The Monday Report

This story features BANK OF QUEENSLAND LIMITED. For more info SHARE ANALYSIS: BOQ

By Greg Peel

Having entered December with a fresh breeze of economic optimism following some better than expected data, Wall Street was assuming the same for the November jobs report, particularly given the earlier ADP private sector report was positive. It thus came as a bit of a shock that having expected 155,000 new jobs to have been created, the result was only 39,000.

To some it seemed incongruous, and for once Wall Street pointed to the volatility of jobs data to provide some hope. At each release earlier months' numbers are revised – sometimes considerably – and Wall Street could not figure out why the retail sector, as noted in the break-down, could have lost jobs in November when every other year Christmas hirings dominate.

As it was the Dow fell 40 points from the bell on the news, which was not a lot under the circumstances. From there it was a bumpy road of recovery before ending the session higher. With the official unemployment rate having risen from 9.6% to 9.8%, Wall Street could relax in the knowledge the Fed would simply have to increase its QE2 efforts were unemployment to remain stubbornly high. We're back to the model of good news being good news and bad news being good news as well – assuming no more shocks out of Europe, China or the Koreas.

The Dow closed up 19 points or 0.2% while the S&P added 0.3% to 1224.

To support the “bad news is good news” model, CBS revealed on Friday that in an interview with Ben Bernanke, which aired on Sunday night, the Fed chairman did not rule out expanding QE2 if necessary. If you like – QE3. With Europe more settled, the US dollar did what it should do under threat of additional money supply and fell 1.3% to 79.17 on its index. More definitively, gold soared US$30.40 to US$1413.80/oz.

The flipside of pouring Monopoly money into the market to artificially boost stock prices is the threat of inflation down the track, although supporters of QE suggest there is no inflation threat in merely fighting deflation.

Only a couple of sessions ago the Aussie was staring 95 in the face, but on Friday it jumped 1.7 cents on the weaker greenback to US$0.9924. Oil jumped US$1.19 to US$89.19/bbl but after a strong week there was some profit-taking on the LME, with all metals slightly softer.

There's little in the way of economic data releases in the US this week. Tuesday sees consumer credit and Thursday wholesale trade before Friday brings the trade balance, Treasury budget and the first Michigan Uni consumer confidence survey for December – one which will provide a guide to Christmas shopping intentions.

It's nevertheless a busy week in Australia on the economic front. Today sees the release of the November construction PMI, along with the ANZ job ads series and the TD Securities monthly inflation gauge. On Tuesday the RBA meets but Stevens has already signalled no rate hike again till next year at least. It will nevertheless be interesting to read the commentary given everything that's happened since the November hike which has made that hike look premature.

Wednesday brings home loan and investment finance data and then on Thursday its our own unemployment report for November. Having ticked up to 5.4% in October from 5.1% the expectation is for a drop back to 5.2%.

Canada also makes a rate decision on Tuesday and this week sees monthly trade balance releases from Germany, Japan, the UK and US, along with China on the Friday.

The Australian AGM rush is now over although there are still a handful of meetings to be held in December. This week's highlight will be the first of the big bank AGMs but not before Bank of Queensland ((BOQ)) meets on Thursday. Thursday also sees a battle of the wallets as the bizarre new Network Ten ((TEN)) board faces off for the first time.

Rudi will be the guest on Sky Business channel's Lunch Money on Thursday at noon.

For further global economic release dates and local company events please refer to the FNArena Calendar.

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