Sunday, March 15, 2015

The Week Ahead: Patience, money policy, industry, housing

This is the week of patience in the markets and the broader economy.

Last December the Federal Open Market Committee said, "The committee judges that it can be patient in beginning to normalize the stance of monetary policy." June has been floated as the earliest possible time for money policy tightening to begin.

As the FOMC approaches a two-day meeting beginning Tuesday, the financial chattering class is all atwitter over the possibility that the word "patient" will disappear from the FOMC statement issued Wednesday at 2 p.m. New York time.

Should it vanish, it will be seen, with typical exaggeration, as a harbinger of earth-shattering change, the end of the world as we've known it since the Great Recession smashed all hopes and expectations.

Fed Pres. Janet Yellen's news conference and the release of the FOMC forecasts at 2:30 p.m. will provide context for the markets, but the week hinges on one meek seven-letter word.

Volatility will rule the week. Which direction? How far? We must be patient.

Two economic reports have market-moving potential, although their impact will surely be small compared to the Fed's: Industrial production on Monday at 9:15 a.m. and housing starts 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.

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

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

Building permits for new private homes from housing starts at 8:30 a.m. Tuesday.

The index of leading indicators, although not itself a leading indicator,  provides a "You Are Here" marker for the economic cycle that I find to be useful. It will be published at 10 a.m. Thursday.

Other items of interest:

Monday: The Empire State manufacturing survey at 8:30 a.m., the Home Builders' housing market index at 10 a.m. and the Treasury international capital tracing flows into and out of the country, at 4 p.m.

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

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

Treasury Debt

  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Thursday
  • 3-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 6-month: Auction Monday 11:30 a.m., announcement Thursday 11 a.m.
  • 2-year: Announcement Thursday 11 a.m.
  • 3-year: Settlement Monday
  • 5-year: Announcement Thursday 11 a.m.
  • 7-year: Announcement Thursday 11 a.m.
  • 10-year: Settlement Monday
  • 30-year: Settlement Monday
  • 10-year: Auction Thursday 1 p.m.

The FOMC announcement on Wednesday at 2 p.m., followed by Fed Chair Janet Yellen's news conference a half-hour later, dominate the Federal Reserve calendar for the week. But there are other items.

Fed Gov. Daniel Tarullo, a member  of the Federal Open Market Committee, testifies about regional banks before the Senate Banking, Housing and Urban Affairs on Friday at 10 a.m.

Two other FOMC members take to the podium, both on Friday. They are Atlanta Fed Pres. Dennis Lockhart and Chicago Fed Pres. Charles Evans.

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,402 stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades, I'm trading April 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 June 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, March 15, 2015


My price channel trading rules can be read here. My long-term share trading rules can be read here.  My volatility trading rules can be read here. The channel rules are based on
 the classic Turtle Trading rules, which can be read here.


Two social media feeds provide notification whenever something new is posted.


Creative Commons License

All content on Tim Bovee, Private Trader by Tim Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at

No comments:

Post a Comment