The two day meeting this week of the US Federal Reserve, plus the autumn meetings of the IMF and World Bank will dominate markets here and offshore.
In Australia we are due to get the minutes of this month’s Reserve Bank board meeting, as well as two speeches from senior central bank officials, plus a major report on the health of the country’s financial system.
Deputy Governor, Ric Battellino speaks on Wednesday to a conference in Sydney on debt and on Thursday, the head of the bank’s Economics Department, Assistant Governor, Phil Lowe speaks on Thursday on to an Australian economic conference.
Then on Friday the bank’s second Financial Stability Review will be issued.
But given the continuing worries about the health of the US economy and doubts about the eurozone and the euro, the key focus for investors in the week ahead will be the Fed’s monetary policy meeting on Tuesday and Wednesday, US time.
The meeting has been expanded to two days to consider the range of options the Fed could deploy to further stimulate the US economy.
The AMP’s chief economist, Dr Shane Oliver wrote on Friday:
"At this stage we don’t think Chairman Bernanke is ready to deploy another round of quantitative easing (i.e. QE3) as he will probably want to see more evidence on whether the expected pick up in the US economy during the current half year is occurring or not.
"So far the evidence is mixed.
"However, given the downside risks the Fed probably will announce a modern day “Operation Twist”, which will involve selling short dated Treasury debt from its balance sheet in return for buying longer dated securities so as to force investors to take more risk and hold bond yields down in order to keep mortgage rates low.
"While the absence of QE3 could come as a disappointment for investors in the week ahead, we remain of the view that it is still on the way, probably following the Fed’s early November meeting, Dr Oliver wrote.
(But US mortgages hit 60 year lows last week of around 4.09% for 30 year loans (and 3.30% for 15 year loans. Loan applications rose 6.3% last week, but only 23% of those applicants were buying a new house, the rest were refinancing more expensive loans).
Besides the Fed’s meeting data for US home builder conditions (due tonight, our time), housing starts and permits (Tuesday night), existing home sales (Wednesday night) and house prices (Thursday night) will show that the US housing sector is still just bouncing along the bottom.
And without that sector hailing itself out of its long depression, the US economy won’t growing quickly.
The IMF releases its updated world economic outlook Tuesday night, our time and its new global financial stability report Wednesday night.
US earnings stand will include tech giants, Oracle Corp and Adobe Systems, Inc (both tomorrow night) and sports equipment giant, Nike Inc on Thursday night.
But the major profit report will be from transport and parcels giant, Fedex (Thursday night), which will tell us how the just in time logistics business inside the US and in Asia and Europe is travelling at the moment.
For the third quarter, earnings in the S&P 500 are expected to rise 13.5%, according to FactSet, on a 9.9% rise in revenue. That’s better than the 11.4% and 11.3% growth rates in the second quarter.
That sounds overly optimistic (banks will do it very, very tough) because 73% of companies that have so far issued updates have warned on the third quarter, easily topping the 35% that released positive guidance.
In Australia the RBA has centre stage. Friday’s second Financial Stability Review of the year is expected to confirm that the Australian financial system remains in good shape even though stresses have re-emerged globally.
This review will follow the semi-annual global review of from the IMF (which is waited for commentary on the funding problems of European banks), as well as the latest economic outlook for the world’s economy and individual countries such as Australia.
Speeches from Deputy Governor Battellino (Wednesday and Thursday) and Assistant Governor Lowe will be watched closely for any clues on the outlook for interest rates and on the central bank’s view about the health of the economy, which seems to be stronger than it seemed a month ago.
The minutes of the Reserve Bank of Australia’s last policy meeting will be released tomorrow.
In the corporate world, Premier Investments will report full-year results, along with Washington H Soul; Pattinson, Brickworks, Lynas Corporation, David Jones, TPG Telecom, Muchison Metals, Oroton, New Hope Corporation and Kathmandu Holdings.
A slow week for economic data sees international merchandise import figures for August released by the Australian Bureau of Statistics later today.
Thursday sees the ABS reveal the new weighting pattern for the Consumer Price Index, after revising its latest release downwards last week.
On Friday, construction materials production data will be published by the ABS.
But the new Bureau of Resources and Energy Economics releases the September quarter forecasts on commodity exports tomorrow.
Locally, meetings (general and extraordinary will come from companies including: the ASX, Alesco Corp. Wintech Group Ltd, Dynasty Metals Australia, Mineral Commodities Ltd, Gold Anomaly Ltd, TMA Group of Companies, Red Sky Energy Ltd, Berkeley Resources Ltd, Uran Ltd,
