Hi Folks.

A quick word about last week's CPI. Last week I wrote it was unlikely to make a Friday appearance as scheduled on the FF calendar, and yet, there it was Friday morning at 8:30 as promised. I was as shocked as anyone to see the charts go nuts about a millisecond after the release, and until earlier today had no idea why that number alone, out of all the other numbers, including the NFP, was suddenly the most important number in the world. But I'll give you a hint why it happened: The answer is found at 2:00 p.m. on Wednesday of this week's USA calendar. Yep. This is another Fed week, with the interest rate decision due for the second to last time this year, and at least one Governor has stated they believe another rate cut is in order, while a couple others think they need to stay put for a while longer. So having the CPI info before that meeting is crucial to the decision-making process, and explains why the CPI got conjured up when none of the others did.

As for that shutdown, I am hearing rumblings that a small group of Democrat Senators are getting tacit approval from Schumer to vote to reopen the Government (hopefully in time to fund everyone's food stamp cards in a timely manner). If that happens this week as expected, it will still likely take a few days for the markets to return to some sense of normalcy, so let's be very careful out there this week no matter how the shutdown is managed. This too will pass eventually and we will be back to normal. Just make sure you don't blow your accounts out in the meantime.

So here are this week's numbers.

SUNDAY: Only one number tonight. The Japanese Services Producer Price Index (SPPI) at 7:50 p.m., and this one rarely cracks 10 pips, much less 20. So we start, as is usual for Sunday evenings, with a Pass.

MONDAY: Asian/London Session: If you ignore the two Chinese reports, we have 6 entries from start to finish, and none of them are noteworthy. Bullock from the Royal bank of Australia speaks at 4:15 a.m. my time (evening his time) at some rubber chicken event. Fed Speak at its finest. At 5:00 a.m. we get the Euro combo of German ifo Business Climate along with two Eurozone numbers, M3 Money Supply y/y and Private Loans y/y, and collectively these three generate less than 20 pips just about every month. So pass. 7:00 a.m. brings us the CBI (Confederation of British Industry) Realized Sales and this one is normally sub-10 pips as well, so yet another Pass. Finally at 8:01 p.m. (which is still midnight:01 a.m. locally...they rolled back their clocks yesterday so all our timings are off this week as a result) the Brits release their BRC Shop Price Index y/y, which is ignored simply because it's a number that drops while all of Britain is asleep. If they don't care enough about it to release it while their markets are open, that tells me we shouldn't care about it either.

          USA Session: Zip. Nada. Nothing.

TUESDAY: Asian/London Session: Japan leads off again tonight with the Bank of Japan Core CPI y/y number, and this one is a little schizophrenic. A few months back (including 3 months back) this one cracked 20 pips regularly, but the last 2 months have been 14 and 12 pips. So it's a maybe, and that's about all I can say. There does not seem to be a correlation between the actual number missing by a little or a lot compared to expectations. It's been dead on and moved 30 and missed by almost a half of a percentage point and moved 12. The only reason I would say consider it is because we are in a number desert right now, so anything with any sort of price action history needs to be at least considered. 3:00 a.m. brings us the German GfK Consumer Climate number, which is typically a sub-10 pip mover as well, so Pass. At 8:30 p.m. Australia releases their CPI variations (q/q, y/y charted monthly, Trimmed Mean q/q) and no matter how you cut it, none of them, alone or collectively, deserve their Red Folder status on FF, since they rarely generate more than 8 pips worth of price action post-drop. 11:30 p.m. brings us New Zealand Fed Speak to close out the evening session

          USA Session: The good news: An actual set of numbers (4) with a reasonable probability. The bad news: These numbers suck. when was the last time I ever had anything good to say about the S&P/CS Composite-20 Housing price Index (9:00 a.m.), the FHFA Housing Price Index (Tentative...uh oh, make that 3 numbers likely to drop), the Richmond Manufacturing Index (10:00 a.m.) and the Conference Board Consumer Confidence number (tentative...uh oh, make that 2 numbers). None of these make price go zoom, so don't expect much today in spite of there actually being real numbers (real lousy numbers) on tap. we also get that API Oil Report at 4:30, but report, not number, so nothing worth considering.

WEDNESDAY: Asian/London Session: The morning half of the session is just garbage. Lots of numbers and no history of price action resulting from those numbers. At 9:45 a.m. Canada drops their Interest rate decision. The expectation is another quarter point cut, from 2.50% to 2.25%. The last 3 decisions resulted in 19, 20 and 16 pip moves in the 15 minutes after release. So it's close to my 20 pip minimum. If I were trading CAD on Wednesday, I'd pay attention at a minimum. At 10:30 they follow up with a press conference, so be aware that one is out there if you continue to trade the CAD after 10:00 a.m. 8:00 p.m. is the ANZ Business Confidence number and 8:30 p.m. is the Australian Import Prices q/q. Both can be safely ignored. And finally, Japan also releases their Interest Rate Decision (expected to remain at <.50%), but as usual with Japan, this one is listed as "tentative" as well, so we can't really plan to trade a number when we don't know when it will drop. So be aware, JPY traders, that this time bomb will be ticking away tonight.

