On one issue this week: the markets and will they continue to act like headless chickens and continue to be driven by the fear and loathing of panicking hedge funds and others trying to get out, or whether they will be a steadying tone.
We are likely to see some concerted steps in Europe to provide certainty of co-ordination across the UK and the eurozone: London is likely to reveal plans to take big stakes in some of country’s major banks, including Barclays, RBS and Lloyds TSB.
The Federal Government yesterday revealed a three year guarantee for all bank deposits and guaranteed the wholesale funding of all banks operating in international markets.
The arrangements are being co-ordinated with New Zealand where our big four banks control 80% of the banking market.
Australian banks are not basket cases like most in the UK, Ireland, much of Europe, the US and several other countries.
This week sees some scattered figures ahead of the major monthly release, the September quarter’s CPI and PPI next week next week.
This Friday sees our international trade indices released, along with lending finance figures for August earlier in the week.
But all eyes will be on events overseas, with the UK and European bank rescue schemes being fleshed out last night.
But the high anxiety on Wall Street (and elsewhere) won’t ease this week and corporate profits and other figures will become an afterthought as investors scramble for safe havens.
US corporate earnings reports for the third quarter get fully underway this week after Alcoa did poorly, IBM a lot better than expected (and raised $US4 billion in new debt on Thursday night, confounding quite a few doomsters) and General Electric met its lowered guidance for the third quarter, and the shares ended up around 13% on the day when the Dow was off 128 points, or 1.49%.
Reports from JPMorgan Chase, Citigroup and Capital One Financial Corp will test market sentiment. JP Morgan and Citigroup have already revealed losses and write-downs for the third quarter.
JP Morgan updated when it revealed the purchase of Washington Mutual at the end of September and Citigroup revealed details of its write-downs when its deal to buy Wachovia was announced two weeks ago. That was gazumped by Well Fargo.
Inflation readings for September will be updated this week with the Producer Price Index on Wednesday and the Consumer Price Index on Thursday.
Both are in the background now, but should show a sharp drop, given the fall in oil and petrol prices in particular.
The figures on September housing starts is out Friday, US time, and will show us if the credit freeze and dislocation mid-month from when Lehman Bros was allowed to fail, has had an impact like it had on September car sales which was a major factor behind the 27% fall in sales last month.
The fall in car sales will be a major factor in what will be a poor set of figures on US retail sales for September. Apart from Wal-Mart last week, most US retail chains revealed miserable sales results for last month. Target saw same store sales down 9% in the month, department store chain, JC Penny, 123%!
The US Fed releases its “beige book” of anecdotal reports on regional economic conditions on Wednesday. On Thursday the Fed also reports on September factory activity with its report on industrial output and capacity utilization.
Friday sees the Reuters/University of Michigan Surveys of Consumer Sentiment released with their preliminary readings for October on what consumers are thinking.
All should make gloomy reading: the consumer confidence figures could be very depressing when read with retail sales as consumption accounts for some 70% of US economic activity.
MONDAY:
ANZ Jobs survey for September; Australian Bureau of Statistics lending finance figures for August.
TUESDAY:
JB Hi-Fi AGM in Melbourne; Energy Resources of Australia third quarter production report; NAB monthly business survey; Fairfax media CEO, David Kirk addresses the Sydney Institute.
WEDNESDAY:
Coal and Allied third quarter production report; Rio Tinto third quarter production report; AGL Energy, Brickworks Investment Co, and Origin Energy’s AGMs in Sydney; RiverCity Motorway AGM in Brisbane; Westpac/Melbourne Institute leading index of economic indicators for August; Opes Prime creditors meeting due in Melbourne; Australia Post releases its annual results; The Reject Shop and CSL AGMs in Melbourne
THURSDAY:
Network Ten annual results; RBA Bulletin for October; Woodside Petroleum’s third quarter result.
FRIDAY:
ABS international trade indices for September quarter; News Corp AGM in New York Friday night, our time; Healthscope AGM, Melbourne.
