Tag Archives: China and Emerging Markets

article 3 months old

The Monday Report

By Greg Peel

No Deal in Doha

Shock horror. The meeting of OPEC and non-OPEC oil producers in Doha last night has failed to reach any agreement on a coordinated production freeze. The first market to respond this morning to the stunning news is the Aussie dollar, which fell from around US77.2c to under US76c in a heartbeat.

But in almost as short a space of time, the Aussie is currently back at US76.6c.

As to why the meeting in Doha even went ahead is a mystery. All year Saudi Arabia has said it will only freeze production if all relevant oil-producing nations, including Iran, freeze production, and all year Iran has said no. Heading into the meeting, Saudi Arabia maintained its position. As it turned out, Iran didn’t even bother to attend.

The question now is as to whether, heading into the meeting, oil and other markets had accepted the fact the whole thing was going to be a farce or whether today will bring substantial moves in response, in particular a plummeting oil price. Perhaps the Aussie has provided a clue. Were the initial response in oil prices to be a plunge, the buyers may well be ready to jump on the opportunity and damage will be limited.

There can hardly be any excuse for being surprised.

And then there’s China

Notably, the only sector not to finish in the green on the local market in Friday’s trade was energy. A slight dip suggested squaring up for Doha.

The banks and the materials sectors both had quieter sessions after their solid runs last week, up 0.5% each. This left the rest of the market, which had mostly taken a back seat last week, to pick up the ball and have a run. The consumer sectors, healthcare, telcos and utilities all posted gains of around 1% or more, with industrials just off the pace. It was a choppy session, but in the end the 0.8% gain for the ASX200 was mostly a market-wide effort.

The highlight of the day was the release, mid-session, of Chinese economic data.

China’s GDP grew by 6.7% in the March quarter, smack on expectation. That’s down from 6.8% in December, and, as the headlines in the populist press will be quick to point out, the slowest pace of growth since 2009. It may be a fact but it’s also an ignorant comparison. China’s economy has grown substantially since 2009, such that to achieve the dollar value of additional GDP represented by 6.7% growth today would have required a growth rate in 2009 well into double digits.

In the month of March, Chinese industrial production grew by 6.8% year on year, up from 5.4% in February and ahead of 5.9% forecasts. Retail sales grew by 10.5%, up from 10.2% and ahead of 10.4% forecasts. Year to date fixed asset investment grew by 10.7% over the same period last year, beating expectations of 10.3%.

While drawing upon the usual grain of salt, we may conclude from the data that the stimulus measures undertaken by Beijing last year and into this year are finally starting to see some results. But once again the caveat is the impact of volatility around the Lunar New Year break.

The Chinese numbers helped lift a wobbly ASX200 to a stronger close on Friday but it was not the sort of performance one might have expected in times past when China reported Street-beating numbers. The local resource sectors had a muted session.

Wall Street

Wall Street’s session on Friday was mostly about waiting for Doha. The WTI price fell a dollar to sit poised near the US$40 mark in anticipation. US oils stocks similarly saw a square-up.

Citigroup was the last of the major US commercial banks to report on earnings on Friday and just as had been the case for its counterparts throughout the week, Citi reported a result that was weak but not as weak as forecast. All up Wall Street finished slightly lower on Friday night but higher for the week, led by the rebound in bank stocks.

On Friday night the Dow closed down 28 points or 0.2% while the S&P fell 0.1% to 2080 and the Nasdaq lost 0.2%.

US data releases for the session were weak. Industrial production fell a greater than expected 0.3% in March to mark the sixth monthly decline in seven. The Michigan Uni fortnightly measure of consumer sentiment showed a fall to 89.7 from 91.0 at end-March, suggesting a fourth consecutive month of decline.

Bucking the trend, The Empire State activity index rose to 9.6 from 0.6 last month, to post its strongest reading since January 2015. But this series has become increasingly volatile, and could just as easily be negative next month.

Either way, Wall Street is currently supported by the Yellen Put. Weak data only serve to push out the expected timing of the next Fed rate hike.

Commodities

On Saturday morning, West Texas crude was sitting at US$40.42/bbl, down US$1.03 from Thursday night, and Brent was down US81c at US$43.07. We await tonight’s reaction to Doha.

We can say the same for base metal prices, given the direction of oil has this year been a significant factor in sentiment on the LME. Moves were mixed on Friday night, with zinc’s 1% gain the standout as copper fell 0.7%.

Iron ore fell US$1.10 to US$57.50/t.

The US dollar index had slipped 0.2% by Saturday morning to 94.70, which helped the Aussie up 0.4% to its pre-Doha level of US$0.7726. Gold rose US$6.50 to US$1234.10/oz.

The SPI Overnight closed down 4 points on Saturday morning, but that’s no longer relevant.

The Week Ahead

The US earnings season steps up a gear this week, as a range of Dow components across all sectors take centre stage. Morgan Stanley and Goldman Sachs will round out the investment banking performance, while everything from Johnson & Johnson to Google, Caterpillar and General Electric will offer a more widespread indication of the state of the US economy.

Economic data releases will come thick and fast as well, but as suggested, they lack any real clout above the Fed’s safety net.

Tonight sees housing sentiment, tomorrow housing starts and Wednesday existing home sales, while Thursday brings house prices, leading economic indicators, the Philadelphia Fed activity index and the Chicago Fed national activity index. Friday will see a flash estimate of April’s manufacturing PMI.

Japan and the eurozone will also flash on Friday. The ECB will hold a policy meeting on Thursday but no one is expecting anything new.

It’s a quiet week for Australian data, but the RBA will be in the frame nonetheless. The central bank’s Financial Stability report, released on Friday, suggests concerns over Australia’s apartment construction bubble. Glenn Stevens will speak on Tuesday, and the minutes of the April RBA meeting will be released.

There’s plenty of action on the local stock front this week. The resource sector quarterly production report season ramps up in earnest, with highlights this week featuring Oil Search ((OSH)) and Rio Tinto ((RIO)) tomorrow, BHP Billiton ((BHP)) and Newcrest Mining ((NCM)) on Wednesday, OZ Minerals ((OZL)) and South32 ((S32)) on Thursday and Santos ((STO)) on Friday.

Outside of resources, quarterly reports will be forthcoming from Transurban ((TCL)) today and Brambles ((BXB)) and Challenger ((CGF)) on Thursday. Wesfarmers ((WES)) will report quarterly retail sales on Thursday.

