Economic Calendar for week 24th - 28th Sept 2007

All times now GMT NOT BST.

Monday Sept 24th:

UK - 08:30 - Public Sector Net Borrowing.
EU - 09:00 - Industrial New Orders M/M..

Tuesday Sept 25th:

FR - 06:45 - Consumer Spending M/M.
EU - 08:00 - IFO Business Climate Index.
EU - 08:00 - IFO Business Expectations Index.
UK - 08:30 - Business Investment Q/Q.
US - 13:00 - National Home Price Index.
US - 14:00 - Existing Home Sales.
US - 14:00 - Consumer Confidence.
US - 14:00 - Richmond Fed Index.

Wednesday Sept 26th:

GE - 06:00 - Consumer Confidence.
UK - 08:30 - GDP Q/Q.
UK - 08:30 - Current Account.
US - 12:30 - Durable & Core Durable Goods Orders.

Thursday Sept 27th:

GE - 07:55 - Unemployment Rate.
EU - 08:00 - M3 Money Supply Y/Y.
UK - 10:00 - CBI Distributive Trades Realized.
US - 12:30 - GDP Annualised & GDP Deflator Annualised Q/Q.
US - 12:30 - Unemployment Claims.
US - 14:00 - New Home Sales.

Friday Sept 28th:

UK - 09:30 - Consumer Confidence.
US - 12:30 - Core PCE Price Index M/M.
US - 12:30 - Personal Spending M/M.
US - 13:45 - Chicago PMI.
US - 14:00 - Consumer Sentiment.
US - 14:00 - Construction Spending M/M.

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

The week ahead.

Many traders will be breathing a heavy sigh of relief this week as the economic calendar lightens comparatively. The US interest rate decision weighed heavily on trading action last week. The FOMC announcement had top billing and it certainly didnt disappoint. Many analysts were expecting a 25 base point cut, with much speculation on when the next cut would be. The 50 base point cut took many by surprise and the market reacted with typical enthusiasm.

Bernake and Co became the heroes of the hour on Wall Street, with them seemingly averting the credit crunch and saving the day. The Dow Jones rose 2.5% on Tuesday, and the following day, the Nasdaq 100 came within 4 points of its July peak. Crisis, what crisis? In fact some commentators are now labeling the latest concerns a faux credit crunch.

The decision has sparked some strong movement in the currency market with the Dollar falling hard against the Euro. The Euro remained strong across the board with the ECB maintaining their tightening bias. The Loonie, as the US Dollar/ Canadian Dollar exchange rate is called, fell hard due in part to the rise in oil prices. The USD and CAD are now standing at parity (1USD = 1 CAD), the lowest levels for well over 30 years.

Over in the UK, the queues outside Northern rock disappeared as the Government and Bank of England intervened with various measures and reassurances, aimed to calm jittery investors and savers.

Next week is a relatively lighter week on the economic news front. Notable announcements are the US existing home sales on Wednesday, and new home sales on Thursday. With the US housing market being at the forefront of the current situation, this data could bring fresh perspective on the intermediate future. Although it is too soon for the recent rate cut to have any impact, Wednesdays core durable goods orders and Fridays PCE price index will give clues as to the implications of the 50 base point cut.

Opinions on the Feds rate cut have been mixed, with Wall Street enjoying the move and some economists questioning its wisdom. As the impact of the announcement settles down, some are questioning what the Fed knows, that the rest of us dont. What was it that spooked the Fed into a half point cut? The implications are that the large cut was made because of the state of the economy, particularly the housing market and job growth.

Last Friday saw options expiration day, and according to research from www.sentimentrader.com, since 1990, the week following options expiration in September has shown a positive return on the S&P 500 just 2 out of the last 17 times. Taking out the week following 9/11, the average return for the week is -1.3% with the maximum gain being +0.6. One must always take such seasonality studies with a pinch of salt, but coupled with the dramatic rise we saw on one day last week, it could lend credence to the argument that were short term over bought on the US markets.

A no touch trade, 90 points higher on the S&P, returns around 7% over 14 days. This means that as long as the market rallies slowly, stays still, or drops, you win.

You may also wish to have a look at BetOnMarkets.coms new Double Contra which pays out if the market never touches the two barriers you set above and below the current price. If it touches just one or neither of these you win. If volatility reduces during the relatively news light week, it could be an interesting play, particularly if you weight it to the downside.

