Next Week At A Glance

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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

Everyone knew the fiscal cliff was coming, and while there may have been hope of a Republican sweep in the election from early in the year this was far from a given. The truth is Wall Street has gained 60% in the first four years of Obama's presidency, and until the election was up 16% in 2012.

So we can't really say it's an “Obama thing” that we have seen a sharp negative reaction to the election result. Indeed, had Romney won with the Democrats retaining a Senate majority, which they most likely would have, commentators have argued there would be no reason to feel any better about things than is the case currently. It's simply about the cliff, the associated uncertainty, and a dash of Europe to boot. The rally from June seems almost to have been one of “blind faith”, or at least faith in QE alone, given the fiscal cliff was always going to be there.

Right now the US indices (and Apple, as good as an index by itself) are breaking down through technical levels, which sets off computerised tea leaf readers. It's a bit of a snowball pullback at this point – one which those looking to buy at better levels will allow to roll for a while to gain maximum value benefit. Commentary is split between those confident no US government will allow a true plunge over the fiscal cliff, and those who believe the two conflicting mandates – a president who promised tax increases for the wealthy and a House which promised no tax increases of any sort – suggest no compromise could ever be reached. Grab your parachute.

It all simply boils down to uncertainty, and now we await the next round of headline flow. Thank God the Melbourne Cup always signals the beginning of the Silly Season in Australia, because now we can all just go to Christmas lunches and drinkies and flip the bird at the rest of the sad world.

What's happening next week? I mean really, who cares? There may or may not be headlines out of the US, Europe and perhaps even China to drive market sentiment. In the meantime, the following won't really carry much weight.

Next week begins with a half-holiday in the US on Monday in which banks and bond markets close but stock and commodity markets remain open for the odd skeleton who pulled the short straw. Thereafter, inflation, retails sales and industrial production data will be released along with the Empire State and Philly Fed manufacturing indices.

Australia will see housing finance and investment lending, NAB business confidence and Westpac consumer confidence. The local bourse will see another million AGMs along with a mini agri/explosive reporting season including results from Graincorp ((GNC)), Orica ((ORI)) and Incitec Pivot ((IPL)). Dulux will also paint us a full year picture.

Japan and the eurozone will both offer up September quarter GDP results.

Have a good weekend.
 

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