Cimic ((CIM)) and Woodside Petroleum ((WPL)) will hold AGMs on Thursday.

Watch the price of Woodside this morning.

Rudi will appear on Sky Business on Tuesday around 11.15am, via Skype-link, then again on Wednesday, to host YMYC 8-9.30pm, then twice on Thursday (12.20-2.30pm and Switzer TV between 7-8pm), and then again via Skype-link on Friday, usually around 11.05am.
 

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

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article 3 months old

The Overnight Report: Short Squeeze

By Greg Peel

The Dow closed up 187 points or 1.1% while the S&P gained 1.0% to 2082 and the Nasdaq rose 1.1%.

Material Gains

Strong rallies overnight in oil, iron ore and base metals set the scene for yesterday’s market-leading 3.4% gain for Australia’s materials sector. Underscoring renewed interest in this beaten-down bunch were China’s surprisingly positive March trade numbers, released late morning.

The headlines in this morning’s papers are suggesting that after throwing loads of liquidity and stimulus into the system, Beijing has finally succeeded in reviving China’s “old economy”. “Old” being the economy of manufacturing and export – the economy Beijing is attempting to wind back from overcapacity -- with “new” being an economy based on services and domestic consumption.

In US dollar terms, Chinese exports rose 18.7% year on year in March after falling 25.4% in February. Economists had forecast a 2.5% rise, Imports fell 7.6% after falling 13.8% in February. Economists had forecast a 10.2% fall.

The sighs of relief across Australia’s mining industry were notably audible yesterday. We won’t mention, nevertheless, that every year Chinese data are volatile and distorted in the months around the New Year break and as such, usually misleading.

Such a consideration did not faze Fortescue Metals ((FMG)) yesterday, which having picked a good day to chime in with a production report showing even further astonishing cost cuts, saw its shares jump 8%. BHP Billiton ((BHP)), which drew upon the rallies in both iron ore and oil, rose 6%. Rio Tinto ((RIO)) gained 4.5%. On the base metal front, one of the most shorted stocks in the market – Western Areas ((WSA)) – enjoyed a 4% rally, as did Independence Group ((IGO)), which has also been popular among the shorters.

The energy sector was the next best performer yesterday, posting a 2.6% gain. But the real clout in market cap terms, helping the ASX200 up 1.6%, was a 1.8% rally in the banks. How are those resource sector loan exposures looking now? Not as bad as they were a week ago, when bank investors were heading for the hills.

We might suggest that every time the index heads north through 5000, it is a “risk on” trade. Telcos and utilities comparatively sat on the sidelines yesterday and healthcare managed only a modest gain. Consumer staples did post a 1.0% gain, but only after having been hammered this week thanks to the Target scandal.

Today’s session will be interesting. Iron ore and base metal prices are again up strongly overnight. Oil is off, but only by a tad. And on Wall Street, the banks were the big winners on the day.

Chase JP Morgan

Well you could knock me down with a feather, but apparently when asked whether an agreement on an oil production freeze was likely to be reached in Doha on Sunday, the Saudi oil minister last night responded with “Forget about this topic”.

One wonders, thus, just what the meeting is for.

I suggested yesterday that after a couple of days of sharp rallies, you wouldn’t want to be standing under an oil price on Monday if nothing was to come out of Doha. And to top things off, last night’s weekly US crude inventory numbers showed a build of 6.2 million barrels when analysts had forecast 1 million. By rights, oil prices should be down about 10% this morning.

But they’re not. They’re only off a smidge. There are two reasons we can consider.

WTI is not back over 40 due to any false sense of hope an agreement can be reached in Doha. Nobody ever actually believed one would be. Which leads into the second point, WTI is back over 40 because the trend of US production is heading in the right direction, ie down, notwithstanding weekly inventory fluctuations. The weekly US crude data also showed that production has now fallen below the 9 million barrels per day mark. And gasoline inventories fell more than expected in the week, as is the current trend, suggesting growing demand.

The fact that oil prices held up when they had every right to tumble was supportive of the rally on Wall Street last night, but not the driver. The driver was JP Morgan’s (Dow) March quarter earnings report. The talk leading into the US earnings season has been of forecasts being marked so far down as to skew the odds heavily in favour of upside surprise. All that was needed was some confirmation.

JP Morgan’s result was not a good one, but it wasn’t as bad as had been forecast. JPM shares jumped 4%, and subsequently floated all US bank share boats. Tonight sees results from Bank of America and Wells Fargo.

US bank stocks have been very much out of favour in 2016 for a number of reasons: sluggish US economic growth; ultra-low interest rates, crimping earnings potential; volatile markets, hitting trading profits; and credit exposure to the stricken energy sector. It is said that a bull market on Wall Street is not possible unless led by the banks. The fact Wall Street has been stuck in a range for many months now can to a great extent be explained by bank underperformance.

Maybe this earnings season will prompt a bank comeback. But as many a trader has pointed out, the short interest on US stock markets is currently as high as it was in 2009, and market scepticism surveys have been hitting peak levels. Wall Street is rife for a break-out rally, but does it have substance? Volumes have been on the tepid side, including last night, suggesting a lack of buying conviction. Retail investors remain absent. The conclusion as to why Wall Street rallied last night was simply one of “short squeeze”.

And short-covering rallies tend to be ephemeral.

Commodities

West Texas crude is down US8c at US$41.56/bbl and Brent is down US36c to US$43.90/bbl.

Harking back to the strong Chinese data released yesterday, all base metals are up 1-1.5%.

Iron ore is up another US$1.40 to US$59.90/t.

While the strong Chinese data are good news for the Australian resource sector, they are not good news for the Aussie dollar. It jumped sharply on yesterday’s release. So the RBA will be very relieved to see that last night’s bank-led rally on Wall Street was accompanied by a 0.8% bounce-back in the US dollar index, to 94.82.

The Aussie is subsequently down 0.3% over 24 hours to US$0.7652. Gold is off US$13.30 to US$1242.30/oz.

Today

The SPI Overnight closed up 38 points or 0.8%.

The Aussie will be very much in focus today when the local March job numbers are released.

The Bank of England will hold a policy meeting tonight, but no one much cares ahead of the Brexit referendum.

US CPI numbers are out tonight, following disappointing retail sales and PPI releases last night.

