The coming week will see financial markets continue to focus on the turmoil in the US financial system and the $US700 billion bailout plan, which seems to have been sorted out.
The US Government wants it available for approval before Asian trading opens today, but the opposition from the newly pure Republicans was a sticking point yesterday, even as the President and Senator McCain tried to push for a solution.
It’s likely to go to the vote tonight, our time.
But as we saw above, the real story remains the weakening state of the US economy, especially housing.
There was enough information on the poor state of new and existing home sales last week to conclude that nothing has happened to alter the view that the US housing sector is still sinking and with it the economy as a whole.
US Government plans to alleviate that, the banking problems and the overall econom, are falling into the cracks caused by the current US election cycle.
If nothing is done in the next day or so, it’s very likely that markets will sort it out for everyone and everyone will lose and lose badly.
The employment data is likely to show a sharp slump in employment in September and rise in unemployment made worse by the recent hurricanes.
The Standard & Poor’s Case/Schiller home price index will show more downward pressure in July.
It’s due on Tuesday, along with a September survey of manufacturing activity in the US Midwest states and another reading on consumer confidence. A survey of US services sector is due on Friday.
The European Central Bank meets on Thursday and is expected to keep its lending rate at a seven-year high of 4.25% to fight inflation even as economic growth in the region contracts.
Germany, France and Italy slipped into negative growth in the second quarter, dragging the zone down, and late last week Ireland fell into a full blown, two successive quarter-recession.
But no rate cut is expected because of a hardline against inflation from the executive and from Germany.
The struggle to keep the Belgium-Dutch financial group, Fortis, alive could influence the ECB if the company’s situation worsens.
In Japan the Tankan survey of industrial sentiment and expectations will be released on Wednesday.
It will show how confidence among major Japanese companies has softened in the past quarter, with cuts suggested in spending, sales and exports, which slipped sharply in August, according to figures out late last week.
The Japanese economy is slowing and contracted in the second quarter, and looks like it is again shrinking this quarter.
The slump in exports, especially to the US and the impact of still high oil prices (compared to a year ago), is having a negative impact. Consumer inflation is running at a still high annual rate for Japan of 2.4%.
In Australia, data for retail sales, private sector credit, building approvals and the trade balance will be released.
The retail trade survey has been made less reliable after that $20 million funding chop led to a cutback in the size of the sample used to create the survey.
Nevertheless, August retail trade data is likely to fall after the sharp rise reported in July.
But we will get a further sense of the state of the domestic economy, while the monthly private credit figures from the RBA will reveal if there’s been any further slowing in lending for housing and business, which has been a feature for most of the year.
The impacts of the slump in commodity prices and the value of the Australian dollar will show up in the Reserve Bank’s monthly release of its commodity price index tomorrow.
MONDAY:
Myer annual results; Australian Foundation investment Co and Djerriwarrah Investments AGMs in Melbourne; ASIC Court case against 10 former directors and senior managers of James Hardie starts in the NSW Supreme Court in Sydney.
TUESDAY:
Reserve Bank financial aggregates (private credit) figures for August; the Australian Bureau of Statistics releases retail trade figures for August and building approvals, also for August; AGMs from Fortescue Metals and Incremental Petroleum in Perth and Ambri Ltd in Brisbane; Lion Selection full year figures.
WEDNESDAY:
Reserve Bank index of commodity prices; Australian Industry Group (AIG)/ PricewaterhouseCoopers performance of manufacturing Index for September; Hudson 4th quarter employment expectations survey.
THURSDAY:
ABS releases the International Trade figures for August; Rio Tinto CEO, Tom Albanese addresses a Melbourne business lunch; Telecom NZ AGM in NZ; Milton Corp. AGM in Sydney.
FRIDAY:
AIG/Commonwealth bank Performance of Services Index for September; Melbourne Institute/ TD Securities inflation gauge for September: Professor Ross Garnaut addresses a CEDA lunch on climate change; Contact Uranium AGM in Perth.
