The Week Ahead: Jobs, Income and Outlays, International Trade

The employment report, including the headline-generating unemployment rate, will be published Friday at 8:30 a.m. New York time. It will dominate market talk over the week as traders try to guess how changes in employment will impact money policy decisions by the Federal Reserve.

I find it to be a counter-intuitive exercise. Unemployment down? That's good for workers and the country. But perhaps it's an indicator to the Fed that the economy is overheating and that it's time to tighten a bit, which would be bad for market bulls.

The employment report gets a sneak preview on Wednesday when a private-sector payroll company releases the ADP employment report, on Wednesday at 8:15 a.m.

Three other potential market-movers will hit the Street during the week: Personal income and outlays, which are used to calculate the savings rate, another key measure of the economy's temperature, on Monday, and international trade on Friday, both at 8:30 a.m., and the Institute of Supply Management manufacturing survey on Wednesday at 10 a.m.

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 performance, also called the deliveries times index, from the ISM manufacturing survey, Wednesday at 10 a.m.

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

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

Other items of interest:

Monday: Pending home sales at 10 a.m. and the Dallas Federal Reserve manufacturing survey at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price survey on conditions in 20 metropolitan areas at 9 a.m., the Chicago Purchasing Managers index at 9:45 a.m., and consumer confidence at 10 a.m.

Wednesday:  Motor vehicle sales throughout the day, the Purchasing Managers Institute manufacturing index at 9:45 a.m., construction spending at 10 a.m., and petroleum inventories at 10:30 a.m.

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

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

Fedsters

Fed Gov. Jerome Powell, a member of the Federal Open Market Committee, takes part in a panel discussion of Government Debt Management a the Zero Lower Bound, on Tuesday at 10:30 a.m. The subject is a core consideration as the Fed seeks to manage its efforts to stimulate the economy with interest rates already cut as far as they possible can be.

Chicago Fed Pres. Charles Evans, an FOMC alternate, speaks on Monday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 1,203 mid-cap and larger stocks and exchange-traded funds.

Trading calendar

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

Good trading.

-- Tim Bovee, Portland, Oregon, Sept. 28, 2014

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