Whitehaven Coal ((WHC)) will release a quarterly production report today, Transurban ((TCL)) was to provide a quarterly update but postponed it until Monday, Bendigo & Adelaide Bank ((BEN)) will hold a strategy day and tonight, Rio Tinto will hold its UK AGM.

Rudi will make his weekly appearance on Sky Business from 12.30-2.30pm.
 

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article 3 months old

The Overnight Report: Caution

By Greg Peel

The Dow closed down 20 points or 0.1% while the S&P lost 0.3% to 2041 as the Nasdaq fell 0.4%.

Consolidation

On Friday the ASX200 fell 70 points before recovering to a close of down 26, having briefly breached the 4900 mark at the low. Yesterday the index only made to 4910 on a 27 point drop to late morning before recovering to be down 6 at the close.

At the moment it appears the buyers are happy to step in around the 4900 mark. So many times this year we have seen sharp legs down through 4900 very quickly turn into sharp rebounds back again to the safety of the 5000 level. This time we’re actually seeing some consolidation at these familiar lows, which is probably a good thing.

Technical analysts are still calling the index to 5350-5400 as long as the previous lows hold. The last couple of sessions would suggest the lows are holding, barring anything unforeseen. Consolidation in commodity prices is making a supportive contribution, fighting back against bank woes. Other sectors have been largely oscillating up and down of late.

Yesterday the resource sectors held up the market, with energy rising 1.6% and materials 1.5%. Perhaps the interesting point to note is that energy only rose 1.6% when oil prices jumped 5-6% overnight. In the not so distant past, energy was flying around over 3% a day up and down with every little tick up or down in WTI. Similarly, the materials sector rose yesterday despite the iron ore price falling.

We might conclude that the dooming and glooming of analysts in recent weeks -- warning that commodity prices were being artificially supported by short-covering and temporary restocking – is no longer striking fear in the market given commodity price consolidation.

Can there be any more bad news for the banks? Well, they may yet be forced to raise more capital on stricter regulatory requirements, but this is pretty well understood and likely well priced in. The banks were off 0.4% yesterday in a session which saw mixed sector moves. An off-target Wesfarmers ((WES)) led the consumer sectors down a percent and helped balance resource sector gains.

Sitting here above the 4900 level, it appears the local market is looking towards Wall Street and the US earnings season to provide direction just as much as Wall Street is at present. But we must not forget China, which, having been out of the news for a few weeks, is back in this week with a load of March data and the March quarter GDP result.

Positive Sign?

China’s CPI came in at 2.3% annual in March, unchanged from February. Economists had forecast 2.5%, and Beijing’s target is 3%, thus the assumption is the door is still well and truly open for further stimulus.

The bad news is the PPI was down again in a negative run that has now lasted four years. The good news is that the 4.3% annual drop in March is an improvement on the 4.9% drop marked in February. Could there be light at the end of the tunnel? We’ll need to get past the typical distortion Chinese data suffers before, during and after the New Year break before any trend can be confirmed.

And We’re Off

Alcoa’s March quarter result beat on earnings but missed on revenue. The result came out after the closing bell and Alcoa shares are currently down 4.5% in the aftermarket, having closed up 4% before the bell.

While the focus is always on the S&P500’s net earnings result – and it is interesting to note these past couple of sessions have seen analyst forecast actually pulling back from the dour numbers previously forecast – it may yet be revenue growth, or lack thereof, that provides the most impact this season. Alcoa achieved an earnings beat through cost cutting. There is only so far cost cutting can go to improve earnings before revenue potential begins to be affected as well.

What Wall Street wants to see is real earnings growth, which needs to be supported by revenue growth.

It’s early days. Alcoa’s release is only considered to mark the unofficial start of each US result season because it was always the first Dow stock to report. Alcoa is no longer in the Dow, but traditions are hard to shake. We now have to wait until the end of the week before the big banks start reporting, including the actual first Dow stock, JP Morgan Chase. Forecasts are for the banks to have had a shocker, losing a net 20% in earnings from the March quarter 2015.

On Friday night the Dow rallied 150 points before pulling back to close up only 35. Last night the Dow rallied 150 points to close down 20. In each case a jump in the oil price provided initial incentive – the oils are up another couple of percent this morning – but Wall Street has not wanted to go on with it.

Patience is required.

Commodities

West Texas is up US75c at US$40.36/bbl and Brent is up US$1.00 at US$42.85/bbl.

Commodity prices were offered some support from the US dollar last night, which is continuing its gradual decline. The dollar index is down 0.2% at an eight month low 93.98.

The greenback didn’t help aluminium nevertheless, which closed down 1% in London, to mark the only move of any real significance amongst the base metals.

Slightly more significant is a near 5% jump in the iron ore price, which is up by US$2.60 at US$55.90/t.

Gold found some support in the greenback, rising US$19.70 to US$1258.10/oz.

But every silver lining has a cloud. The Aussie is up 0.6% at US$0.7598.

Today

The SPI Overnight closed down one point.

The global economic and local stock calendars are both exceedingly bare today. The only highlight is the release today of the NAB business confidence survey for March.

Rudi will appear via Skype-link on Sky Business this morning, 11.15am, to discuss broker calls.
 

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available in the FNArena Cockpit.  Click here. (Subscribers can access prices in the Cockpit.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Monday Report

By Greg Peel

Comeback

It was looking pretty ugly for the ASX200 at the open on Friday, with early falls suggesting we could be in for one of those pre-weekend capitulations as sentiment turned sour once more. But having opened down 70-odd points, the index very quickly found buying support.

The early drop took us down through 4900, which suggests the impetus to buy at that point was largely a technical one. Or we might simply note that every time the index has fallen through 5000 this year, and even down towards 4800, it has subsequently recovered to trade back over 5000 every time.

Outside of a 1.3% fall in the insignificant info tech sector on Friday, the banks and energy led the index to its close of down 26 with 0.8% falls. Thereafter, sector falls were lighter and fairly uniform, but for utilities which managed the only gain on the day, up 0.2%.

Sentiment this week will centre on the first of the US earnings results, along with the first quarterly reports from local stocks.

Bring it on

Janet Yellen appeared at a gathering of Fed chairs past and present after the close of US trading on Thursday evening. Joined by Volker, Greenspan and Bernanke, it was not really the forum for Yellen to be spouting any significant change of heart on current monetary policy. Not that she was likely to anyway, and she didn’t.

