Saturday, October 5, 2013

The Week Ahead: Shutdown uncertainty

If Congressional Republicans continue to refuse to fund the U.S. government, which remains mainly non-operational over this weekend, then the schedule of federal economic reporting will be in doubt.

Two major reporting agencies, the Labor Dept. and the Commerce Dept., have shut down most of their major functions. For example, Labor didn't release the employment report due out last Friday. Other agencies, such as the Federal Reserve, have independent funding and so are doing their jobs unimpaired.

The one major report that appears certain at this point is the release of minutes of the Federal Open Market Committee's Sept. 18 meeting, providing a window into the thinking of the men and women who set monetary policy. It is scheduled for Wednesday at 2 p.m. New York time.

The other major reports are all from agencies impacted by the shutdown: International trade on Tuesday at 8:30 a.m. and the producer price index and retail sales on Friday at 8:30 a.m.

Three other reports of interest are produced by agencies affected by the shutdown: Import and export prices on Thursday at 8:30 a.m. and the Treasury budget, also on Thursday, at 2 p.m., and business inventories on Friday at 10 a.m.

Reports from shut down agencies might be released if government funding is restored, or if the agencies find a workaround. At this point I am reluctant to hazard as guess as to which of those data releases will actually be available to traders.

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. This report was released by the Labor Dept. last week despite the government shutdown.

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

Other reports of interest:

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


St. Louis Fed Pres. James Bullard, a member of the Federal Open Market Committee, speaks on Thursday.

Two FOMC alternates have scheduled appearances, Cleveland Fed Pres. Sandra Pianalto and Philadelphia Fed Pres. Charles Plosser, both on Tuesday.

San Francisco Fed Pres. John Williams, who has no seat on the FOMC this year, will speak on Thursday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,383 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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