FYI | Aug 26 2007
By Greg Peel
There are some important second quarter data being released in the US this week, into a calmer but no less anxious market. But possibly most important are two separate measures of August consumer confidence. How has the US consumer responded to the current mortgage crisis? For he or she may hold the entire world in the balance. The bulls in the market have put their money behind the resilience of the US consumer. The bears are calling a recession, which would have ramifications from China to Australia.
Not that these two particular releases will prove single defining factors. Good news may yet deteriorate into bad. But bad news is unlikely to be well received.
The same could be said of the second quarter data releases. Thursday’s GDP and core PCE deflator (an alternative inflation measure) are now very much old news. However, this does not mean they will lack any influence. Results that come in on expectation will be unhelpful. Results above expectation will provide a boost, as it would mean a recession has a further distance to establish itself, if it does at all. Lower than expected results will have the R-word hitting the headlines.
Monday in the US kicks off with July existing home sales. An above expectation new home sales number helped fuel the rally on Friday. Tuesday is critical, providing August consumer confidence and the Richmond Fed economic activity report for August. It also sees the release of last month’s FOMC meeting minutes, but these are now a bit passe.
We then jump to Thursday for the second quarter figures – GDP, core PCE deflator, personal consumption and house prices. Buckle up.
And stay buckled up for Friday, when the July PCE deflator, factory orders, personal income and personal spending numbers are released, along with the Michigan University’s August consumer confidence measure and the Chicago purchasing managers index for August.
And just to top off the week, the governors of the Federal Reserve attend their annual summer retreat this week in Jackson Hole. Oh to be a fly on the wall. One doubts whether a lot of retreating will be achieved, and chairman Bernanke will fill us in on discussions on Friday. The world will stop.
It’s also an important data week in Australia, after a similar drought last week. We wait until Wednesday for second quarter construction work done, and the July HIA new home sales measure. On Thursday we have second quarter private capex, and, more importantly, the second quarter current account. Friday brings July retails sales, trade balance, and one scary number in the form of private sector credit.
Elsewhere in the world, The president of the European Central Bank, Jean Claude Trichet, will speak in Budapest, hopefully enlightening the world as to why the ECB has pumped record amounts of liquidity into the European banking system these past two weeks, and what might be next. The Japan CPI for July is due on Friday, which may or may not influence the BoJ’s critical rates decision.
It’s week two of the local reporting avalanche this week, tapering off as the week progresses. Details can be found in the FNArena calendar.
