Hi Folks.
It seems like only yesterday I was celebrating the end of August and summer doldrums, and here we are now welcoming in the month of October. I always kind of knew as we get older time moves faster, but damn! I haven't quite wrapped my head around the idea of September and as of the middle of this coming week, it's gone for another year. Time is moving a little too fast for my taste.
But as Chaucer once wrote and Mick repeatedly sings, time waits for no man.
So onward we march into the Forecast.
SUNDAY: So here is a shocker for ya! Sunday night, one report (Japanese SPPI at 7:50), and a documented history of it doing nothing (4, 5, and 7 pips over the last 3 reports) all add up to the same result we see pretty much every Sunday: Pass.
MONDAY: Asian/London Session: Brit Fed Speak at 6:00 a.m., Euro Fed Speak at 9:30 a.m. (Lagarde doing her semi-annual testilying in front of some Euro Governing Board, so this one could cause trouble for EUR traders), the Brits once again release their BRC Shop Prices number at 7:01 pm my time, midnight :01 their time, so once again the rule regarding numbers dropping while the source country is in bed kicks into play and results in an easy Pass, and we close with Australia's Household Spending number, which has been a consistent single pip producer for ages. So Pass all the way around.
USA Session: As of Thursday last, the Monday calendar had zero US entries listed, making it the 5th or 6th one in a row where nothing was happening numbers-wise here in America. But I guess someone at FF decided enough was enough and now we have not one, not two, but THREE Fed Speak listings, at 8:15, 1:25 and 1:30. Names and topics are irrelevant. These are just filler numbers and not tradeable given their nature. Just be aware the chatter is out there.
TUESDAY: Asian/London Session: So as is the usual, we go from a dearth of calendar entries for the last what, 16 weeks? And now we enter the abundance phase, although if today is what abundance looks like, it's likely overrated. We start with the Australian Interest rate, which, three meetings back, jumped from 4.10% to 4.35%, where it remained through the last two meetings. But today the rate is expected once again to rise from 4.35% to 4.60%. The last rate bump generated 20 pips, and the last meeting's staying put generated 22 (the middle report managed only 11 pips). Given the expected rate bump, I would expect this report to hand you at least 20 pips, if not a few more. So be ready when the number drops at 12:30 a.m. my time. The remaining morning numbers are safely ignored, although note that Nagel from the German Buba and Lagarde from the ECB are both speaking (6:00 and 7:00 a.m. respectively) at some event in Frankfurt. Both are the heads of their Central Banks so both have the power to destroy, or at least minimally disrupt, otherwise good trades, So be aware. Canadian GDP is on calendar for 8:30 a.m. but the last 3 pip results of 9, 13, and 14 mean another otherwise decent Canadian number has fallen upon hard times. If/when this one climbs back into the 20's for a couple of consecutive months, we'll start paying attention once again. The evening numbers are also barely worth mentioning, although Japan drops both the Preliminary Industrial Production number along with Retail Sales and they both usually drop on the same day) but pip counts of 4, 11, and 3 make this one an easy Pass. Finally we end the day where we started, in Australia, where its time for their monthly CPI number (and their monthly proving that only the US and GB CPI numbers are worth following): 6, 7, and 6 pips from the last 3 reports equals Pass.
USA Session: A pair of housing numbers at 9:00 will do their usual nothing, so Pass. At 10:00 we get the JOLTS/Conference Board Consumer Confidence combo, which we last saw working together on June 30th. JOLTS has only managed 9 and 9 the last two months while the CB number did slightly worse at 7 and 7, but in June, while paired together, they were part of a 25 pip move. On the surface that looks pretty good, and diving a bit deeper into the morning of June 30th I can't see any other reason the market might have moved 25 pips, so maybe this is one of those serendipitous pairings that pops up from time to time. I seriously doubt it, but I need to stop taking investment advice from my gut. Be aware this one might overperform and thus be worth keeping an eye upon. After this combo comes and goes, we get a cavalcade of Fed b.s. with speakers at 11:00, 12:40, 1:00, 2:00 and 3:00 p.m. And we close with the API Oil report at 4:30, a non-event in terms of trading.
WEDNESDAY: Asian/London Session: 25 separate calendar entries and the only ones worth even mentioning are the Japanese Tankan Manufacturing and Non-Manufacturing Index numbers dropping at 7:50 p.m. my time. The Tankan numbers are sort of the functional equivalent of the US's ISM Manufacturing/Service PMI number set. Typically they perform a bit better than the generic PMI numbers that drop twice a month and which we now ignore entirely. But much like their ISM counterparts lately, the Tankan numbers only put up 7, 7, and 11 pips the last times they dropped (and this is a quarterly number, not monthly) so in spite of appearances to the contrary, these too may be safely Passed upon until further notice.
