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Trading Radar: Payroll Data to Be Released -- If the Government Is Even Open

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Economics, earnings reports, and market events for the week ahead.

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The last few days have been dominated by the fiscal discussions in Washington. I'd suggest taking a look at David Miller's unbiased breakdown of what to expect, play-by-play, over the weekend and into Monday and Tuesday.

From our sources in the market, we know that many investors are already very long and not willing to add more exposure at these levels without a significant upside catalyst. Last week, equity funds had record weekly inflows, coincidentally at a market peak. Additionally, quarter end is Monday, and it appears that some of the balance sheet cleansing occurred today rather than next week.

There is a lot of economic data to pay attention to next week. On Monday, Chicago PMI and the ISM Milwaukee report will give a preview of the broader index on Tuesday. Chicago's data is usually tied to the strength of auto sales, and Milwaukee's data is tied to home appliance and remodeling activity. Given the rate of change in producer prices and the downward trend in factory orders, it is reasonable to predict that manufacturing activity peaked in August after bottoming in April.

The September nonfarm payrolls report will be released on Friday. Should the government shutdown through the week, the Bureau of Labor Statistics has indicated that it may not be able to release the report. Other releases during the week offer a preview for Friday's data. The Wednesday ADP private payrolls report and ISM services are a fairly accurate indicator of the total jobs created that month. More recently, the total revisions from the prior two months has had an equally high effect on the market. After the final personal income data for August was released earlier this morning, I think it's very likely that we see August's payrolls report revised significantly higher.

The last major catalyst for market movement during the week will be the large number of Fed speakers scheduled to give speeches. Over the past week, we saw a similar number of speeches, which -- at the very least -- tried to clarify the Fed's intentions for the markets. The hawkish speakers dissented from the opinions of the committee regarding the Fed's decision not to taper, saying that the market had been primed for a cutback in policy. The dovish speakers pointed to persistently low GDP growth and the potential for the fiscal debates to slow economic activity as the catalyst for not tapering. In addition to Chairman Bernanke's comments during the Q&A two weeks ago, FOMC members continually indicated that slack GDP growth (rather than unemployment) was the major reason for keeping policy unchanged. This shift in focus back toward normal monetary policy is a healthy change for the market.

The ECB will release its monetary policy decision on Wednesday. Recently members of the ECB have indicated that another round of long-term refinancing operations (LTRO), or long-term loans to member banks, could be possible. Member banks have already repaid more than one-third of the 1 trillion euros in loans that were issued more than a year ago. In a somewhat humorous statement last month, ECB President Mario Draghi talked down the rate of recent European growth, saying that it was due to seasonal factors and abnormally good weather.

We'll have to wait another week for earnings season to start. The only reports for the week are from Walgreen (NYSE:WAG), Constellation Brands (NYSE:STZ), and Monsanto (NYSE:MON).


Monday, September 30

US Economics (Time Zone: EDT)

09:00 ISM Milwaukee – prior 48.21
09:45 Chicago PMI – consensus 54.0, prior 53.0
10:30 Dallas Fed – consensus 5.0, prior 5.0
11:00 Fed to purchase $1.25b-$1.75b notes in 23 to 30-year range
11:30 Treasury selling $30b 3-month bills, $25b 6-month bills

Global Economics (Time Zone: GMT)

01:45 CNY HSBC/Markit Manufacturing PMI
05:00 JPY Housing Starts
08:30 GBP Mortgage Approvals
09:00 EUR Eurozone CPI
12:30 CAD GDP
23:30 JPY Jobless Rate

Earnings

No major earnings


Tuesday, October 1

US Economics (Time Zone: EDT)

08:58 Markit US PMI Final Estimate – consensus 53.1, preliminary 52.8
10:00 Construction Spending MoM – consensus 0.4%, prior 0.6%
10:00 ISM Manufacturing – consensus 55.1, prior 55.7
10:00 ISM Prices Paid – consensus 55.0, prior 54.0
5:00 Total Vehicle Sales – consensus 15.8M, prior 16.02M
5:00 Domestic Vehicle Sales – consensus 12.4M, prior 12.44M
11:30 Treasury selling 4-week bills

Fedspeak

9:30am Pianalto speaks in Chicago
1:00pm George speaks in Chicago

Global Economics (Time Zone: GMT)

01:00 CNY Manufacturing PMI
04:30 AUD RBA Rate Decision
07:55 EUR German Employment Change
07:55 EUR German Manufacturing PMI
08:30 GBP Manufacturing PMI
09:00 EUR Eurozone Unemployment Rate

Earnings

Before:

Walgreen (WAG)


Wednesday, October 2

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Applications
08:15 ADP Employment Change – consensus 176K, prior 176K

Fedspeak

12:00pm Rosengren speaks in Virginia on economy
3:30pm Bernanke speaks on community banks in St.Louis

Global Economics (Time Zone: GMT)

01:00 AUD New Home Sales
01:30 AUD Trade Balance
08:30 GBP Construction PMI
11:45 EUR ECB Rate Decision
5:30am Germany to sells EU5b 10-year notes

Earnings

Before:

Monsanto (MON)


Thursday, October 3

US Economics (Time Zone: EDT)

07:30 Challenger Job Cuts YoY – prior +56.5%
07:30 RBC Consumer Outlook Index – prior 51.1
08:30 Initial Jobless Claims - consensus 314k, prior 305k
08:30 Continuing Claims – consensus 2800K, prior 2823K
10:00 Factory Orders – consensus 0.2%, prior -2.4%
10:00 ISM Non-manufacturing Composite – consensus 57.0, prior 58.6

Fedspeak

11:00am Williams speaks in San Diego
12:30pm Fisher speaks in Dallas on economy
1:00pm Lockhart speaks in Atlanta on labor market
1:30pm Powell speaks in St. Louis on banking
5:30pm Fisher speaks in Arkansas

Global Economics (Time Zone: GMT)

JPY Japanese Investors Buying of Foreign Stocks/Bonds
01:00 CNY Non-manufacturing PMI
08:00 EUR Eurozone Services PMI
09:00 EUR Eurozone Retail Sales

Earnings

After:

Constellation Brands (STZ)


Friday, October 4

US Economics (Time Zone: EDT)

08:30 Nonfarm Payrolls – consensus 180K, prior 169K
08:30 Private Payrolls – consensus 180K, prior 152K
08:30 Manufacturing Payrolls – consensus 7K, prior 14K
08:30 Unemployment Rate – consensus 7.3%, prior 7.3%
08:30 Average Hourly Earnings MoM – consensus 0.2%, prior 0.2%

Fedspeak

8:30am Fisher speaks in Arkansas on economy
9:15am Dudley speaks in New York
9:30am Stein speaks in New York on repo markets
1:45pm Kocherlakota speaks on monetary policy in Minnesota

Global Economics (Time Zone: GMT)

JPY Monetary Policy Decision
01:45 CNY HSBC/Markit Services PMI
08:30 GBP Lloyds Employment Confidence
14:00 CAD Ivey PMI

Earnings

No major earnings reports


Twitter: @MichaelSedacca

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