Sunday, March 22, 2015

The Week Ahead: Prices, GDP, homes, durable goods

The week will see two economic reports having impact on the Federal Reserve's decision-making about interest rates.

The third and final estimate of 4th quarter gross domestic product will be published Friday at 8:30 a.m. New York time. The report not only tracks the entire economy. One component, the price deflator, provides a measure of inflation that many influential economist, including some among the Fed nobillissimi, consider to be superior to the more followed measure...

...the consumer price index, which will be released Tuesday at 8:30 a.m. This is the inflation gauge that makes the headlines and roils politics.

The conventional wisdom is that an active economy as measured by the GDP and rising prices as tracked by the inflation measures will increase pressure on the Federal Open Market Committee to raise interest rates.

The other potential market-movers will hit the Street: Existing home sales on Monday and new home sales on Tuesday, both at 10 a.m., and durable goods orders, tracking activity in big-ticket items, will be out on Wednesday 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. 

The index of consumer expectations from the Reuters/University of Michigan consumer sentiment report, at 10 a.m. Friday.

Other items of interest:

Tuesday: The Purchasing Managers Institute manufacturing index flash report at 9:45 a.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.
  • 52-week: Announcement Thursday 11 a.m.
  • 2-year: Auction Tuesday 1 p.m.
  • 2-year floating rate: Auction Wednesday 11:30 a.m.
  • 5-year: Auction Wednesday 1 p.m.
  • 7-year: Auction Thursday 1 p.m.

Fedsters are out in droves during the week after keeping largely silent in the run-up to last week's money-policy meeting.

Federal Reserve Vice Chairman Stanley Fischer speaks twice, on Monetary Policy Lessons and the Way Ahead on Monday at 12:20 p.m. at the Economic Club of New York, and on The Nonbank Financial Sector: Issues and Regulation on Friday at 6:30 a.m. New York time at the Deutsche Bundesbank Conference in Frankfurt, Germany.

Other Federal Open Market Committee members taking to the podium are San Francisco Fed Pres. John Williams on Monday, Chicago Fed Pres. Charles Evans on Tuesday and Atlanta Fed Pres. Dennis Lockhart on Thursday.

An FOMC alternate, St. Louis Fed Pres. James Bullard, makes public appearances on Tuesday and Thursday, 

Analytical universe

This week I shall be analyzing new bull and bear signals among 2,443 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 July 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 22, 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.


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