          USA Session: A pair of "tentative" reports: Goods Trade balance and Prelim wholesale Inventories lead us off. Probably will not see the light of day unless the standoff ends and everybody scurries back to work on Monday. Don't count on that happening. Pending Homes Sales is at 10:00, and while this one will likely show, it also will likely come and go without anyone noticing. Crude Oil at 10:30, and then, as I mentioned in the ramble in the beginning, US Fed Interest Rate Decision (expected to be a cut to 4.00% from 4.25%) at 2:00 p.m., with the Press Conference at 2:30. Trading the actual number release would likely be suicide for your account balance, but prices tend to stay active for an hour to 90 minutes after the 2:00 p.m. drop. So use your favorite method to chart price action and be ready to get in and get out quickly should you decide to roll the dice and take a trade or two.

THURSDAY: Asian/London Session: First on calendar is the tentative Japanese Press Conference following the earlier Interest rate decision. Can't do much with it but know it is out there if you are trading the JPY. After that is a dumpster full of individual EU states sharing GDP's and CPI's and a bunch of other crap no one really cares about. So let's look at the Beige Folder numbers. There are 3 of them and we can instantly dispose of the German CPI, listed as tentative. It's listed as tentative because the German CPI number is actually made up of 6 separate numbers from 6 different German states, and they all report at different times during the day. So what are we supposed to do with that? Pass. Spanish Flash CPI is listed at 4:00 a.m., and the previous 3 numbers managed to post 13, 10 and 16 pips in the 30 minutes after release. Pass. Lastly we get the German Preliminary GDP q/q at 5:00 a.m. The three previous numbers posted 15, 23 and 8 pips. I'm not sure that 23 pip move is duplicatable today, but it beats the hell out of the 13/10/16 from the Spanish CPI an hour earlier. So, maybe. But the real EUR mover should be at 9:15 a.m. when the EU announces THEIR interest rate decision, where they are expected to leave their rate at 2.15% for the time being. IF they do anything else besides stand pat, expect a ton of price action. Swiss Fed Speak at 1:00 p.m. Then Japan releases the Tokyo Core CPI y/y along with their Unemployment Rate, which is ridiculously low and expected to fall even further. Neither of these move the JPY much. At 7:50 p.m. Japan then releases Preliminary Industrial Production m/m and Retail Sales y/y. Again, these two, alone or combined as they are today, don't move the JPY enough to justify the risk in taking any trades. Finally we close out the evening session at 8:30 p.m. with Australia's PPI q/q and Private Sector Credit m/m. The PPI is the bigger of the two numbers and it rarely cracks 10 pips, so Pass.

          USA Session: Advance GDP is listed as tentative (this one normally drops at 8:30 a.m., along with the Advance GDP Price Index, which also appears as tentative this morning). Don't expect to see it. The Fed already met yesterday so these numbers just aren't important enough to drag people back into work for the day to crank them out. NatGas at 10:30 a.m. and one lonely Fed Speaker at 1:20 p.m.

FRIDAY: Asian/London Session: Kind of a repeat with the Thursday morning session dumpster numbers. FF has the EU Flash CPI estimates listed as Beige Folder news at 6:00 a.m., and the three previous drops posted 12, 23 and 11 pip moves in the 30 minutes after the drop. Going backwards from there we see far more sub-20 pip moves than we do 20+. It's been another tragic week for tradeable numbers, and this is the last shot for the A/L session, so if this is all you have left to work with and need to take a trade, at least there are a handful of instances where your faith was rewarded with 23 pips. So Maybe. All the earlier numbers can safely be ignored. At 8:30 we end the A/L session with the CAD GDP m/m, which has produced 15, 23 and 13 pips over the last three reports. This one also used to do better but lately the smaller numbers seem more like destiny than the 20+ moves, which just seem random. If I had to choose between the EU Flash CPI and the Canadian GDP, I'd probably stick with the EU number. But honestly, neither one really sets the world on fire, so be careful trading either one.

          USA Session: The typical 8:30 numbers are all listed as tentative, which means we probably won't see any of them (Core PCE Price Index, Employment Cost Index, Personal Income and Personal Spending). Fed Speak at 9:30 a.m., Chicago PMI at 9:45 a.m. (this one will drop but unless everyone is desperate by this point, no one will care) and we close out the day, the week and the month with double Fed Speak at 12:00 p.m. (Bostic and Hammack both at some event in Dallas).

Fingers crossed this is the week the adults in the room prevail and the Shutdown shuts down and things begin the process of returning to normal. I think I've written something similar the past 3 weeks and we all know how that turned out. But I really really mean it this time.

See you next week.

Jeff

P.S.: Sorry this is getting out so late. I've been seriously under the weather the last few days and this has slowed me to a crawl.