The Week Ahead: Fed Chair testimony, GDP, durables and global trade

The new Federal Reserve chairman, Jerome Powell, testifies before Congress for the first time as head of the agency, before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday. Each hearing begins at 10 a.m. New York time.

Powell is the first non-economist to head the Fed since William Miller, who served in the post in 1978 and 1979. Miller was CEO of an aerospace/defense company, Textron Inc. (TXT), and Powell was an investment banker at several companies, culminating as a vice president at the no-longer existing Dillon, Read & Co.

And that’s what will keep me glued to the screen throughout the testimony: How will his approach and assessments, given his background, differ from those of the long string of economists that have controlled our money, our prosperity and our ability to earn a living and therefore survive in the world. High stakes, and as traders we need to understand the odds of him having an impact on our results.

Meanwhile, back in the more mundane realm of economic reporting, traders will get a second estimate of gross domestic product for the 4th quarter, on Wednesday at 8:30 a.m. It will be one of a collection of reports that give deep insight into our economic realities: Durable goods orders and international trade in goods, each on Tuesday at 8:30 a.m., and personal income and outlays on Thursday, also at 8:30 a.m.

In addition, new home sales statistics will be published on Monday at 10 a.m.

Back to the Fed, Vice Chairman for Supervision Randal Quarles will give give an assessment of the U.S. economy in an address to the 34th Annual National Association for Business Economics Economic Policy Conference, on Monday at 3:15 p.m. in Washington.

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 Institute of Supply Management manufacturing survey at 10 a.m. Thursday.

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

Average weekly initial claims for unemployment, from the jobless claims report at 8:30 a.m. Thursday.

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

The index of consumer expectations from the University of Michigan consumer sentiment survey at 10 a.m. Friday.

Events arranged by day:

Monday: New home sales at 8:30 a.m.

Tuesday: Durable goods orders and international trade in goods, each at 8:30 a.m, the Case-Shiller home price index, covering 20 metro areas, at 9 a.m., and Fed Chairman Powell’s House testimony at 10 a.m.

Wednesday: GDP a 8:30 a.m., the Chicago Purchasing Managers index at 9:45 a.m., pending home sales at 10 a.m. and petroleum inventories at 10:30 a.m.

Thursday: Motor vehicle sales throughout the day, jobless claims and personal income and outlays, each at 8:30 a.m., the PMI manufacturing index at 9:45 a.m., and the ISM manufacturing surveyconstruction spending and Fed Chairman Powell’s Senate testimoney, each at 10 a.m.,  and the M2 money supply at 4:30 p.m.

Friday: Consumer sentiment at 10 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 5-year implied inflation rate which is the difference between the yields on 5-year U.S. Treasury notes and  5-year Treasury inflation protected securities (TIPS).

By Tim Bovee, Portland, Oregon, Feb. 24, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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