The yen pulled back against the US dollar ahead of the open on Wall Street on Friday after its surging run on Thursday. Prime Minister Abe had previously ruled out intervention but on Friday Japan’s finance minister said he may act against a “one-sided” yen.

The easing yen allowed the US stock markets to open with some strength, taking the Dow up 150 points in the first half hour as oil prices posted another 5% jump. On the 2016 correlation, it was a no brainer for a solid session in US stocks. But this month that correlation has broken down.

The Dow closed up 35 points or 0.2% while the S&P gained 0.3% to 2047 and the Nasdaq was flat.

Oil prices may be bouncing around a lot, but at the moment they’re not really getting anywhere. The lack of overall direction, despite day to day volatility, has meant stock traders have moved on to concentrate on other drivers. This week that means corporate earnings, which by some measures have been now forecast to fall as much as a net double digit percentage.

Forecasts have actually been getting weaker and weaker this past couple of weeks, which tends to suggest they have become a little overblown to the downside. The proof of the pudding awaits over the course of the next month. Alcoa reports tonight, then there’s a bit of a gap to week’s end when the big bank results start to flow. The pullback from the highs for the indices on Friday night, despite oil holding onto 5% gains, likely reflects squaring up ahead of the first earnings numbers.

Commodities

Last week’s US data showed a surprise drop in crude inventories. On Friday night, the Baker Hughes rig count showed a drop to 354 from 362 a week earlier and 760 a year ago. While the third straight week of lower rig counts was no great shock, the oil market is beginning to see the numbers lining up and moving in the right direction.

No one expects this weekend’s meeting in Doha to result in any meaningful supply freeze agreement between OPEC and non-OPEC members, but on last week’s US data it probably doesn’t matter that much anymore. There may yet be some disappointment if nothing eventuates in Doha, but on the wider scheme of things, earlier talk of WTI having to go back to test its US$26 low is now waning.

West Texas was up US$2.08 or 5.5% at US$39.61/bbl on Saturday morning and Brent was up US$2.26 or 5.7% at US$41.85/bbl.

Stronger oil prices provided incentive for a more positive session on the LME. Copper and zinc rose 0.5%, tin 1%, aluminium 1.5% and nickel 2%.

Iron ore fell US50c to US$53.30/t.

Gold was relatively steady at US$1238.40/oz.

The US dollar index fell 0.3% to 94.19, helping the Aussie to rise 0.6% to US$0.7551.

The SPI Overnight closed up 20 points or 0.4% on Saturday morning.

The Week Ahead

US earnings results will be closely watched at the beginning and end of this week. US date releases this week include retail sales, inventories, the PPI and Fed Beige Book on Wednesday, CPI on Thursday, and industrial production, fortnightly consumer sentiment and the Empire State activity index on Friday.

China will release its March quarter GDP result on Friday. Forecasts suggest 6.7% growth, down from 6.8% in December.

Ahead of that release, Chinese monthly inflation numbers are due today, trade on Wednesday, and industrial production, retail sales and fixed asset investment on Friday.

Housing finance numbers are due out in Australia today. Tomorrow sees the NAB monthly business confidence survey and Wednesday the Westpac consumer equivalent. The monthly jobs lottery takes place on Thursday and on Friday the RBA will release a Financial Stability Review.

On the local stock front, Energy Resources of Australia ((ERA)) is due to release its March quarter production report today, thus kicking off the resource sector quarterly production reports season. Fortescue Metals ((FMG)) reports on Wednesday and Whitehaven Coal ((WHC)) on Thursday while Rio Tinto Plc ((RIO)) will hold its London AGM on Thursday night.

The non-mining quarterly report/update/ investor day season will be kicked off by IOOF Holdings ((IFL)) on Wednesday followed by Bendigo & Adelaide Bank ((BEN)) and Transurban ((TCL)) on Thursday.

Rudi will first appear on Sky Business on Tuesday, via Skype-link around 11.15am, then again for two hours on Wednesday morning (10-midday), on Thursday he'll be back from 12.30-2.30pm and finally he'll do another linkup via Skype on Friday morning, probably around 11.05am.
 

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

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article 3 months old

Next Week At A Glance

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

Alcoa will report quarterly earnings on Monday night, unofficially kicking off what is one of the more highly anticipated US earnings seasons. Forecasts suggest high net single digit losses for the S&P500, dragged down particularly bey the energy sector but also by US dollar strength in the March quarter impacting on multinationals.

With Wall Street now having recovered the sharp losses posted earlier in the year, direction from here will be very much determined by actual earnings results.

The news vacuum in the Australian market that has persisted post February result season all the way to now may come to an end next week as quarterly reports roll in from the resource sector in particular but also from other industries. Fortescue Metals ((FMG)) is among early production report publishers and Rio Tinto ((RIO)) will hold its London AGM, while updates and investor days start to flow as well. IOOF ((IFL)), Bendigo & Adelaide Bank ((BEN)) and Transurban ((TCL)) provide their offerings next week.

China is in the frame next week as it rolls out March economic data. We’ll see inflation on Monday, trade on Wednesday and industrial production, retail sales and fixed asset investment on Friday, along with the March quarter GDP result.

US data next week include retail sales and inventories, inflation, industrial production, consumer sentiment and the Empire State activity index and Fed Beige Book.

Australia will see the NAB business and Westpac consumer confidence surveys along with the jobs lottery on Thursday. On Friday the RBA will publish a quarterly Statement on Monetary Policy.


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article 3 months old

The Monday Report

By Greg Peel

Manipulation

It looked like a worrying start to the June quarter for the local market on Friday but really it was a reversal of the solid end to the March quarter on Thursday. On Thursday, fund managers bought up the market in general to fool you into thinking they’d actually generated better returns when in fact they were clueless. On Friday they simply sold back those trades.

So for all intents and purposes, the June quarter starts today. And where from? Well, 5000 of course. Prisoners of our own device.

Economic data were never going to matter on Friday. On any other day, news that China’s official manufacturing PMI swung back into expansion in March for the first time in eight months would have been met with cheers. Beijing’s index rose to 50.2 from 49.0 in February. Caixin’s independent measure did not quite make expansion but a move up to 49.7 from 48.0 at least corroborates the trend.

