Financial Options

Plenty of things to watch for in the week ahead. (Update: A commenter asked for links to where he could find all these things. Answer: Here in the Economic Indicators category.)

Monday, the Institute for Supply Managament will release its Non-manufacturing Survey for November, giving a good snapshot of the service side of the US economy.

Tuesday, the Commerce Department releases Factory Orders for October and the National Association of Realtors will release its Pending Home Sales Index. The Bureau of Labor Statistics will release the revised Productivity and Costs for the Third Quarter as well Tuesday.

The Pending Home Sales index is one of the newest indicators and potentially one of the most interesting this week. Many pundits are insisting there is a «bubble» in residential real estate prices and even Alan Greenspan has spoken of a bit of froth in the market. Home equity has been the fuel for this economic expansion in much the way that tech stocks were the fuel for the last one. The Fed doesn't seem as thoroughly bent on deflating housing values, but they certainly are intent on moderating growth in the sector. The Pending Home Sales index is a new indicator based on numbers of homes contracted for sale with the sale not yet closed (aka «in escrow»). Theoretically this index should lead the Existing Home Sales Index by 1 to 2 months, so this should give us a glimpse of what's coming in January and February. What will be most interesting to see is the ratio of Pending to Existing Home Sales in a flat to declining versus appreciating market. For now there's not enough historical data to make any determinations, but we might expect to see fewer pending sales actually closing as the market gets tougher - tougher appraisals, tougher credit standards and employment problems torpedoing more sales.

Wednesday, the Federal Reserve will release its G.19 report on Consumer Credit for October. If the consumer credit release shows banks passing along more of the increased cost of borrowing to consumers this could indicate a potential for lower consumer spending and lower consumer confidence, but could also cut potential for further Fed rate increases or increase the possibility that they will be delayed. Wednesday is also the day the Energy Department releases its report on petroleum inventories for the US. With the drop in US crude oil supplies and rise in heating oil inventories, oil prices rose this week. If refining activity continues or increases its pace and imports of crude don't pick up, we could see another big drop in crude supplies and oil could push back above $60/barrel. If imports pick up and inventories recover, oil prices could slip further. Refining capacity has been recovering at a good pace from storm damage, so that's another part of the report to pay attention to.

Friday, the Commerce Department will release Wholesale Trade figures for October. The Factory Orders (Tuesday) and Wholesale Trade numbers (Friday) combined will give some insight into the sustainability of corporate profits in manufacturing.

For more important business and personal finance information be sure to check out this week's Carnivals of Personal Finance and the Capitalists.