Dave Evans

Economic Calendar for week 17th - 21st Sept 2007

All times now GMT NOT BST.

Monday Sept 17th:
EU - 09:00 - Trade Balance.
US - 12:30 - Empire State Business Conditions Index.

Tuesday Sept 18th:
UK - 08:30 - CPI & Core CPI Y/Y.
UK - 08:30 - RPI Y/Y.
GE - 09:00 - ZEW Economic Sentiment.
EU - 09:00 - ZEW Economic Sentiment.
US - 12:30 - PPI & Core PPI M/M.
US - 13:00 - TIC Net Long-Term.
US - 17:00 - NAHB Housing Market Index.
US - 18:15 - Interest Rate Statement.

Wednesday Sept 19th:
EU - 06:00 - PPI M/M.
UK - 08:30 - MPC Meeting Minutes.
US - 12:30 - CPI & Core CPI M/M.
US - 12:30 - Housing Starts.
US - 12:30 - Building Permits.
US - 14:30 - Crude Oil Inventories.

Thursday Sept 20th:
UK - 08:30 - Retail Sales M/M.
UK - 08:30 - Public Sector Net Borrowing.
UK - 08:30 - M4 Money Supply M/M.
UK - 08:30 - BSA Mortgage Approvals.
US - 12:30 - Unemployment Claims.
US - 14:00 - Leading Index.
US - Tentative - Fed Chairman Bernake Speaks.
US - 16:00 - Philadelphia Fed Manufacturing Index.

Friday Sept 21st:
EU - 08:00 - Current account.

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

The week ahead.

Last week the credit crunch continued to dominate headlines with banks and housing stocks being hit the hardest. The Bank of Englands Governor King alluded to the situation being akin to a run on the banks. Specifically he was referring to the situation whereby major banks are withholding funding in the asset backed commercial paper market. LIBOR, the rate at which banks are willing to lend to each other rose to a nine year peak last week. The three month lending rate at one point rose to more than 100 base points above the Bank of Englands target rate.

The bank of England eased the situation somewhat by relaxing restrictions on the amount of money financial institutions need to hold with the central bank, encouraging them to lend more to each other. Libor dropped for the third straight day on Friday, but overnight on Thursday there was a severe reminder of just why banks were being so wary in lending to each other. Northern Rocks fresh profit warning and surprise move to tap the BoE for emergency funding spooked investors further.

Governor King predicted that banks would move to the more traditional model of funding lending through deposits. As a reflection of this, some banks have increased the interest offered in their deposit accounts, but at the same time have increased the rates charged to mortgage borrowers.

The BoE hinted that if the situation worsens it may act with an interest rate cut. Until then, with borrowers being hit with a de facto rate hike, it may not be long before the credit crisis expands to the wider economy. We will know more about this next week with the minutes from the last MPC meeting being released on Wednesday and retail sales data on Thursday.

Tuesday 18th of September 18.15 GMT sees one of the most important FOMC interest rate statements in recent history. It is likely that markets will grind to a halt coming into the decision and then unwind like a coiled spring on the announcement. The US Federal reserve has come under intensive pressure from Wall Street to cut rates to ease the credit crisis.

Yet it is not an easy decision to make, the US housing market has been in severe decline for a while and householders at the thick end of the sub prime crisis will no doubt be grateful for a rate cut. On the other hand inflationary pressures do remain. Oil continues to surge to record highs and commodities such as wheat have risen spectacularly in recent months. The latter even prompted a pasta protest in Italy, with Italians calling for the government to do something about the spiraling cost of the national dish. Wednesdays US housing starts data and Bernakes speech on Thursday will both influence an excited market post rate decision.

Predicting the market in the short term is near impossible as so much depends on the US rate decision and accompanying statement next week. The quarter point cut is the more likely option for the moment, but even if this is how it pans out, the potential for another cut at future meetings will be equally market moving. If you were willing to trade in the face of so much uncertainty, a volatility play may be the better option with markets expected to move considerably on Tuesdays announcement in the US. A 14 day up or down trade trades returns around 10% on the S&P 500 with the triggers set as 1420 and 1525. If the market touches either of these levels within the next 14 days you win.

Dave Evans