More important than China’s manufacturing sector is its services sector, which Beijing is supporting in favour of over-capacitated manufacturing. The government’s services PMI rose to 53.8 from 52.7, which also reversed the weak trend of the last couple of months.

And for the record, what’s left of Australia’s own manufacturing industry posted a PMI increase to a breakneck 58.1, up from 53.8. That’s the fastest pace of expansion since April 2004.

March is often a vacuum month for Australian corporates coming, as it does, in the wake of the February results season. Quite often not a lot happens to generate any market news and this year has been no exception. April features school holidays, which we’ve already had in Victoria and Queensland and are about to have in NSW, just to increase the potential for quieter markets.

But we do see the corporate news begin to ramp back up again in April, beginning with resource sector quarterly production reports and then moving on the ever increasing number of quarterly reports provided by the rest of the market. We are ever so quietly moving towards a US-style quarterly reporting calendar. If only we could adopt the US practice of providing homogenous EPS results for clear comparison rather than Australia’s antiquated obsession with this thing called “profit”, which is often misleading.

Around the Grounds

There may not be much left of Australia’s manufacturing industry but in Japan, manufacturing is the economy’s primary driver. It will thus be concerning for the Abe government that Japan’s manufacturing PMI fell to 49.0 from 50.2, representing the first move into contraction in eleven months.

It was steady as she goes on the other side of the world, with the eurozone’s PMI inching up to 51.6 from 51.2 and the UK similarly to 51.0 from 50.8.

Wall Street was relieved to see the US manufacturing PMI flip back into expansion at a better than expected 51.8, up from 49.5.

And suddenly, no one cared

The US added 215,000 jobs in March, although you’d have been hard-pressed to find that out on Saturday morning. The unemployment rate ticked back up to 5.0% from 4.9% but that was because the participation rate reached its highest level in two years.

As late as last year the US monthly non-farm payrolls report releases drew audience numbers exceeded only by the World Series and Super Bowl, but now the data have become relatively consistent across past months and Janet Yellen has emphatically set a dovish policy agenda, it really wasn’t going to matter what the jobs outcome was on Friday night.

If anything, a June Fed rate hike cannot be ruled out, but that does not represent a change in market view. The most important number within the data suite – wage growth – showed a better than expected 0.3% increase following a disappointing 0.1% drop in February. This is the inflation indicator Fed-watchers are targeting, but the flip-over hints at statistical noise.

On the strength of both better than expected jobs numbers and manufacturing numbers, Wall Street rallied on Friday. The Dow closed up 107 points or 0.6% while the S&P gained 0.6% to 2072 and the Nasdaq rose 0.9%.

The most interesting point to note about the rally is that it came in direct defiance of a fall in the oil price.

Oil fell 4% on Friday night and as a result, the Dow opened down over a hundred points. But traders who made the assumption the near perfect correlation still stands were in for a rude shock. Oil fell because Saudi Arabia suggested that Doha meeting or not, if Iran does not agree to a production freeze then Saudi Arabia will not agree to a production freeze.

If the near 50% rebound in the WTI price from its February low is all about hopes of co-operation between OPEC and non-OPEC producers in a concerted effort to reduce supply and support prices, then either oil traders are very stupid or the rally actually has nothing to do with such speculation. The rally is all about a market that became very oversold on panic and a subsequent short-covering scramble.

Throw in some early signs of falling US production, despite still rising inventories, lower US rig counts and a growing number of marginal producers falling by the wayside and we have sufficient reason for a rebound in oil. We can also cite a lack of major financial disaster in the US banking industry stemming from oil producer defaults and bankruptcies, as was at one point feared, as easing concerns.

The oil price had stabilised over March, but with nothing new going on, and short-covering now exhausted, it is of no surprise oil should fall back again. Perhaps Saudi Arabia was an excuse rather than a source of great angst but either way, oil is not going back to US$50/bbl until the trends noted above become more entrenched.

The fact Wall Street turned around and closed on a high note on Friday is testament to waning fear of another plunge in the WTI price to an even lower low.

Commodities

West Texas crude was down US$1.48 or 3.9% at US$36.68/bbl on Saturday morning and Brent was down US$1.65 or 4.1% at US$38.68/bbl.

Normally we would see positive results for both Chinese and US manufacturing provide a boost to base metal prices but the LME appears to be suffering from a bout of schizophrenia of late, suggesting price moves are more about metal-specific production and inventory levels than they are about the macro-economic picture.

On Friday night, with the US dollar index as good as steady at 94.58, tin rose 0.5%, aluminium 1%, lead 2% and zinc 3% while copper fell 1% and nickel fell 2%.

Iron ore rose US80c to US$54.00/t.

The solid US data helped gold down US$9.20 to US$1221.90/oz.

The Aussie rose 0.3% to US$0.7684.

With the Thursday-Friday shenanigans out of the way, the SPI Overnight closed up 23 points or 0.5%.

The Week Ahead

That Aussie will no doubt be a focus of attention when the RBA meets tomorrow. A rate cut is not expected but the market will be looking for hints the board might be prepared to act, or at least talk down the currency.

Ahead of the meeting we see local retail sales and building approvals numbers today along with ANZ job ads and the TD Securities inflation gauge. Tomorrow brings the trade numbers and the services PMI and on Thursday it’s the construction PMI.

Service sector PMIs will be posted across the globe on Tuesday, including Caixin’s China number.

In the US it’s factory orders tonight, trade on Tuesday along with the PMI, and chain store sales on Thursday. The minutes of the March Fed meeting will be published on Wednesday but they have already been trumped by Yellen’s speech last week. Yellen speaks again this week, on Thursday.

There’s a late trickle of ex-divs in the local market this week and Bank of Queensland ((BOQ)) will report earnings on Thursday. On Friday, both Dexus Group ((DXS)) and Investa Office ((IOF)) will hold EGMs to vote on the proposed portfolio management takeover.

Rudi will appear on Sky Business on Tuesday, via Skype-link, 11.15am and again twice on Thursday (Trading Day 12.30-2.30pm & Switzer TV between 7-8pm), and via Skype-link at around 11.10am on Friday.
 

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

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article 3 months old

Next Week At A Glance

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

The US non-farm payrolls report for March is due tonight. Given the shift to a more dovish stance from the Fed following first the March policy statement, and more emphatically, this week’s speech from Janet Yellen, the level of vital importance of US jobs reports has waned since, say, this time a year ago.

