Saturday, August 9, 2014

The Week Ahead: Industry, Retail, Producer Prices

Retail sales, industrial production and producer prices dominate the week in economic reporting, providing three opportunities on two days for the news to guide the markets' drunken course.

Retail sales, the broadest of the retail sector reports, will be published on Wednesday at 8:30 a.m. New York time. Consumer willingness to shop till they drop is often cited as a major element in a robust bounce back from the crash, so this report monitors a source of the recovery.

Industrial production, another broad report measuring production and capacity in industry, mining and utilities, will be released on Friday at 9:15 a.m. It measures a symptom of the recovery.

The producer price index, also out on Friday, at 8:30 a.m., measures inflation a few steps up the chain from the retail shelf, providing an early indicator of consumer prices and therefore monitors a possible trigger of Fed action to slow or speed the recovery.

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, at 9:55 a.m. Friday.

Other items of interest:

Tuesday: The Treasury budget, showing the federal current account deficit, at 2 p.m.

Wednesday:  Business inventories at 10 a.m. and petroleum inventories at 10:30 a.m.

Thursday: Import and export prices at 8:30 a.m.

Friday: The Empire State manufacturing survey of conditions in New York state, at 8:30 a.m., and Treasury international capital, tracking money flows into and out of the country, at 9 a.m.

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


The Fed glitterati are back! With an all-star cast adding spice to the market week.

Fed Vice-Chairman Stanley Fischer addresses the Swedish Ministry of Finance Conference on the subject, The Great Recession: Moving Ahead. Fisher speaks Monday at 3:15 a.m. New York time.

Two Federal Open Market Committee members speak: New York Fed Pres. William Dudley on Wednesday and Minneapolis Fed Pres. Narayana Kocherlakota on Friday.

Also at the podium, Boston Fed Pres. Eric Rosengren, who is unconnected with the FOMC this year, on Wednesday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 261 large-cap and exchange-traded funds, a smaller pool than usual in order to lesson processing time while I travel in East Asia.

Trading calendar

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

Good trading.

-- Tim Bovee, Fukuoka, Japan, Aug. 9 2014 New York time

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