Weekly Reports | Nov 18 2011
By Greg Peel
Next week is the week Americans give thanks, but at present it's not clear for what. Europe is the issue that won't go away and as Spain prepares to go to the polls on Sunday the bond markets are telling the EU-ECB-IMF to get its cheque book ready, as indicated by Spanish yields rising towards the level that saw Greece, Portugal and Ireland bailed out. The EFSF, as it is, can handle Spain, but even leveraged to E1trn it can't handle Italy where bonds yields there are taunting the market at just under 7%.
The US Super Committee charged with the task of reaching a multilateral agreement on budget cuts and debt ceilings is believed to be in stalemate as the deadline looms. Here we go again. We recall that it was a Congress-Administration stalemate which sent stock markets plunging in August, before the Greek political problems emerged, when Standard & Poor's cut the US credit rating. If there is no resolution this time (the upcoming deadline represents a postponement) then S&P may well go again.
So we go into next week pretty much not knowing what to think and, as far as the majority rule appears to have it, staying well out of this unpredictable market. Thanksgiving falls on Thursday in the US which has all local markets closed and the Friday is a half-day on the NYSE which typically draws a very minimal crowd. Not that volumes could get much lower at this point.
On Tuesday the US will see another revision of its September quarter GDP and the UK will follow suit on Thursday – a day which will also see Germany's GDP. The Fed will release the minutes of its last monetary policy meeting on Wednesday and again economists will be scouring for any further clues on QE3.
Next week also brings a round of US data in the form of the Chicago Fed national activity index, existing home sales, durable goods, personal income and spending, consumer sentiment and the Richmond Fed manufacturing index, all of which will be crammed in before Thursday along with the Treasury's auctions of two and five-year notes.
A quieter economic week in Australia will see September quarter construction work done on the Wednesday as the highlight and there'll be a few thousand AGMs to keep us occupied. Programmed Maintenance ((PRG)) and Graincorp ((GNC)) will provide earnings results.
For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.