Beijing will release both China’s March manufacturing and service sector PMIs today. Again, with Beijing expected to step up monetary and/or fiscal stimulus if data continue to be weak, the potential for volatility that once accompanied these releases had faded somewhat.

Australia, Japan, the eurozone, UK and US will release manufacturing PMIs and Caixin will release its independent China manufacturing PMI today.

Next Tuesday sees the same round again for service sector PMIs.

The Fed will be back in the frame next week with the release of the minutes of the March FOMC meeting. The only real point of interest, nevertheless, will be the level of dissention among voting members. Janet Yellen has since superseded the March statement with her speech this week. Yellen will also speak again next Thursday.

US data release next week include factory orders, chain store sales and trade numbers in what is a quieter week economically.

Australia will see ANZ job ads, the TD Securities inflation gauge, building approvals and retail sales numbers on Monday. The RBA will hold a policy meeting on Tuesday. While Glenn Stevens’ recent speech suggests no likelihood of a rate cut, his statement will be interesting in the wake of the reduced possibility of a Fed rate hike anytime soon and the impact that is having on the Aussie dollar.

The round of ex-dividends in the local market all but comes to a close next week. Bank of Queensland ((BOQ)) will report earnings on Thursday.
 

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article 3 months old

China: Where Is It Headed?

This article was first published for subscribers on March 17 and is now opened to general readership.
 

By Greg Peel

The Chinese Growth Myth

“It is normal for a fast-growing economy to slow at some point,” suggest Commonwealth Bank’s international economists. “China is no exception”.

It is no wonder smaller investors are sent into panic mode every time there is less than positive news out of China. It is the preserve of the popular press to come up with the most shocking headline it can. Good news is all a bit dull. The fact the popular press mostly has absolutely no idea what it is talking about is by the by.

For the past decade, China’s rate of economic growth has been slowing. The days of double-digit GDP results are now long gone and if one were to take the popular press headlines at face value when growth dropped to 6.9% in 2015, you’d think the world was coming to an end. “Lowest growth in 25 years!” The hyperbole is similar every time China’s manufacturing PMI shows another month of contraction. Never mind that Beijing’s structural reform agenda includes a reduction in over-excessive manufacturing.

Indeed, I would wager very few in the popular press could, if pushed, correctly define a purchasing managers’ index.

But we’re not here simply for a bit of media bashing, as much fun as that might be. The point here is that yes, there are certainly reasons to be concerned over the trajectory of the Chinese economy. One must, however, understand what one is actually concerned about.

China’s GDP has grown from just US$200bn in 1978 when economic reforms first began, CBA notes, to US$10.4trn in 2015. China’s GDP per capita has increased over that period by 129 times. China is still considered an “emerging market” because despite having grown to be the world’s second largest individual economy, it is still a long way from being “developed”. The rate of China’s growth has been slowing this past decade, but then, so it should.

Nothing can grow at a double-digit pace for ever. The bigger an economy becomes, the smaller the incremental percentage of GDP growth each year’s dollar value of GDP represents. China’s 6.9% growth in 2015 added US$600bn to GDP. To generate that same dollar value in 2016 would require a growth rate of only 6.5%, CBA notes. Last year Beijing set a growth target of 7.0% and achieved 6.9%. This year the target is 6.5-7.0%.

Looking at it around the other way, to notch up US$600bn in 2010 China’s GDP would have had to have grown by 10.4%, and in 2005, by 17.8%. China’s average growth rate of 10.5% achieved over the past decade is equivalent to only 5.8% required for the period 2016-20.

CBA believes China will become a 5-6% growth economy in 2020. One can just imagine the headlines: “CBA predicts major Chinese growth collapse!” But indeed, the opposite is true.

From the mid-noughties, assumptions of the pending rise of China as a global economic powerhouse, more colossal than that of post-war Japan given its population, were based on the “urbanisation and industrialisation” thematic. Twenty years ago the vast bulk of China’s populace were subsistence farmers. Over that period many of those farmers have moved to the cities, attracted by the growth of Chinese industry. China has built more cities as a result. Beijing’s official target is to increase China’s urbanisation rate to 60% by 2020.

The standard urbanisation rate of a major developed economy is 80%. China is, thus, still emerging. CBA believes ongoing urbanisation remains the key pillar for the future growth of China. Given the rate reached 56% in 2015, that target of 60% by 2020 should not be difficult to reach, albeit there remains an urbanisation rate imbalance between coastal regions and the vast inland.

Every one percentage point of urbanisation growth brings another 17m Chinese to live in cities, boosting consumption, service and investment growth. An average urban Chinese consumes three times that of rural counterparts, CBA notes. There follows a flow-on to investment, as more people require more housing, roads, airports, schools and hospitals.

While CBA acknowledges such growth does not follow a straight line – there will be macroeconomic cycles and external shocks along the way – so far China is enjoying higher incomes despite the country’s various economic issues. Around 20m Chinese move from poor rural areas to prosperous urban areas each year, thus becoming more productive, being paid more, and consuming more.

“Such a powerful trend,” says CBA, “should allow China to continue to grow at a decent speed for many years to come”.

Not that there aren’t issues overhanging. Since the GFC, China’s debt to GDP ratio has increased dramatically. Investment efficiency (dollars in to dollars out as GDP) has fallen to its lowest level since the 1978 start of the reform process. There is much concern over hidden asset impairment in the Chinese financial sector (non-performing loans). Here, ongoing reform is the only solution, CBA suggests.

Beijing has indicated its determination in restructuring the country into a more sustainable consumption and services-based economy. The government will soon release its thirteenth five-year plan, providing detail on its reform agenda through to 2020.

For those who lay awake at night worried about Chinese growth, it must be remembered that reform and restructure can be an initially painful business. Just ask the retailers of luxury cars or proprietors of Macau casinos, for examples, just what impact Beijing’ crackdown on corruption amongst government officials has had on profits. Or consider what impact Beijing’s attack on China’s shadow banking system had on global financial markets. Steps forward in economic growth require initial steps back.

And of course there is concern from outside China that when it comes to reform implementation, Beijing is very inexperienced. Witness the comical, day by day flip flopping of stock market rules witnessed during last year’s Chinese stock market collapse. Or the People’s Bank of China’s ill-thought out sudden devaluation of the renminbi.

