The bank revamp and rescue plan from the Obama Administration will be the big story this week.
It will set the scene for the Group of 20 leaders meeting next week on a framework for international regulation of financial services, and it will set the scene for either the long waited turnaround in the health of American banks, or another downward lurch.
As we have just read, the plan can come to soon the day the US financial sector’s woes worsened on Friday and over the weekend with the American credit union system now in danger of freezing up.
"Pretty much everything else is going to be background noise to the core issue: confidence in banks," Eric Kuby, chief investment officer for North Star Investment Management Corp in Chicago, was quoted by Reuters over the weekend.
That sums up the importance of the revamp plan and the details of plans to buy up toxic bank assets, such as dud mortgages of all types and corporate loans, not to mention credit derivatives.
The core problem for the banks and other financials is the health of the US home system: this week we will get updates on home prices for January with the latest Case Schiller home price index for January, figures on sales of existing houses (will they show an upward tick like new home starts and permits last week did?).
As well data on durable goods orders, personal income and consumption (all for February) are due for release.
That will give a very good idea of how the current quarter is travelling: by all accounts it’s not all that well, judging by the Fed’s comments last week in its post meeting statement.
As reports on March consumer sentiment as well as earnings from companies like drug store chain (a major retailer) Walgreen and Tiffany & Co, the struggling luxury goods group, will provide further clues on consumer sentiment.
Existing home sales for February are due tonight, Australian time and new home sales for that month will be released on Wednesday.
Wednesday’s data on February durable goods orders won’t make good reading, not after the two Fed surveys of manufacturing sentiment in the US east Coast are any guide.
Both the Empire State and the Pennsylvania Fed surveys showed record lows for activity and sentiment among manufacturers in the region.
Forward orders were not strong either.
Thursday sees the third and final reading for 2008 fourth-quarter gross domestic product.
Last month’s preliminary reading showed the economy contracted at an annual rate of 6.2% in the final three months of 2008.(1.6% down on the September quarter).
Reuters and Bloomberg surveys show US analysts are not confident: some see a higher reading for a contraction of between 6.5% and 6.9%. The current quarter is seen at 5% or worse at the moment.
Key Japanese data for industrial production, employment, retail trade and inflation for February will be released on Friday. Industrial production and employment will be the vital readings.
Both are going the wrong way: unemployment is now over 4% and climbing. Industrial production is falling: the January reading of a fall of 10% (a record) was revised to a fall of 10.2% last week by Japan’s Trade and Industry Ministry.
In Australia, there’s no important economic figures due for release, but there will be three speeches from the RBA including Governor Glenn Stevens, the release of the RBA’s Financial Stability Review on Thursday.
Thursday also sees the RBA’s head of economic analysis speaking on the state of the housing sector, which will give up an update on how the RBA sees the first home buyers grant working and its impact on housing demand and on the domestic economy.
That will indicate that while the risks have escalated further, Australia is in reasonably good shape compared to other major countries.
Federal Treasurer Wayne Swan makes a speech midweek.
Sigma Pharmaceuticals reports today, Nufarm is due on Wednesday, OrotonGroup, Myer, Brickworks Ltd and Washington H Soul Pattinson Ltd are also due to release interim figures. .
Babcock & Brown creditors will hold their first meeting on Wednesday. It won’t be nice.
