Economic Calendar for week 18th - 22nd February 2008

All times GMT

Monday Feb 18th:

US - 00:01 - Rightmove House Price Index M/M.
US - ALL - Stock markets closed for Washington's Birthday (President's Day).

Tuesday Feb 19th:

US - 18:00 - NAHB Housing Market Index.

Wednesday Feb 20th:

GE - 07:00 - PPI M/M.
UK - 09:30 - MPC Meeting Minutes.
UK - 09:30 - M4 Money Supply M/M.
UK - 09:30 - Public Sector Net Borrowing.
UK - 11:00 - CBI Industrial Trends Orders.
UK - 13:30 - CPI & Core CPI M/M.
US - 13:30 - Building Permits.
US - 13:30 - Housing Starts
US - 19:00 - FOMC Meeting Minutes.

Thursday Feb 21st:

FR - 07:45 - CPI M/M.
EU - 09:00 - Current Account.
UK - 09:30 - Retail Sales M/M.
US - 13:30 - Trade Balance.
US - 13:30 - Unemployment Claims.
US - 15:00 - Philadelphia Fed Manufacturing Index.
US - 15:00 - Leading Index M/M.
US - 15:30 - Crude Oil Inventories.

Friday Feb 22nd:

FR - 07:45 - Nonfarm Employment Q/Q.
EU - 09:00 - Manufacturing PMI.
EU - 09:00 - Services PMI.
EU - 10:00 - Industrial New Orders M/M.


EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

Credit and liquidity were again the main drivers of events last week. US stocks reversed on Thursday, as Fed chairman Ben Bernake warned that a scarcity of credit would restrain economic growth. Former Fed chairman, Alan Greenspan intimated that the US economy was on the edge of a recession. House prices in the US continued to plunge further than analysts had expected despite the recent round of interest rate cuts. It is perhaps too early for the Feds recent 1.25% rate cuts to filter down.

According to data from Merill Lynch & Co, US companies are paying more to borrow now, than before the Fed reduced its benchmark rate in January. Banks have been accused of hiking fees and charges in order to recover losses on overly risky credit related trading. Reducing interest rates on loans may not be enough to encourage US consumers to resume their free spending, especially as they are now faced with negative equity on their homes.

Commodities had a mixed week, with wheat pulling back from its recent explosive highs. However, the inflationary benefits of this were nullified as oil rose strongly again past the $95 marker. The Euro regained half the ground lost against the Dollar in the previous week following hawkish comments from the ECB, which poured cold water on speculation that they would be ready to cut rates as early as their next meeting. Sterling strengthened against the Dollar, as the $1.95 level again supports cable.

Next week starts slowly as US markets are closed for Presidents day on Monday. The top tier announcements dont really hit until Wednesday with the release of the previous MPC and FOMC meeting minutes. The MPC minutes will have more of an impact due to the greater uncertainty over the central banks next move. Following this, US CPI will provide insight into the possible inflationary effects of the recent rate cuts. Thursdays retail sales will give further clues as to the strength of the UK economy and the likelihood of a domestic slowdown.

Sentiment is negative, but is now reaching extreme levels. This month, US money managers turned underweight in equities for the first time since March 2003. This was of course actually turned out to be the low of the last bear market. Several investor sentiment readings including the AAII survey have now reached levels of extreme bearishness. In addition, Fridays Michigan consumer confidence survey dropped below 70 for the first time since 1992. At these levels, such pessimism is historically a good contrarian indicator.

There are therefore some good indications that sentiment could reverse over the coming weeks, but one could also argue that after a mildly positive week we are not oversold enough on a short term basis. A heavy sell off could point to an exhaustion low which triggers a rebound. With the US markets closed on Monday, the FTSE could be rudderless and Mondays early housing data may point to housing slowing in the UK. If this report comes in as worse than expected, a one touch trade around 50 points below the opening low could be the best value next week. Based on Fridays close for example, a one touch trade for the FTSE to hit 5725 in 16 days could return 13%.

David Evans