The Week Ahead: Feeling Confident?

This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN

By Greg Peel

When Whitlam won in ’72, the nature of government in Australia changed very much from one of old school tie capitalism to one of comrade socialism. Whitlam didn’t last long. When Hawke won in ’83 the Aussie dollar was floated and financial markets deregulated. This seemed an unusual thing for a union-based Labor government to do, but it had a manifest effect on Australian markets thereafter. Hawke/Keating lasted 13 years, at which point the recession finally buried Keating.

Now that Rudd has won in ’07, the first reaction from a market perspective is none at all. The polls have tipped a Labor victory all year, so the market was already prepared. And even then, there is so little policy difference to contemplate there is little reason to see a change of government as having any effect on market sentiment. Work Choices may be dismantled, but only over time and not in a way that would prove to be an inflationary gaffe. Perhaps a more strict consideration of all things environmental, and a more rapid move to carbon trading, is the only real consideration for Australian corporations. The big polluters have been getting ready anyway, but they may find Rudd less sympathetic and less apathetic than Howard.

So it should be back to business of the global economy this morning. Mind you, Rudd may have been given a hospital pass.

It’s a relatively quiet week in Australian economic data. Wednesday brings third quarter construction work and the HIA home sales measure for October. Thursday sees third quarter capex, while on Friday we learn the third quarter current account (here you go Wayne) and the October credit numbers.

Things are a bit more active in the US as traders return from their four-day weekend. Tuesday kicks off with the official November consumer confidence measure which may provide some guidance as to whether the US will see a jolly Christmas or not. September house prices probably won’t help, and the Richmond Fed also releases its index of economic activity.

Wednesday brings the Fed’s Beige Book survey of economic conditions. We also learn October existing home sales and durable goods orders. Thursday sees the third quarter GDP which has already been touted at 3.9% (quarter-on-quarter). It will be the fourth quarter that really matters. Also on Thursday are third quarter house prices and October new home sales. Friday is busy with the Chicago purchasing managers’ index for November, October construction spending, personal income and personal spending, and the October core PCE deflator which is oft considered a better inflation measure than CPI.

Friday is also a big day across the pond, when both the UK and Europe will reveal its consumer confidence measures for November. Is the contagion spreading? The EU also learns its third quarter GDP and November CPI on Friday, which may or may not influence interest rate thinking.

On the Australian corporate front it is the busiest but thankfully pretty much the last week of AGMs. See the FNArena calendar for details. Today Paladin ((PDN)) holds an analysts briefing while Rio Tinto ((RIO)) holds an investor briefing in London. Wesfarmers ((WES)) holds an analyst briefing on Tuesday.

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