Hi Folks.
Welcome to another edition of the Econ Forecast. While the lineup of reports this week isn't all that impressive (aside from Friday's NFP) this does mark the beginning of one of the longest stretches of the year without much Holiday interference (Good Friday on April 3 usually opens for half the day here in the most Christian nation on Earth, which is a bad joke I seem to make every year about this time). But that means we have relatively clear sailing for the next 3 to 3-1/2 months, so now is the time to lean into your trading, because once summer gets here around mid to late June, things will slow down noticeably.
LATE UPDATE: I wrote the entire forecast on Friday afternoon, then woke up Saturday morning to news that the US and Israel are engaged in a pretty fierce attack on Iran. All politics aside, this could have a huge impact on the markets across the board, starting with the FX and Futures aftermarket trading at 6 pm eastern tonight, and certainly carrying over into the market opens for the various regions and indexes. You can make a lot of money during these times, and you can have your ass handed to you on a silver platter in the blink of an eye just as easily. So exercise a bit more than the normal caution you already use, and if prices are moving up and down so fast you are having trouble getting into a trade, shut it down and call it a day. If you have trouble getting in, imagine the trouble you'll have getting out (aside from blowing up your account and getting margin called). Capital Protection is Job #1 during these times, so just be extra careful out there for the next few days.
Here is the Forecast.
SUNDAY: There are four entries on Sunday night, 3 from Australia and 1 from Japan. We’ve seen all of them a million times and a million releases have resulted in no significant price action. So once again we pass the entire session.
MONDAY: Asian/London Session: We start this session with two sets of numbers. One is the Manufacturing PMI numbers that stagger out over a 3-4 hour period (more if you count Canada’s contribution), which is this case is Spain (3:15) Switzerland (3:30) Italy (3:45) France (3:50) Germany (3:55) Eurozone (4:00), Great Britain (4:30) and Canada (9:30). Same rules as always apply. See Trend = Trade Trend. No Trend = No Trade. The other is the collection of country specific numbers that typically do nothing for price action, including the GBP numbers at 4:30 (M4 Money Supply, Mortgage Approvals, and Net Lending to Individuals). Then there is a third grouping: Fed Speak, and today we have a ton of it: 7:30, 9:00 (two entries, one of which is Lagarde, so keep an eye on the Euro pairs while she’s at the podium), 9:10 (Nagel from the German Buba, on par with Lagarde and Powell), and 10:30 ( a nobody from the UK). For the evening session we bookend Fed Speak from Gov. Bullock from the RBA (4:30 p.m.) and Ueda from the Bank of Japan (11:00 p.m.) with a bunch of dumpster fire reports that are all easily ignored, no matter the country they source from.
USA Session: 9:45 a.m. is the lesser Manufacturing PMI (from the same source as the earlier A/L session entries) and traders don’t even know it exists. But at 10:00 we get the ISM Manufacturing PMI and PMI Prices, and traders definitely know when this one comes out. It might not be at the same level as the CPI and NFP, but it is typically behind some decent price action each month, particularly if the number misses the expectation (by a little or a lot, it does not matter).
TUESDAY: Asian/London Session: At least we had the PMI numbers to look at yesterday. Today’s early session is a bunch of country-specific numbers, all of which could have an impact on the Euro but never do. Even the Eurozone CPI Flash Estimates at 5:00 a.m. rarely generate more than 8-10 pips, so it too is a pass. The late morning and evening numbers are also not worth mentioning, including the Australian quarterly GDP number, which has produced a stellar 8, 8 and 4 pips over the last 3 releases, confirming yet again the world only cares about the US and UK numbers.
USA Session: You know it’s going to be “that” kind of day when we open with Fed Speak at 9:55 a.m. Most of the trading morning is gone and this is the best we can come up with? We also have that floating RCM/TIPP Economic Optimism report that might show up at some point today but is essentially untradeable as a “tentative” (and same with the Wards Total Vehicle Sales). More Fed Speak at 11:45 a.m. and we close with the API Oil Report at 4:30. Total waste of a day, news-wise.
