The Week Ahead: Production, income, outlays

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The week brings a third and final look at 1st quarter gross domestic product, on Wednesday at 8:30 a.m. New York time.

The 2nd estimate, released last month, showed GDP increasing by an annual rate of 2.2% during the 1st quarter, down from 2.9% in the prior quarter. The quarter saw the second straight decline since a peak in the 3rd quarter of 2017.

Personal income and outlays on Friday at 8:30 a.m., showing how much we make, how much of that we spend, and through the mathematical magic of subtraction, how much of that we’re setting aside for other purposes, such as savings and investment.

A month ago income was rose from the prior month at a 3.6% annualized rate, outlays by a 7.2% annualized rate. Bottom line: We’re spending more than we make at a fairly good clip.

Three other major reports hit the Street during the week:

  • New home sales, the smaller portion of the housing market, on Monday at 10 a.m. Existing home sales, covering the larger portion of the market, were reported last week.
  • Durable goods order on Wednesday at 8:30 a.m. I consider this in some ways to be a consumer sentiment measure — Are people and companies sufficiently confident to invest big money in things that they’ll use for years.
  • International trade in goods, also Wednesday at 8:30 a.m. a measures of U.S. participation in our global economy.

In Fedworld, Federal Reserve Vice Chairman Randal Quarles addresses the Utah Bankers Association on Wednesday at 11 a.m. New York time (9 a.m. local) at Sun Valley, Idaho. His subject: “International Regulatory Participation and Cooperation”. The event will streamed live here.

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 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.

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 10 a.m.

Tuesday:  The Case-Shiller home price index in 20 metro areas at 9 a.m. and consumer confidence at 10 a.m.

Wednesday: Durable goods orders and international trade in goods, each at 8:30 a.m., and petroleum inventories at 10:30 a.m.

Thursday: GDP and jobless claims, each at 8:30 a.m.  and the M2 money supply at 4:30 p.m.

Friday: Personal income and outlays at 8:30 a.m., the Chicago Purchasing Managers index at 9:45 a.m. and 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  10-year Treasury inflation protected securities (TIPS).

By Tim Bovee, Portland, Oregon, June 23, 2018

Disclaimer

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

Based on a work at www.timbovee.com.

 

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