All times GMT
Monday Feb 11th:
FR - 07:45 - Industrial Production M/M.
UK - 09:30 - PPI Input M/M.
UK - 09:30 - Trade Balance.
UK - 09:30 - DCLG House Price Index Y/Y.
UK - 09:30 - PPI Output M/M.
Tuesday Feb 12th:
UK - 00:01 - BRC Retail Sales Monitor Y/Y.
UK - 09:00 - CPI & Core CPI Y/Y.
UK - 09:30 - RPI Y/Y.
GE - 10:00 - ZEW Economic Sentiment.
EU - 10:00 - ZEW Economic Sentiment.
Wednesday Feb 13th:
UK - 00:01 - RICS House Price Balance.
GE - 07:00 - German WPI M/M.
FR - 10:30 - Government Budget Balance.
UK - 09:30 - Average Earnings Index +Bonus Q/Y.
UK - 09:30 - Claimant Count Change.
UK - 09:30 - Unemployment Rate.
EU - 10:00 - Industrial Production M/M.
UK - 10:30 - BOE Inflation Report.
US - 13:30 - Retail Sales & Core Retail Sales M/M.
US - 15:00 - Business Inventories M/M.
US - 15:30 - Crude Oil Inventories.
Thursday Feb 14th:
GE - 07:00 - GDP Q/Q.
FR - 07:45 - GDP Q/Q.
EU - 09:00 - ECB Monthly Bulletin.
EU - 10:00 - GDP Q/Q.
US - 13:30 - Trade Balance.
US - 13:30 - Unemployment Claims.
US - 15:00 - Fed Chairman Bernanke Speaks.
EU - 17:30 - ECB President Trichet Speaks.
Friday Feb 15th:
FR - 07:45 - Nonfarm Employment Q/Q.
EU - 10:00 - Trade Balance.
US - 13:30 - Empire State Business Conditions Index.
US - 13:30 - Import Price Index M/M.
US - 14:00 - TIC Net Long-Term Transactions.
US - 14:15 - Capacity Utilization Rate.
US - 14:15 - Industrial Production M/M.
US - 14:45 - IECB President Trichet Speaks.
US - 15:00 - Consumer Sentiment.
US - 18:15 - Fed Governor Mishkin Speaks.
EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany
After registering their best weekly gains in five years, it was almost inevitable that US markets would not be able to replicate this feat again, especially in the current trading environment. Unfortunately, markets provided almost a mirror opposite of last weeks rally, erasing all or most of the gains from the previous week. Not enough was the general cry from traders as the FTSE sold off on the back of the MPCs 0.25% interest rate cut on Thursday. Calls from the BCC for the Bank of England to cut rates to 5% in March helped stocks finish off their lows, but poor results from BT, Yell and Roll Royce had done enough damage.
The UK Government has now quasi nationalized Northern Rock, meaning that if a takeover deal isnt struck, �90.70 billion could be added to national debt. This combined with the prospect of further rate cuts hit the pound hard against the Dollar. The Euro also fell back hard against the Greenback as The ECB softened its inflation fighting rhetoric. Traders interpreted Trichets comments on Thursday as indications that the ECB would also have to succumb to rate cuts in the coming year. The Euro fell 2.4% against the dollar on the week while the pound has now fallen 8% since its hitting $2.1 to the pound in November.
It wasnt a complete wash out for the week as the US congress approved Bushs economic stimulus package and strong results were reported from US consumer stocks like Pepsico. This ensured that markets finished off their lows, but not by much.
Oil spiked higher to end the week above $90 a barrel, while Gold also held above the key $900 per ounce level. Agricultural commodities such as wheat and Soya beans extended their recent gains even further. Food prices and other inflationary factors continue to be the sticking point for European central banks in terms of rate cut plans.
The top tier announcement next week for the UK is the BOE inflation report on Wednesday. Inflationary commodities such as such as foods will impact the MPCs ability to cut rates further as traders are clamouring for. On the same day, we receive US core retail sales, which will provide an insight into the health of the lifeblood of the US economy, the consumer. Consumer sentiment readings on Friday will compound the effect of any worsening in retail sales. Any signs that these figures are not as bad as expected could lift markets towards the end of next week.
Last week pending home sales in the US plummeted by 25%, a further indication that the subprime mess isnt over yet. http://bigpicture.typepad.com/ summarises a study which compares the current US economy with major declines in Japan and other Western nations. In short, the US could consider itself quite fortunately if its downturn is a relatively short and mild one.
A retest of the January lows could very well be on the cards, but from there a short term snap bounce is very possible. Therefore an Up or Down trade could be a good option for next week. An up or down trade on the S&P 500 with the two barriers set to 1380 and 1270 could yield 16% over the next 16 days.
David Evans
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