The Week Ahead: Productivity, retail, industry, housing

Productivity

Productivity, 1988-2017

The always important question of productivity takes center stage this week, along with the retail, housing and industrial sectors.

The quarterly productivity and costs report will be published Wednesday at 8:30 a.m. New York time. As the chart above shows, productivity peaked in 2002, hit a lower high in 2011, and thereafter fell into a narrow range in the cellar. Economists consider productivity to be the source of growth.

The chart of productivity below shows just how dramatic the long-term change has been. We are back in the 1970s, and traders of a certain age know all too well what that meant back in the day: Massive job losses, the dismantling of the American industrial sector, stagflation. Not a happy chart.

productivity1947

So economists for sure and many traders as well will be paying attention when the report is released.

The sector reports will be concentrated on Wednesday and Thursay.

Expect retail sales on Wednesday at 8:30 a.m., concurrently with productivity, and industrial production 45 minutes later at 9:15 a.m. Housing starts will be published on Thursday 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 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. Thursday.

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

The index of leading indicators, although not itself a leading indicator, is built from them and provides a useful “we are here” marker for the eonomy.

Events arranged by day:

Tuesday: Import and export prices at 8:30 a.m.

Wednesday: Productivity and costsretail sales and the Empire State manufacturing survey of conditions in New York, each at 8:30 a.m., industrial production at 9:15 a.m., business inventories and the Home Builders housing market index, each at 10 a.m.,  petroleum inventories at 10:30 a.m. and the Treasury international capital report at 4 p.m.

Thursday: Jobless claims, housing starts and the Philadelphia Federal Reserve business outlook survey of conditions in the mid-Atlantic region, each at 8:30 a.m., and the M2 money supply at 4:30 p.m.

Friday: Consumer sentiment and leading indicators, each 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 10-year U.S. Treasury notes and  10-year Treasury inflation protected securities (TIPS).

By Tim Bovee, Portland, Oregon, Aug. 11, 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.

License
Creative Commons License

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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