We can only hope that with each bungled experience, and a loss of face in the eyes of the rest of the world, the Chinese government will learn.

The Debt Issue

CBA cites as a major concern China’s debt to GDP ratio, which has grown to 243% at the end of 2015. That 243% is, nevertheless, but one measure. China’s financial markets are a long way from being fully reformed and any outside estimate of Chinese debt always comes with a caveat of “as far as we can determine”.

National Australia Bank’s economists have had a go at assessing a more accurate measure of China’s debt, including that outside the country’s traditional banking system which has grown considerably since the GFC. China’s “shadow banking” industry is notoriously opaque.

CBA cites a figure provided by the Bank for International Settlements. NAB has attempted to broaden that measure, by including bank loans, shadow banking, government bonds and non-shadow banking aggregate financing. This measure renders a figure of 308% of GDP as at the end of 2015. Even that should be considered conservative, warns NAB, given it does not include wealth management products and the more recent development of a peer-to-peer lending market, for which there is no data.

Debt, NAB reminds us, is not necessarily a bad thing. The value of debt can be assessed by comparing a country’s nominal credit growth to nominal GDP growth. A ratio of one to one suggests debt is being used effectively to promote economic growth, as was the case for China between 2004 (when the expression “super-cycle” was coined) and 2008 (the GFC).

But since 2011, China’s economic growth has seen a sustained slowdown, yet credit growth has accelerated. Shadow banking has provided the increase, NAB notes. Using NAB’s wider measure of debt, as opposed to the widely accepted BIS measure, debt was growing at around three and a half times the rate of economic growth at end-2015.

Allowing such a rate of debt growth to go unchecked would increase the likelihood of a major financial crisis, NAB notes, and a perennially feared “hard landing”. But China’s five-year plan target growth rate of 6.5% per annum is unlikely to be achieved without growth in debt. To put the brake on debt growth would mean missing the target GDP growth rate, which is unlikely to sit well with Beijing.

One of Beijing’s reform agendas is nevertheless to tackle overcapacity in industry and so-called “zombie” companies. Companies suffering overcapacity and low profits thus face a higher chance of default. Unlike the US, for example, China has not entered a deleveraging process post-GFC, and thus the risks are increasing.

Global credit insurance group Coface notes China’s outstanding private sector debt (non-bank) reached 201% of GDP in mid-2015, up from 176% in mid-2013 and 114% in mid-2008. Coface recently conducted a survey on corporate risk management to which 1000 Chinese companies responded.

Coface notes that as growth expectations have slowed, and customer credit payment experience has weakened, Chinese firms have tightened their customer credit requirements. Yet 80% of survey respondents experienced overdue payments in 2015, while 58% reported an increase in the amount of overdues.

Not only are Chinese companies having to deal with overcapacity and high leverage, they have also now been hit with a devalued currency and a dangerously volatile stock market.

The Outlook

There are thus those who believes China is heading into a storm, CBA’s economists note, fuelled by the high debt ratio, manufacturing overcapacity, a housing bubble and large non-performing loans hidden in the banking system. And worse, they don’t believe Beijing can see it coming. After a period of such strong economic growth, gravity will soon reassert itself, and China’s economy will fall back to earth with a crash.

There are also those who shrug of such scaremongering. China’s economy can continue to grow rapidly for many years yet, they believe, thus maintaining a gap between growth and the issues chasing behind. China boasts a high savings rate, large foreign exchange reserves (a comfortable US$3.2trn by Deutsche Bank’s calculation), and a fast-growing middle class. The rapid growth of China’s service industry to over 50% of GDP is an indication Beijing’s reforms are working, and there is still huge growth potential in China’s inland regions which is yet to be unlocked.

CBA’s economists, and others, sit in a camp between the China bulls and bears. In five years’ time, China’s economy will be growing by 5-6% but will be more “accident prone”, CBA believes. Longer term growth drivers of productivity and an increasing labour force are now fading. CBA does not expect China’s economy to collapse, but does acknowledge the problems.

“Much of China’s future growth path,” says CBA’ “will depend on the government’s willingness and ability to push through further structural reforms”.
 

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The Monday Report

By Greg Peel

Determination

The Australian market appeared similarly confused as to how to interpret Mario Draghi remarks on Thursday night following the ECB’s surprisingly extensive stimulus package announcement. European markets had sold down heavily but while Wall Street also tumbled on the open, the buyers soon returned with gusto.

Buyers also reappeared on Bridge Street at midday on Friday to send the ASX200 up to a positive close from a 32 point drop. The biggest move among sectors was a 0.9% gain for consumer staples. We might assume last week’s strength in the Aussie will ease some of the food deflation pressure the supermarkets have been suffering of late.

The Aussie has become somewhat of a concern, rising yet another 1.6% to Saturday morning at US$0.7562. Will the RBA be forced into action? Rebounds in commodity prices have driven short-covering in the Aussie and central bank easing all over the globe is making our 2% cash rate ever the more attractive to foreign investors.

The saviour could be the Fed, were it to raise its own cash rate this week. But that’s not going to happen. The Aussie will likely find resistance once the shorts have all been cleared out but to fall back to 70c would require an indication from the Fed that rate hikes are still very much expected in 2016.

In the meantime, the local market seems fairly determined it is going to push up to previous resistance levels and, if all goes well, perhaps make another shot at 5400.

Rethink

The German stock market jumped 3.5% on Friday night. On Thursday night the DAX initially rallied 2.5% on the ECB’s bigger than expected stimulus package, but then crashed to be down 2.5% following Mario Draghi’s press conference in which the ECB president declared he “did not anticipate the need for further rate cuts”.

European markets interpreted this statement to imply the ECB has now thrown everything at it, and that’s all there is. But another interpretation, and no doubt what Mario Draghi was trying to say, is that such an extensive stimulus package should be enough to support the eurozone economy. It does not mean the ECB has no further “whatever it takes” capacity.

Wall Street initially fell along with Europe on Thursday night before rallying back to be flat on the session. European investors had a night to think about it, and decided on Friday night their initial interpretation might have been a bit short-sighted and unnecessarily panic-driven. So the DAX jumped 3.5%. We might therefore conclude with some rough maths that the fresh ECB stimulus was worth a net 1.5% rally in Germany.

