In Australia, the Federal Budget will be the main event and it is likely to be a tough one for high income earners and for the economy generally in the picture it will paint of the next year.
A huge deficit, tax income falling and spending curbs, but not too much.
The AMP’s Dr Shane Oliver says "We expect the Budget to be predicated on a 0.5% contraction in the economy in 2009-10 and unemployment rising to 8% next year, followed by a gradual recovery in 2010-11.
"The Reserve Bank is forecasting a 1.25% contraction in the year to June 30, 2009 and 1% for the year to December, and 2% growth in the year to December, 2010.
"Against this backdrop the Budget is likely to contain extra fiscal stimulus in the form of pension increases, increased unemployment benefits, an extension of the increased first home owners grant for new homes and increased spending on infrastructure.
"While there is likely to be a cutback in middle class welfare, the means testing of the private health insurance rebate, a reduction in superannuation concessions for high income earners and a possible delay in tax cuts for high income earners, extra spending and the recession will nevertheless see the 2009-10 budget deficit blow-out to around $A60 billion (or 5% of GDP), from a $A35.5 billion estimate in February.
"The key issue in the Budget will be to strike a balance between continuing to provide support for the economy while at the same time limiting the blow out in public debt over time and mapping out a credible, but not debilitating, strategy to get the deficit and public debt back under control," Dr Oliver wrote.
Besides the budget we will also get data for housing finance, wages growth, consumer confidence and the National Australia Bank’s latest monthly business survey.
We can expect both consumer confidence and business confidence to rise following the improvement in the in the news flow regarding the share market and economy over the last month or so.
Full year results from SPN Ausnet, CSR. Interim from Incitec Pivot. Annual meetings include AMP, Boart Longyear, Oil Search and Sigma Pharmaceuticals.
As well we will get the Commonwealth Bank’s third quarter trading update on Wednesday.
Besides the budget, other official data this week will be housing finance and lending finance figures.
Chinese economic data for April will start flowing and will provide part of the backdrop for the Australian budget and the economic forecasts for the next year.
We will see figures on fixed asset investment and loan growth, industrial production and export growth, plus inflation.
In the US, data for the trade balance, retail sales, industrial production, consumer prices and consumer sentiment will be released.
As well, weekly jobless claims and the May survey of New York State manufacturing activity will also be released.
Among the companies reporting, Wal-Mart Stores will lead several big retailers due to post quarterly results, including Kohl’s, Macy’s and Nordstrom.
A speech by Federal Reserve Chairman Ben Bernanke about the financial system’s condition tonight, our time, will keep the spotlight on what’s ahead for banks.
General Motors says CEO Fritz Henderson will hold a conference call tonight, our time, to update the media and the markets on the company’s progress in its restructuring efforts ahead of a June 1 deadline.
It will be the second such update since Henderson took over the top job from Rick Wagoner in March. It comes after GM revealed a $US5.9 billion first quarter loss and a cash burn of $US10.2 billion.
The US government has given GM until the end of the month to reach concessions with bondholders and the United Auto Workers union to avoid a bankruptcy filing.
A Reuters poll of economists forecasts April retail sales will be flat compared with a 1.2% decline in March. Excluding cars, sales are forecast to be up 0.2% against a 0.9% fall in March.
According to Thomson Reuters data, by the close Friday about 85% of the S&P 500 companies had reported quarterly results, and 65% beat estimates, 8% came out in line, and 28% reported under estimates.
However many missed estimates for revenues, which some analysts say is a sign of future problems to come.
In Europe the European Union’s gross domestic product figures will be released for the first quarter.
Investors will also watch earnings from insurer, Allianz SE, steel group ThyssenKrupp AG and Imperial Tobacco Group Plc.
The EU’s statistics office will report the first-quarter gross domestic product for the euro region on May 15.
Europe’s recession is much deeper than estimated in the fourth quarter after companies scaled back production and consumer spending declined.
The forecast for this year is for a fall of 4% for the EU as a whole, more than 5% in Germany and 3.8% in the UK.
Some early japanese figures will also be released towards the end of this week.
