After China’s March quarter GDP and production, investment and retail sales data yesterday, the coming week will be concentrating on the growing unease on Wall Street about the health of the US economy.
As well the World Bank and International Monetary Funds hold their Spring meetings in Washington this week, with the IMF due to release its latest economic forecasts and its global financial stability review.
Its views on Australia will reflect last week’s Stability Review from the Reserve Bank.
While most interest will be the business conditions surveys for April (Friday) which are expected to remain solid, there is a growing belief that US economy is stuttering. Car sales are down two months in a row, retail sales also fell for the second month in a row in March and core consumer inflation fell last month for the first time in months.
This week sees the health of the US housing sector examined with the NAHB’s home builders’ conditions index (overnight Monday solid), housing starts (tonight, our time) falling slightly (after February’s big gain), and rebounds in building approvals (also tonight) and existing home sales (Friday night, our time).
The rising output of oil will help lift March’s industrial production (Tuesday night) and the Fed’s Beige Book (Wednesday night, our time) of anecdotal evidence will point to continued reasonable growth.
But the San Francisco Fed has trimmed its March quarter growth estimate to just 0.5%, well down on thew weak 2.1% annual growth seen in the December quarter.
In early February, the San Francisco estimate was 3.6%, so the slowing has been sharp, as the 0.2% drop in retail sales showed. The 0.1% fall in core inflation was driven by a sharp fall in the cost of wi-fi.
US economists caution that the March quarter is now the weakest of the four each year because of measurement problems with the data (before any weather related impact which has happened in two of the past four years).
As well, the US March quarter earnings reports will also start to flow in earnest with 68 companies on the S&P 500 reporting first-quarter results.
These will include Bank of America, Goldman Sachs, Netflix, Harley-Davidson, Yahoo, Johnson & Johnson, Amex, Schlumberger, Mattel, Nucor, ABB, Debenhams (in the UK), CSX, Blackrock, GE, Danaher, Honeywell, Verizon and Sky (in the UK), and US Bancorp.
In Europe, the first round of the French presidential election (Sunday April 23rd) will be the focus of attention in Europe and the performance of Marie Le Pen, the extreme rightwing candidate.
On the data front, the Eurozone business conditions surveys for April (Friday) to remain strong.
Apart from the Chinese data yesterday, the other major releases in Asia are the Japanese trade figures on Thursday. Before then the Chinese house price data for March will be out later today.
In Australia, the minutes from the RBA’s last board meeting are likely to confirm a neutral stance on interest rates and reiterate the central bank’s concerns about financial stability flowing from the hot Sydney and Melbourne property markets.
The minutes won’t have anything new given the just released Financial Stability Review (last Thursday).
