Fed Speakers, Thanksgiving and Other Key Themes To Watch This Week

Last week the S&P 500 ($SPX) (SPY) was generally flat, it finished the week off roughly 1% which is not a lot given the movement in the SPY as of late. The news releases and commodity prices had no real impact on market prices and with the larger earnings report behind us, it was a fairly uneventful week. That is to be expected after a 300+ point move in the S&P after the better-than-expected CPI Report, market digestion is usually what happens.

This upcoming week also has the potential to be a slow week with Thursday being Thanksgiving in the US and then a half day on Friday. Even though it is a short week and lower than usual participation is possible, there are still a lot of notable things to watch this week, particularly on the economy as a whole. Some of the reports are leading indicators that could push the markets around.

Here are 5 themes to watch in the market this short week:

Bank Holidays

Japan has a Bank holiday on Tuesday celebrating their Labor Thanksgiving Day and the US has a holiday on Thursday and a half day on Friday in observance of their Thanksgiving Day (There is a lot of giving thanks this week apparently). While the days are not of any particular importance to the markets, there will likely be low liquidity and potentially irregular volatility in the markets. The lower-than-usual liquidity, especially on Thursday and Friday, have the potential to really make the markets whipsaw as smaller size will move the price around. This is not a problem, and can make for fun trading, but is worth noting.

Fed Speakers

There will be no shortage of FED speakers this week. Tuesday Mester, George, and Bullard will all hold speaking engagements. On a week with lower-than-usual expected liquidity, it has the potential to have a market-moving effect. The speakers seem to oscillate between hawkish and dovish so Tuesday has the potential to have some wild swings. Of course, with the lower expected volume, it could also have no effect at all if larger banks/traders take an early vacation.

FOMC Meeting Minutes

Wednesday before the US Thanksgiving the FOMC meeting minutes are announced, this type of event often will have a market-moving effect given it is the rationale for the rate decisions that are announced. This also will often give insight into the next rate decision based on the language used in the meeting. The day before a holiday in the US is often very slow and low volume so an event of this magnitude has real potential to provide some excitement in the markets, even if it is short-lived. 

US PMI

The US Flash Services and Manufacturing PMI is expected to be released Wednesday before the FOMC Meeting. These news releases have the potential to have a real impact upon release on a lower liquidity week. Both are leading economic indicators for the economy as a whole, and if they continue to come in softer than expected it would signal potential trouble ahead for the US economy.

This has been a topic of real debate lately with yield curve inversion, slowing growth, and other economic indicators pointing toward potential recession on the horizon. Eyes will be on this report to see if those rumors hold any real water or if they are just rumors.

New Home Sales

Another potential indicator of economic health is the New Home Sales number released on Wednesday. Similar to PMI it holds the potential to move the markets in a lower liquidity environment, but on a larger scale, it will act as a confirmation or contradiction to the PMI about economic health. If both come in softer than expected it could potentially lead to weakness in the overall market. It could have a potential effect similar to the AAPL news on Christmas a few years back, the lower the usual liquidity made bad news even worse. 

Best of luck this week and don’t forget to check out my daily options article.

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