More of the same for the week ahead: big plans in the US, important statistics here and in the US and more corporate earnings reports.
In the US we have the Tuesday night deadline (our time) for the recovery plans for General Motors and Chrysler.
Expect lots of talk about possible bankruptcies, especially for GM. Chrysler might reveal a deal to involve Fiat more formally and other new shareholders with the existing owners, Cerberus and Daimler reduced to a rump.
Wednesday night, our time, the Obama administration reveals plans to help US mortgage holders. It had better be more convincing and more detailed than last week’s botched attempt to outline a bank recovery plan.
A number of major US banks (who have received government aid) have continued their moratoriums on home loan foreclosures until March to allow time to assess whatever ideas the Obama administration comes up with.
The US sees figures for housing starts, industrial production, the leading index of indicators, and consumer and producer price inflation all for January.
There will also be a survey of homebuilders and some manufacturing sector surveys as well. Housing might show a hint of steadying, but we shouldn’t expect too much joy anywhere.
The Fed will also publish the minutes from its last meeting which are likely to throw more light on the way the Fed is thinking about buying government securities to try and kick-start lending.
Discussion on the Fed’s latest economic forecasts will also give us the background to the central bank’s gloomy thinking on the health of the US economy.
US markets are closed tonight for the Presidents Day holiday.
Wal-Mart is the major US corporate report this week. Its 4th quarterly figures on Tuesday night, our time, are expected to reveal softer earnings than a year ago, revealing that this defensive stalwart is not immune to plunging consumer demand.
Hewlett Packard and CBS also report
Other retailers will follow: so far the US earnings season has been characterised by deep losses and write-downs, forcing companies to slash jobs and cut or withdraw guidance for the year.
The big international figure will be Japanese December quarter GDP data, out later today, which is likely to show a sharp contraction in economic activity, with an annualised fall of around 7% or 8%, according to most estimates.
Japan’s economy remains in seeming free-fall, with production, exports and retail sales falling, deflation appearing and unemployment rising steeply.
In Australia the focus will be back on the Reserve Bank with the release of the Minutes from this month’s RBA’s Board meeting, testimony before a Parliamentary Committee by Governor Glenn Stevens and a couple of speeches by other RBA officials.
The AMP’s chief economist, Dr Shane Oliver says the message from the RBA is likely to remain that the door is still open for further interest rate cuts, but that the pace of easing is likely to slow.
"We continue to see the cash rate troughing at around 2.25%.
"December quarter wages data is likely to show that wages pressures are abating, not that they were ever much of a problem anyway, and with unemployment now on the rise wages growth is likely to slow towards 3% over the year ahead," he said on Friday.
The December half 2008 profit reporting season peaks this week and next in Australia
This week companies such as AXA Asia Pacific, Fosters, OneSteel, CSL, Woodside, Brambles, Fairfax, Santos and Wesfarmers due to report. Wesfarmers is out later today.
Cuts to dividends and more capital raisings are likely to be key themes as companies try to swap difficult-to-obtain and expensive debt for equity capital. Some of those reporting have already revealed such moves.
Fairfax has cut dividend. Wesfarmers has raised new capital.
The AMP’s sharp profit fall, revealed in an update Friday and lower inflows of funds will be repeated at Axa. AMP releases detailed full year results on Thursday.
OneSteel last week revealed a management restructure that seems to hint at cost cuts elsewhere in the business.
Fosters is due to detail its plans for the sagging wine business with its half year figures. It sacked 115 maintenance workers from its Melbourne brewery last week.
Given the economic uncertainty, a key focus will be on the outlook statements released by companies. So far, many companies have been hesitant about forecasting second half figures or giving precise outlook guidance.
In Europe, German confidence figures are out this week, while major corporates, Daimler, BNP Paribas and Nestles report their 4th quarter figures.
