Sunday, November 2, 2014

The Week Ahead: Jobs, Big Question, manufacturing and global trade

The Labor Department's employment situation report, out Friday at 8:30 a.m. New York time, will dominate the first week after the Federal Reserve announced an end to its extraordinary Quantitative Easing economic stimulus program.

The Big Question hanging in the market air is whether the Fed acted prematurely. Ending economic stimulus too soon means that unemployment will rise. Although Friday's report will be way too soon to see any policy impact, it will provide a benchmark -- a starting point -- against which subsequent changes can be measured.

One member of the Federal Open Market Committee, Minneapolis Fed Pres. Narayana Kocherlakota, issued a statement on Saturday elaborating on his contention that the FOMC had acted too soon. It can be read here.

Also closely watched for hints as to the Fed's assessment of the new policy, a speech by Federal Reserve Chair Janet Yellen on Friday at 10:15 a.m. to the International Symposium of the Banque de France. Her topics: Policy since the onset of the financial crisis.

The official employment report will get a sneak preview on Wednesday, when a major payroll company, ADP, releases its employment report at 8:15 a.m.

Other potential market-movers during the week: The Institution for Supply Management manufacturing survey on Monday at 10 a.m. and international trade statistics on Tuesday at 8:30 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. Tuesday.

Vendor performance, also called the deliveries time index, from the ISM manufacturing survey, at 10 a.m. Monday.

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

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

Manufacturers' new orders for non-defense capital goods from the factory orders report, at 10 a.m. Tuesday.

Other items of interest:

Monday: Motor vehicle sales throughout the day and the Purchasing Managers Institute manufacturing index at 9:45 a.m.

Tuesday: The factory orders report at 10 a.m.

Wednesday: The Instituter for Supply Management non-manufacturing survey at 10 a.m. and petroleum inventories at 10:30 a.m.

Thursday: Productivity costs at 8:30 a.m.

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


Aside from Fed Chair Yellen, other Federal Open Market Committee members with appearances scheduled are Dallas Fed Pres. Richard Fisher on Monday, Minneapolis Fed Pres. Narayana Kocherlakota on Wednesday, Fed Gov. Jerome Powell and Cleveland Fed Pres. Loretta Mester on Thursday, and  Fed Gov. Daniel Tarullo on Friday

FOMC alternates taking to the podium are Chicago Fed Pres. Charles Evans on Monday and Richmond Fed Pres. Jeffrey Lacker on Wednesday

Another of the Fed glitterati speaking is Boston Fed Pres. Eric Rosengren on Wednesday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 1,374 mid-cap and larger stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades, I'm trading December 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 February 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, Nov. 2, 2014

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