Sunday, May 31, 2015

The Week Ahead: The employed, unemployed, and much, much more

The employment report will be released Friday at 8:30 a.m. New York time, including the statistic loved best by headline writers across the country, the unemployment rate. Employment is a key element in the Federal Open Market Committee's decision-making about whether or tight to raise interest rates.

The private-sector payroll company will provide a sneak preview to the official numbers, the ADP employment report, released Wednesday at 8:15 a.m.

Three other potential market-movers will hit screens in the run-up to Friday's grande finale: Personal income and outlays, from which the savings rate is calculated, on Monday at 8:30 a.m.; the Institute of Supply Management manufacturing index, also on Monday, at 10 a.m.; and international trade on Wednesday at 8:30 a.m.

Busy busy. I expect an interesting week.

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 factor orders report, at 10 a.m. Tuesday.

Vendor performance, or the deliveries times 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 factor orders report, at 10 a.m. Tuesday.

Items of interest, arranged by day:

Monday: Personal income and outlays at 8:30 a.m., the PMI manufacturing index at 9:45 a.m. and the ISM manufacturing index and construction spending, both at 10 a.m.

Tuesday: Motor vehicle sales throughout the day and factory orders at 10 a.m.

Wednesday: The ADP employment report at 8:15 a.m., international trade at 8:30 a.m., the ISM non-manufacturing index at 10 a.m.,  petroleum inventories at 10:30 a.m. and the Federal Reserve Beige Book at 2 p.m.

Thursday: Jobless claims and productivity and costs, both at 8:30 a.m., and the money supply at 4:30 p.m.

Friday: The employment report at 9:30 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate based on U.S. Treasury yields, which presently stands at 1.62%.

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.
  • 3-year: Announcement Thursday 11 a.m.
  • 10-year: Announcement Thursday 11 a.m.
  • 30-year: Announcement Thursday 11 a.m.
  • None

Two Federal Reserve princelings, both members of the Federal Open Market Committee, give potentially market-impacting policy addresses during the week.

Fed Vice Chairman Stanley Fischer speaks about "Lessons form the Financial Crisis" at the American Bankers Association International Monetary Conference in Toronto, on Monday at 9:30 a.m.

Fed Gov. Lael Brainard delves into the core concerns of the markets, today, tomorrow and always: "U.S. Economic Outlook and Monetary Policy". He delivers his remarks on Tuesday at 10 a.m. at the Center for Strategic and International Studies in Washington.

Other FOMC members at the podium are Chicago Fed Pres. Charles Evens on Wednesday, Fed Gov. Daniel Tarullo on Thursday and New York Fed Pres. William Dudley on Friday.

Two FOMC alternates speak: Boston Fed Pres. Eric Rosengren on Monday and St. Louis Fed Pres. James Bullard on Wednesday.

Analytical universe

This week I shall be analyzing new bull and bear signals among 489 large-cap stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades of Monthly options, I'm trading July 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 September options and later for single calls and puts as well as straddles. Shares and Weekly options, of course, are good at any time.

Good trading.

-- Tim Bovee, Portland, Oregon, May 31, 2015


My trading rules can be read here.


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