The Week Ahead 10/09/2017

What to Watch for this Week

Last week the non-farm payrolls declined for the first time since September 2010. Several factors impacted the payroll reports, one, most notably, were the Hurricanes that hit the Texas and Florida coast.  One thing to note is that the wage growth has picked up, a pivotal point in the Feds decision to raise rates in December.

  • September nonfarm payrolls decreased by 33,000 (consensus 75,000). Over the past three months, job gains have averaged 91,000 per month. August nonfarm payrolls revised to 169,000 from 156,000. July nonfarm payrolls revised to 138,000 from 189,000.
  • September private sector payrolls decreased by 40,000 (consensus 98,000). August private sector payrolls revised to 164,000 from 165,000. July private-sector payrolls revised to 133,000 from 202,000.

Is the SP500 now forever safe?

  1. The SP500 has been positive for the 11 out of the past 18 months.
  2. The VIX ended September at 9.51, its lowest monthly close in history
  3. The average VIX in September was 10.44, the least volatile September month ever.
  4. No 3% pullback since Nov 2016.
  5. On pace for a 9-year winning streak.

All the data points here describe a very safe place to park money.  Do not be complacent. Just because a hurricane does not make landfall some were in the Gulf of Mexico, does not mean that they never will.  Selling insurance in a risk-free environment is like selling ice cubes to an Eskimo.  No one seems to want it or need it.  Options by their nature are there to help hedge against events that could happen while enhancing our portfolio returns.


Global Spotlight

U.S. President will refuse to recertify the Iranian Nuclear deal on October 12, 2017.  The decision will start a 60-day timer where Congress can vote on the sanctions on Iran.  Iran, will, in turn, begin to bolster its ballistic missile program and look to European countries limit the effects of the U. S. decision.

North Korea is pushing forward with its nuclear ambitions, though it has been several weeks since we have seen a test.  Another test will happen, when? That is the question.  The USS Ronald Regan will arrive in the waters soon to participate in joint exercises with South Korea around Oct 15.

NAFTA enters its 4th round this week in Washington D.C.  The auto sector will be one of the topics that will be debated.  One proposal requires that 50% of the product or part added value must be done in the US to qualify for the preferential trade access under NAFTA.  Mexico and Canada are not for such a read line.

This from Stratfor, “According to an unconfirmed report, Venezuela’s government and political opposition have reached a tentative agreement for political coexistence, likely in response to U.S. sanction pressure.”

Economic Calendar

After a heavy economic calendar last week, this week we are back to normal.  Such that it is.  Earnings season is upon us so we will begin looking at different companies that report this week and next week to see if there are any good option trades.  If we see a good earnings season, will this lead to a strong finish to the year?

Here is a list of the U.S. economic events happening this week.


Last Weeks Numbers

Review Last weeks numbers here.


“October: This is one of the peculiarly dangerous months to speculate on stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” – Mark Twain