The Week Ahead: GDP, durables, global trade, new homes

The week brings a first look at 3rd quarter gross domestic product. The report will be published Friday at 8:30 a.m.

The release has a greater than normal potential for market impact.. The 1st quarter’s growth was 2.2% and 2nd quarter’s, 4.2%.

That’s a rapid growth rate, and as the markets begin to falter in the face of the Federal Reserve’s raising of interest rates, both the Fed and traders will give these numbers an eagle-eyed scrutiny for signs of a looming recession.

Of greatest importance for interest rates: The implicit price deflator metric within the GDP report. The FOMC gives greater credence to this measure of inflation rather than the headline-generating consumer price index, and it will be a factor the committee considers in setting the target federal funds interest rate.

Today’s Book

The Infinite Game, by Simon Sinek

For the trader, life is a game. The questions we spend on our days, and sometimes nights, worrying about are these: What sort of game is it? What are the rules? What is my goal, besides “Make money”?

Sinek divides games into two varieties, the finite — with fixed rules and goals, like football — and the infinite — where the rules change and the goalposts move, like — well, like trading.

The book carries its discussion of games off the playing field and into the enterprise, and since trading itself is an enterprise, it’s insights apply to the games of the markets as well.

Coming soon.

More about the book

Otherwise, it’s a savory stew of indicators: Durable goods orders, a measure of buyer confidence to commit funds for a long-term asset, and international trade in goods, important as a diagnostic of the impact of the Trump administration’s aggressive tariff policies. Each will be published on Thursday at 8:30 a.m.

There will be one housing report: New home sales, the smaller part of the market, will be released on Wednesday at 10 a.m.

The Fed’s Beige Book will be published on Wednesday at 2 p.m. It provides a narrative of economic conditions in each federal reserve bank region.

Fed Vice Chairman Richard Clarida will address London’s Peterson Institute for International Economics on Thursday at 12:15 p.m. New York timeIt is his first public event as vice chairman, and it will be streamed 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:

Wednesday: New home sales at 10 a.m., petroleum inventories at 10:30 a.m. and the Federal Reserve Beige Book at 2 p.m.

Thursday: Jobless claimsdurable goods orders and international trade in goods, each at 8:30 a.m., the pending home sales index at 10 a.m., and the M2 money supply and Federal Reserve balance sheet, each at at 4:30 p.m.

Friday: Gross domestic product at 8:30 a.m.. and the University of Michigan consumer expectations survey at 10 a.m.

I also keep an eye on the Baltic Dry Index, updated daily, and the 10-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, Oct. 20, 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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