USA Session: We lead off with the ADP Non-Farm Payroll number at 8:15, which still fails to impress traders (6, 6, and 8 pips the last 3 months) in spite of their number being based on reality and not some archaic set of calculations. But 8:30 brings us the Core PCE and Final GDP numbers. Both are Red Folder, based, much like the NFP, on archaic evidence, and neither has been very trader-friendly lately. PCE generated 2, 14, and 24 pips over the last 3 months, and the Final GDP (a quarterly number) posted 24, 11, and 11 pips. And yes, that 24 number was in June when both PCE and GDP dropped together. So maybe the combination today generates some tradeable price action and maybe not. Stay on alert just in case. Chicago PMI at 9:45 a.m. (no one cares), Crude Oil at 10:30, and yet even more Fed Speak at 1:30, 3:25, 5:10 and 6:00 p.m.
THURSDAY: Asian/London Session: Much like yesterday, 26 entries on calendar and nearly all are garbage. FF has once again deemed the Swiss CPI to be a Beige Folder event, but the last 3 pip numbers generated were 6, 25, and 8. The 25 appeared on a day when the CPI came in at -.1%, the first negative inflation number the Swiss posted in the last 6 months. That's kind of a big deal. But the month after they posted another positive number (meaning higher inflation) and the pips dropped from 25 to 6. So the number here is key. Negative means maybe you might see some activity. Positive means Pass. The only other number worth looking at is the Tokyo CPI and that one has a long history of underperforming. The last 3 numbers (4, 12, and 3) simply prove the point. Pass.
USA Session: 16 entries and 8 are Fed Speak (at 9:05 [times 3], 10:00, 1:30, 3:00, 3:30 and 6:45 p.m.) Of the remaining 8 that bring a number to the party, the 8:30 a.m. Beige Folder Weekly Unemployment number continues to not impress...36, 11, and 12 pips, and the 36 was thanks to the PPI dropping the same time...and the 10:00 a.m. ISM Manufacturing PMI number, which has now been downgraded from Red Folder to Beige, and deservedly so. What was once the source (or co-source) of a fairly reliable 20-25 pip move has, like so many before it, fallen back into a pattern of single and low double digit pip generators (9,13, and 15 over the last 3 reports). I keep bringing up Fed Head Warsh's comment that most economic news is trash (I'm paraphrasing, I think) and the market only responding to a handful of CPI and Interest rate numbers (and the NFP) certainly shows the market is far more in agreement with him than not. But we do what we can with what we've been provided. Hopefully the quality of those provisions will improve at some point.
FRIDAY: Asian/London Session: Spanish Unemployment at 3:00 and Italian Retail Sales at 4:00 also go a long way to prove Warsh's point. There is so much garbage on these calendars that when the creators (like FF) run into a day like today where they only have one legitimate entry for the A/L session, they feel compelled to pad it with trash. Just as they've done here. The one "good" number, and I use "good" in the loosest of forms, is the Eurozone's Flash CPI numbers, which have a long history of doing little or nothing. The last 3 pip numbers produced were 9, 22, and 14. The 22 is a tiny bit intriguing as it is far and away the best result the EURUSD has posted for this Flash trash in a very long while. There were no other numbers we can credit with the move, but looking at the chart, this 22 pip drop was the beginning of an overall 70 pip drop in the EURUSD over the next 4-5 hours. So I have to think there was something else afoot, such as a geo-political event or statement made from someone like Lagarde that prompted that big of a drop. All that to say this: one good number does not erase years of crap numbers. I'd pass on this if I was awake at 5:00 a.m. and trading. If you decide it's worth the risk, go in with your eyes wide open and get out at the first sign of trouble. We close at 3:35 p.m. my time with yet another speech from the man who just won't shut the hell up for two minutes, German Buba President Nagel, speaking at some rubber schnitzel event in Mecklenburg. If you're trading at 3:35 p.m. on a Friday, aside from needing a bit of therapy, you also need to be aware Nagel might sink your ship for no good reason. So be careful.
USA Session: The easiest call of the week. 8:30 a.m. my time: Non-Farm Payroll and related numbers. Still one of the High Holy Days of trading and a constant source of large double-digit price moves (41, 60, and 73 are the three previous results). Ignore Factory Orders at 10:00 (everyone else plans to) as well as the Fed Speak set for the same time.
And that brings us to the close of another week and the beginning of Pumpkin Spice season. So drag out the sweats and the wooly socks and get ready to enjoy the winter season (not applicable to the folks in the Southern Hemisphere staring down 6 months of blistering hot weather...sorry about that) and I'll see you back here next week.
Jeff
