sunday, September 29, 2013

The Week Ahead: Jobs and factories

Update 9/30/2013: The Bureau of Labor Statistics said today that should a continuing budget resolution not be signed into law, causing portions of the government to shutdown beginning Tuesday, then some economic reports won't be released as scheduled.

For guidance here are the reports listed in "The Week Ahead" that are issued by government agencies that appear likely to be impacted by the shutdown, with the date and time they were originally scheduled for release:

Tuesday: Construction spending at 10 a.m.

Wednesday: The Energy Information Administration, which publishes the weekly petroleum inventories report at 10:30 a.m., will be able to operate through Oct. 11 under a shutdown.

Thursday: Initial jobless claims at 8:30 a.m. and factory orders at 10 a.m.

Friday: Employment and unemployment at 8:30 a.m.

The Federal Reserve has independent funding and so won't be impacted. I've not listed their reports. Private sector reports, it seems likely, will go ahead as scheduled.

And the inevitable caveat: All is in flux and nothing is certain. What will actually happen to econ reporting this week is anybody's guess.

This is jobs week in the endless feast of economic reports that nourish our lives as traders. An influential manufacturing index released by a private-sector organization and a Commerce Dept. report on factories will add touches of spice to the often drab fare.

The Labor Dept. will release its figures on employment and unemployment on Friday at 8:30 a.m. New York time. As always, there will be the run-up events to fuel speculation: The ADP employment report, put together by the largest American payroll company, will be out at 8:15 a.m. Wednesday, and on Thursday, the Challenger job-cut report tracking layoffs at 7:30 a.m. and weekly jobless claims at 8:30 a.m.

The Institute of Supply Management will publish its ISM manufacturing  index at 10 a.m. Tuesday. It has influence as a leading indicator; so many of the economic reports look backward, but the forward-looking ISM survey, along with the Commerce Department's factory orders report out Thursday at 10 a.m., is an exception.

Also, Fed Chairman Ben Bernanke gives opening remarks to a banking conference in St. Louis at 3:30 p.m. on Wednesday. It's not the sort of venue that normally produces major announcements, but when Chairman Ben speaks, wise traders listen.

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 average hourly workweek in manufacturing from the employment report, at 8:30 a.m. Friday.

Manufacturers' new orders for consumer goods and materials from the factory orders report, at 10 a.m. Thursday.

Vendor orders, also called the deliveries times index, from the ISM manufacturing survey, at 10 a.m. Tuesday.

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

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

Manufacturers' new orders for nondefense capital goods from the factory orders report, at 10 a.m. Thursday.

Other reports of interest:

Monday: Chicago purchasing managers index at 9:45 a.m., and the Dallas Federal Reserve Bank manufacturing survey at 10:30 a.m.

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

Wednesday: Petroleum inventories at 10:30 a.m.

Thursday: Institute of Supply Management non-manufacturing index at 10 a.m.


Three Federal Open Market Committee members haves scheduled public appearances during the week: Fed Chairman Ben Bernanke and New York Fed Pres. William Dudley on Wednesday and Fed Gov. Jeroome Powell on Thursday.

Two FOMC alternates will also take the podium: Dallas Fed Pres. Richard Fisher on Thursday and Minneapolis Fed Pres. Narayana Kocherlakota on Friday

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,393 stocks and exchange-traded funds that have some analyst interest. They are traded both on the major U.S. exchanges and over-the-counter. My universe is selected from mid-cap stocks and larger, defined as market capitalization of $1 billion and greater.

Trading calendar

By my rules, I'm trading November options for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading January options for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading!

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