WEDNESDAY: Asian/London Session: Today’s session reminds me of those swamps out in New Jersey where the mob used to dump bodies they didn’t want found. Today’s entries are for the most part at the same level. We do get the Services PMI number that pair up with the Manufacturing number from 2 days ago, with numbers from Spain (3:15), Italy (3:45), France (3:50), Germany (3:55), Eurozone (4:00), and Great Britain (4:30)-- (no Italy or Canada for this version I guess). Usual rules. Trend = Trade. No Trend = No Trade. Fed Speak at 4:00 a.m. out of Switzerland and 10:30 out of Canada (Macklem, who is at the same level as Powell and Lagarde). The rest of the session is a bunch of random reports with long histories of doing nothing for price action. So once again we have what are really 2 sessions (or one long one that covers two days) that does nothing for us in terms of making prices go zoom.
USA Session: 8:15 brings us the ADP Employment Change number, universally ignored by traders everywhere, no matter how close or how far away it lands from expectations. Yet it continues to be a Red Folder report on the FF calendar. Curious. 9:45 is the Services PMI number everyone ignores, followed by the ISM Services PMI everyone trades, kind of. It generates more heat when it drops at the same time as the ISM Manufacturing PMI, but today it flies solo, so we might not see as much as we might have otherwise expected. Crude Oil is at 10:30 and at 2:00 the Fed releases their Beige Book, which is just a collection of stories told by the various Board members at the last meeting about how well or how poorly the economy is faring in their districts. Not all that interesting to read (yes, I’ve read a few of them) and traders don’t pay much attention either, since it isn’t a number.
THURSDAY: Asian/London Session: Yet another list of numbers that are country-specific (EU member country specific) such as the French Industrial Production number at 2:45 a.m. or the Italian Retail Sales number at 4:00 a.m. No one cares. If France still had the Franc or Italy had the what, Lira? Maybe traders would pay attention. But virtually everything on calendar is going to come and go at the appointed time and all the EUR pairs are going to just sit there.
USA Session: 7:30 a.m. brings the Challenger Job Cuts, before the markets even open, and from what I’ve seen so far, pre-market open trading is all but non-existent around this number. So Pass. At 8:30 a.m. we get the Weekly Unemployment number, along with a set of numbers already two weeks late and direct from the list of numbers that never do anything one way or the other. And no one seems to trade Unemployment any more, so the morning looks like a waste. We close out with NatGas at 10:30.
FRIDAY: Asian/London Session: I could just copy and paste every bad thing I’ve said about this session in the previous 4 days and feel perfectly good about myself and my quest for accuracy. Just garbage numbers, until we get to the 10:00 Canadian Ivey PMI, which has posted 22, 16 and 17 pips the last three months on numbers that missed expectations significantly in both directions. 16 and 17 are obviously below my 20 Pip Line of Death, but two things: the first is that the Ivey used to perform a lot better and regularly posted 20+ pips, so there is some history here (and 16/17 aren’t all that far away from my preferred 20 pip minimum), and second, this has been such a total trainwreck of a session this week, the Ivey may represent the only decent chance any of us have at taking a halfway decent trade to start the month of March. I’m not giving it a 100% Thumbs Up, but don’t ignore it either. It might end up being your best trade of the session.
USA Session: NFP at 8:30, along with a 17 day delayed set of Retail Sales numbers. They won’t help, but they likely won’t hurt, either. It’s going to be all about NFP, so be ready to trade. At 10:00 we get a 27 day delayed Business Inventories number. If you thought traders ignored Business Inventories before, wait until you see them not deal with a 27 days delayed B.I. number. Pass. After that it’s a bunch of Fed Speak (some conference in New York) and Consumer Credit at 3:00 p.m., the last number of the week we can safely ignore.
That’s it. Back next week with (hopefully) a list of better numbers we can actually trade. Assuming we all haven't gone to our reward in a worldwide nuclear holocaust. But as long as the world remains a viable option, I plan on sticking around and doing some trading, and let the future take care of itself. Hopefully you plan to do the same.
Jeff
