Monday Jan 14th:
FR - 07:45 - CPI M/M.
UK - 09:30 - PPI Input & PPI Output M/M.
EU - 10:00 - Industrial Production M/M.
Tuesday Jan 15th:
UK - 09:30 - CPI & Core CPI Y/Y.
GE - 10:00 - ZEW Economic Sentiment.
EU - 10:00 - ZEW Economic Sentiment.
US - 13:30 - Retail Sales & Core Retail Sales M/M.
US - 13:30 - PPI & Core PPI M/M.
US - 13:30 - Empire State Business Conditions Index.
US - 15:00 - Business Inventories M/M.
UK - 21:30 - RPI Y/Y.
Wednesday Jan 16th:
UK - 09:30 - Average Earnings Index +Bonus Q/Y.
UK - 09:30 - Claimant Count Change.
UK - 09:30 - Unemployment Rate.
EU - 10:00 - CPI Y/Y.
US - 13:30 - CPI & Core CPI M/M.
US - 14:00 - TIC Net Long-Term Transactions.
US - 14:15 - Industrial Production M/M.
US - 14:15 - Capacity Utilisation Rate.
GE - 15:00 - CPI M/M.
US - 15:30 - Crude Oil Inventories.
US - 18:00 - NAHB Housing Market Index.
US - 19:00 - Beige Book.
Thursday Jan 17th:
EU - 09:00 - ECB Monthly Bulletin.
EU - 10:00 - Trade Balance.
US - 13:30 - Housing Starts.
US - 13:30 - Building Permits.
US - 15:00 - Philadelphia Fed Manufacturing Index.
Friday Jan 18th:
UK - 09:30 - Retail Sales M/M.
US - 15:00 - Consumer Sentiment.
US - 15:00 - Leading Index M/M.
EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany
The week ahead.
Global stock markets continued their downwards trajectory last week, but losses were not of the same magnitude as last weeks blood letting. After limping over the line to end last year in the black; the S&P 500, FTSE and French CAC are now below their opening levels from 2007. The German DAX remains one of the best performing indices relatively, though this is partly a function of it being a performance based index that includes dividends in its calculations.
Fed Chairman Ben Bernake, reassured Wall Street on Thursday that the Federal Reserve would be proactive to resuscitate the faltering US economy. This sparked a late rally in US equities on the day, as the S&P 500 stemmed some of the heavy selling that had hit equities around the New Year period.
Credit markets received a boost following Wednesdays comments from a Berkshire Hathaway executive that Warren Buffets organisation would not be averse to acquiring a bond insurer. US Financial stocks made a recovery towards the end of the week on news that Bank of America might acquire the ailing Countrywide Financial Corp., the unprofitable US mortgage company.
Currency markets saw some strong action on the back of the MPC and ECB announcements. As expected, the ECB kept rates the same, and many had already predicted Trichets tough talk on inflation. Speculation had increased that the Bank of England might cut rates this month, but retailers and banks were left disappointed as rates were left unchanged at 5.5%. The news sent the pound spiralling further against the Euro, closing above 1.75 for the first time since the launch of the single currency.
This week sees a large number of upper and middle tier economic announcements. On Tuesday, UK CPI figures will influence Sterling, as economists assess the likelihood of a MPC rate cut in February. The Bank of England held back on cutting rates last week due to inflation concerns, but poor CPI data on Tuesday, below expectation earnings inflation on Wednesday, and a potential slump in retails on Friday could force their hand at the next meeting.
Since the start of the year, expectations for half point cut in US interest rates have increased by the day. Last week, Federal Reserve Chairman Ben Bernake spoke of substantive additional action to insure against downside risks to economic growth. According to Fed Futures markets a half point cut is the more probable course of action at the month end meeting. All eyes will be on Tuesdays retail sales data, Wednesdays CPI & Industrial production numbers, and Fridays consumer sentiment figures. If the figures are below expectations it could signal a half point cut as being even more likely.
Given the data heavy week ahead and the continuing gyrations of equity markets, continued volatility could be a feature for the remainder of January. The VIX options volatility index is still below its August and November peaks.
A double touch trade returns a profit if both of two predetermined levels are touched. A small interest in a Double Touch trade with the two levels set as 1393 and 1422 on the S&P 500 could return 50% over 19 days. This means that the market has to touch both these levels at least once for you to win.
David Evans
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