Saturday, October 26, 2013

The Week Ahead: FOMC meeting, three major delayed reports

The Federal Open Market Committee meets for two days and will issue a statement Wednesday at 2 p.m. New York time. The recent Tea Party-inspired closure of government for 16 days and close encounter with default on the federal debt has silenced talk that the Fed will dial back on monetary stimulus any time soon. Both events, economists say, slowed economic growth sufficiently to produce fear that economic tightening will thrown the country back into recession.

Reports delayed by the government shutdown continue to hit the econ board in the coming week, shining some light into the dark shadows that had the markets flying blind while the Congressional Republicans tried to answer the crucial question, "Who's in charge here?"

The three major delayed reports to hit the boards this week are industrial production on Monday at 9:15 a.m., the producer price index and retail sales, both on Tuesday at 8:30 a.m., and the consumer price index on Wednesday at 8:30 a.m.

One fresh report, the Institute of Supply Management manufacturing index will be out Friday at 10 a.m.

The ADP employment report is scheduled for Wednesday at 8:15 a.m. This report usually is out two days before the government's employment report, which was originally to be published on Friday, Nov. 1. However, the shutdown has delayed the government release until Friday, Nov. 8. Nothing on the ADP web site as I write this on Saturday morning indicates a change in their schedule. But the report loses much publicity value without the tie to the federal report, so I wouldn't bet against ADP deciding to delay its report. Or perhaps they'll decide to duplicate it, releasing reports spaced a week apart.

It's a small example of how intertwined activities of government and the private sector are. Shutdown one and cause problems for the other.

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 known as the delivery times index, from the ISM 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. 

Other reports of interest:

Monday: Pending home sales at 10 a.m. and the Dallas Federal Reserve manufacturing survey of conditions in Texas, at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price index at 9 a.m., a delayed report, business inventories at 10 a.m. and consumer confidence at 10 a.m.

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

Thursday: The Chicago Purchasing Managers index at 9:45 a.m.

Friday: Motor vehicle sales throughout the day and the Purchasing Managers index for manufacturing just before 9 a.m.


Two Fedsters have public appearances, both on Friday. They are St. Louis Fed Pres. James Bullard, a member of the FOMC, and Minnesota Fed Pres. Narayana Kocherlakota, an FOMC alternate.

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,399 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 February options for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading!

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