France chimed in with a 3.3% rally on Friday night and London rose 1.7%. Wall Street shot up from the open and largely held that gain throughout the session. The Dow closed up 218 points or 1.3%, the S&P gained 1.6% to 2022, and the Nasdaq rose 1.9%.

Oil Talk

The headlines suggest Wall Street rallied because oil did, because that’s been the correlation throughout 2016 to date. I believe, however, that the correlation is beginning to fade somewhat now oil appears to be consolidating around the high thirties for WTI. West Texas rose US67c on Friday night, which is not typically worth 200 Dow points even if it is off a low base.  Wall Street was more likely embracing ECB QE.

Oil found renewed strength on Friday night because the International Energy Agency suggested oil prices may now have seen a bottom. Iran’s return to the market has been less dramatic than Iran implied it would be, and despite all the spurious chatter about meetings, it does actually appear supply from producers outside OPEC has begun to fall. Within OPEC, all of Nigeria, Iraq and the UAE saw reduced production in February.

A chastened Goldman Sachs also agreed on Friday night oil might have seen the bottom. Goldman sent oil tumbling earlier in the week by suggesting the rebound was all about short-covering and was unfounded on supply-demand realities, but on Friday night forecast a range of US$25-45/bbl for the June quarter, up from a previous US$20-40/bbl. The investment bank has now qualified its earlier call be suggesting simply that oil will take time to recover from the lows given the extent of inventory rundown required, so don’t expect any major rally from here.

Commodities

West Texas crude rose US67c to US$38/bbl on Friday night and Brent rose US28c to US$40.36/bbl.

Aluminium was flat on the LME but the other base metals posted modest gains as traders awaited Saturday’s Chinese data dump. Copper rose 1% and zinc 1.5%.

The pullback from iron ore’s single-day near 20% jump last week continues, with the metal falling US$1.30 on Friday night to US$56.10/t.

Despite the US dollar index remaining flat at 96.21, gold has fallen back US$16.10 to US$1251.70/oz, retracing Thursday night’s ECB-inspired jump.

The SPI Overnight closed up 42 points or 0.8% on Saturday morning.

Slow Start

Data released by Beijing on Saturday showed industrial production up 5.4% year on year for the January-February period, down from 5.9% in December and missing forecasts of 5.6%. Retail sales rose 10.1%, down from 11.1% and missing 10.8% forecasts. Fixed asset investment rose 10.2% year to date, down from 11.1% but exceeding forecasts of 9.5%.

Beijing combines data for January and February rather than the usual monthly numbers because of the New Year interruption. That interruption can often to lead to misleading results in trend terms, but there are no real surprises in this data dump from a trend perspective. Subsequent months will nevertheless reveal whether China’s own stimulus measures are having an effect, such that Beijing’s 6.5-7.0% GDP target for 2016 can be achieved.

The Week Ahead

The Bank of Japan will no doubt be frustrated but hardly surprised by the ECB’s stimulus step-up last week. The BoJ meets tomorrow but no one is expecting any further plunge into the negative for Japanese rates, especially given the Fed will release its quarterly policy statement on Wednesday night.

No one is expecting the Fed to hike this month but the focus will be on the so-called quarterly “dots”, which represent forecasting from each of the FOMC members and thus provides an indication of net dovishness/hawkishness. At this stage the Fed futures market has a June rate hike at 43% chance. Janet Yellen will hold a press conference post release.

The Bank of England also holds a policy meeting this week, on Thursday night, but no one seems to care. Of more interest is the growing wave of Brexit support now Mad Boris has thrown his weight behind the campaign.

The RBA will release the minutes of its March policy meeting today. With all that’s transpired in the past two weeks, including the Aussie shooting up to 75 from 70, these minutes are a bit stale.

US data releases this week include retail sales and inventories, housing sentiment, the PPI and Empire State activity index tomorrow night, industrial production, CPI and housing starts on Wednesday, and leading indicators and the Philadelphia Fed activity index on Thursday.

Friday it’s fortnightly consumer sentiment and the quarterly quadruple witching expiry of equity derivatives.

The highlight of Australia’s economic data week will be the jobs numbers on Thursday.

On Friday the quarterly changes to the S&P/ASX indices will become effective.

Note that the US went on to summer time on the weekend, so as of tomorrow the NYSE will close at 7am Sydney time.

Rudi will appear on Sky Business through Skype-link on Tuesday, 11.15am, and in the studio as guest on Thursday from 12.30 till 2.30pm, and again through Skype-link on Friday, 11.15am.
 

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

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article 3 months old

Next Week At A Glance

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

Tomorrow, China will release industrial production, retail sales and fixed asset investment numbers.

The ECB will now throw everything it has at the eurozone economy. Fearing there may be nothing left to throw, the market has bought up the euro, in stark contrast to the intention of ECB policy.

At its last meeting, the Bank of Japan cut its cash rate to negative. Unfortunately for the BoJ, the US dollar chose the same time to start retreating, as expectations of a March Fed rate rise faded. The yen subsequently rallied, in stark contrast to the intention of BoJ policy.

When everything is moving the same way, it is impossible to get ahead. Next week the BoJ will hold another policy meeting on Tuesday and the Fed will release its latest policy statement on Wednesday night. It’s a quarterly meeting, thus Fed forecasts and the famous “dots” will be updated and Janet Yellen will hold a press conference.

No one is expecting a Fed rate hike. But will there be one in June?

Just about everyone would like to see an RBA rate cut, except the banks perhaps. But with a GDP growth rate of 3% and strong employment, it just can’t happen. The minutes of the last RBA meeting are due on Tuesday. On Thursday, the February unemployment numbers are set for release.

It won’t receive nearly the same level of attention, but the Bank of England holds a policy meeting next Thursday.

The Fed meeting will get all the attention but next week also sees a lot of US data, including numbers for inflation, housing sentiment and starts, retail sales, industrial production and consumer sentiment, along with the Empire State and Philly Fed activity indices.

Friday night on Wall Street is the March quadruple witching equity derivatives expiry.

Friday on Bridge Street will see the quarterly promotions/relegations within the S&P/ASX stock indices become effective.

There is another round of ex-divs to get through on the local bourse next week, and also a bout of out-of-cycle earnings reports. They include Sigma Pharmaceutical ((SIP)), OrotonGroup ((ORL)), Premier Investments ((PMV)) and the most heavily shorted stock on the market, Myer ((MYR)).
 

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