Sunday, March 23, 2014

The Week Ahead: GDP and personal income

Two reports lead the economic week as potential market movers. The final estimate of gross domestic product for the 4th quarter of 2013 will be released on Thursday, followed by personal income and outlays on Friday, both at 8:30 a.m. New York time.

Both get down to the fundamentals -- how much are we producing and how much do we have to spend as a result of our work. From those two starting points springs the entirety of the economy.

Two other reports, new home sales on Tuesday at 10 a.m. and durable goods orders on Wednesday at 8:30 a.m., also sometimes have market impact.

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. 

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 Purchasing Managers Institute manufacturing index flash report at 9:45 a.m.

Tuesday: The S&P Case-Shiller home price index of 20 metro areas at 9 a.m. and consumer confidence at 10 a.m.

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

Thursday:  The pending home sales index of house sales that have been contracted but not closed at 10 a.m. and the Federal Reserve money supply report at 4:30 p.m.

Friday: The Reuters/University of Michigan consumer sentiment report at 9:55 a.m.

I also keep an eye on the Baltic Dry Index, updated daily.

Fedsters

Four Federal Open Market Committee members have scheduled public appearances during the week: Fed Gov. Jeremy Stein and Dallas Fed Pres. Richard Fisher on Monday, Philadelphia Fed Pres. Charles Plosser on Tuesday and Cleveland Fed Pres. Sandra Pianalto on Thursday.

One FOMC alternate takes to the podium: Atlanta Fed Pres. Dennis Lockhart on Tuesday.

And three others from among the Fed glitterati will speak: St. Louis Fed Pres. James Bullard on Wednesday, Chicago Fed Pres. Charles Evans on Thursday and Kansas City Fed Pres. Esther George on Friday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 3,861 small-cap and larger stocks and exchange-traded funds.

Trading calendar

By my rules, I'm trading April 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 July options for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading.

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