Weekly Reports | Aug 31 2012
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.
By Greg Peel
Okay. Bernanke will speak tonight and will not preempt QE3. He may preempt some lesser measures, such as any one or mix of mortgage purchases, dropping the Fed' bank deposit rate to zero, or extending the zero cash rate to 2015. Or he might announce that Fed policy measures will now be linked specifically to a benchmark, such as GDP or unemployment. Or he might say none of these things, and wait for the September 13 FOMC meeting.
He knows the world is watching so he will say something, but it may just be another “we stand ready” brush-off. Wall Street is not expecting QE3, but a rehash will be a disappointment. Measured, rather than knee-jerk, responses to the Fed usually occur the day after a Fed announcement, and Monday is a holiday in the US. So we may have to wait until Tuesday night to gauge Wall Street's true Jackson Hole response.
Over to Draghi, September 6. He will say “we stand ready with bond purchases but can't do anything just yet,” most likely. He knows the world is watching so he will say something positive rather than negative but cannot be expected to announce anything specific or substantial at this time. The world will be disappointed.
Speaking of the world, China will release its official August manufacturing PMI tomorrow and high hopes are not being held. Australia, the UK and eurozone will follow on Monday and the US on Tuesday. Service sector PMIs will follow on Wednesday with the US on Thursday.
With the Australian results season now over, attention turns to economic data and next week will be full of it. June quarter corporate profits, inventories, net exports and the current account are due ahead of Wednesday's GDP result. The RBA will decide to leave rates on hold on the Tuesday, and across the week we'll see job ads, retail sales, unemployment and trade balance data on top of the PMIs. Who needs results season?
In the US the PMIs will be accompanied by construction, vehicle sales and productivity data and the week will end with the all important jobs number (ahead of the following week's FOMC meeting).
The week will also end with a Chinese monthly data dump.
The Labour Day long weekend in the US officially signals a return to work after summer, and all of the above should provide plenty of potential market action after the long malaise.
