The Week Ahead: Jobs, income, outlays, manufacturing, global trade

Do you ever get the impression that the economic reports cycle is much like the phases of the Moon? We drift along with a scattering of reports, sheeding little light on the market landscape, except perhaps for the laggard GDP, but generally a yawn. Half moon. New moon. Half moon again.

And then, bang!. The employment situation report shines out like a glorious full moon, dispelling the shadows and revealing contours of the economy. Market writers stretch their fingers as they sit at their keyboards, first to speculate on the impact of the new numbers, and then to describe the actual impact, which is often something entirely different. Employment week is the best week of the month, in my book.

And it has arrived, like the glorious full moon. The employment situation report will be published on Friday at 8:30 a.m. New York time, preceded by the usual private sector preview compiled by a payroll management company, the ADP employment report on Wednesday at 8:15 a.m.

Today’s Book:

The Alchemy of Finance

By George Soros

George Soros has made headlines of late as the target of a domestic terrorist, a wannabe mail bomber. Before that he periodically made headlines as one of President Trump’s rhetorical bugbears, the so-called mastermind behind the Democratic Party’s efforts to roll back Trumpism.

But far before the hyper-politicized headlines of the moment, Soros was known as one of the most successful investors in the world, an immigrant who grew up in Nazi-occupied Hungary and eventually made his way to America, where by applying his energy, logic and wits, he grew his holdings to a net worth of $8 billion, and that’s what’s left over after he donated $18 billion to charity.

Soros is the American dream come true.

As traders — all politics set aside — it is that success that we look to in our never-ending quest to learn how to trade better. Soros in 2007 wrote a book about finance and the new trends he sees shaping the core of our global economy. He updated the book in 2015 in light of the collapse known as the Great Recession, with a forward by another voice worth listening to, former Fed Chair Paul Volcker, who in the early 1980s painfully but successfully wrung runaway inflation out of the American economy.

The Wall Street Journal in a review described Soros’ book this way: “An extraordinary … inside look into the decision-making process of the most successful money manager of our time. Fantastic.” I couldn’t have said it better myself.

More about the book.

Employment week always brings a cluster of major reports, and this week is no exception.

Look for personal income and outlays on Monday at 8:30 a.m., the Institute of Supply Management manufacturing index on Thursday at 10 a.m. and international trade on Friday 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.

Vendor performance, or the deliveries times index, from the Institute of Supply Management manufacturing survey, at 10 a.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 factory orders report at 10 a.m. Friday.

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.

Manufacturers’ new orders for non-defense capital goods from the factory orders report at 10 a.m.Friday.

Events arranged by day:

Monday: Personal income and outlays at 8:30 a.m. and the Dallas Federal Reserve Bank manufacturing survey at 10:30 a.m.

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

Wednesday: The ADP employment report at 8:15 a.m., the employment cost index at 8:30 a.m., the Chicago Purchasing Managers Institute index at 9:45 a.m. and petroleum inventories at 10:30 a.m. .

Thursday: Jobless claims and productivity and costs, each at 8:30 a.m., the Purchasing Managers Institute manufacturing index at 9:45 a.m., the Institute of Supply Management manufacturing index and construction spending, each at 10 a.m., and the M2 money supply and Federal Reserve balance sheet, each at 4:30 p.m.

Friday: Motor vehicle sales throughout the day, the employment situation and international trade, each at 8:30 a.m., and factory orders 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. 27, 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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