Economic Calendar for week 4th - 8th February 2008

All times GMT

Monday Feb 4th:

EU - 09:30 - Sentix Investor Confidence.
UK - 09:30 - Construction PMI.
EU - 10:00 - PPI M/M.
US - 15:00 - Factory Orders M/M.

Tuesday Feb 5th:

GE - 08:55 - Services PMI.
EU - 09:00 - Services PMI.
UK - 09:30 - Services PMI.
US - 15:00 - ISM Non-Manufacturing Index.
US - 15:00 - ISM Non-Manufacturing Prices.

Wednesday Feb 6th:

UK - 00:01 - Consumer Confidence Index.
UK - 10:30 - BRC Shop Price Index Y/Y.
US - 13:30 - Nonfarm Productivity Q/Q.
US - 13:30 - Unit Labor Costs Q/Q.
US - 15:30 - Leading Index M/M.
US - 19:15 - Crude Oil Inventories.

Thursday Feb 7th:

FR - 07:45 - French Trade Balance.
UK - 09:30 - Industrial Production M/M.
UK - 09:30 - Manufacturing Production M/M.
GE - 11:00 - German Factory Orders M/M.
UK - 12:00 - Interest Rate Statement.
EU - 12:45 - Interest Rate Announcement.
EU - 13:30 - ECB President Trichet Speaks.
US - 13:30 - Unemployment Claims.
US - 15:00 - Pending Home Sales M/M.
US - 14:45 - Chicago PMI.

Friday Feb 8th:

UK - 00:01 - NIESR GDP Estimate.
GE - 09:00 - Trade Balance
EU - 11:00 - Composite Leading Indicators M/M.
GE - 11:00 - Industrial Production M/M.
US - 13:30 - Unemployment Claims.
US - 15:00 - Wholesale Inventories M/M.

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

The week ahead.

The markets got the shot in the arm theyd been clamouring for last week, as the US Federal reserve slashed interest rates down to 3%, as well as taking another 0.5% off the discount rate. Fading the Fed was the trade to make last week, as traders aggressively sold the initial rally in equities that greeted the Feds decision. Contributing to the sell off on Wednesday was a downgrade of the Monoline insurer FGICs credit rating from AAA to AA.

Monoline insurers have come to the forefront recently, with a rumoured rescue package contributing to recent rallies. Monolines are so called because they operate in one line of business, which is to insure as much as $2.5 trillion of debt globally. The Monoline bond insurers rely on their AAA credit rating because this has a knock on effect on the credit rating of the insured assets themselves. This could be potentially devastating to an already shaking credit market. Markets rallied on Thursday, partly on the back of news that Monoline insurer MBIA will keep its AAA credit rating. According to some analysts, ratings agencies are under considerable pressure to hold off downgrading ratings of the two largest Monolines, until the rescue package has been achieved.

The catalyst for rally on Friday was for once not directly related to the credit market. Microsofts $44.6 billion dollar takeover proposal of Yahoo caused Yahoos share price to surge to over 50%, and US futures markets to turn around early sluggish trading. The proposed takeover price represents a hefty 60% premium to Yahoos previous closing price. Markets were buoyed by the news on speculation that tech stocks are undervalued in general, and that the merger and acquisitions train is back on the rails. The news marked a turn around for tech stocks after Google and Apple had disappointed with earnings reports.

US markets managed their biggest weekly gain in five years as the S&P500 rose 4.9% and the Dow 4.4%. The Nasdaq still lagged behind with a gain of 2.8%. The gains came despite poor jobs data and a record drop in year on year new home sales in the US.

The top announcements next week in Europe are the MPC and ECB interest rate announcements on Thursday. Analysts speculate that the two could move in different directions, after it was announced that the Eurozones inflation level remained 1% above the target rate of 2%, and UK manufacturing growth slowed to its lowest level since August 2005. The poor manufacturing figures could open up the door for a quarter point cut in the UK, while the ECBs commitment to fighting inflation could result in a quarter point raise next week.

After rising so far from the market lows it is arguable that we are now overbought in a bear market. Economists estimates for the probability of a recession vary from 50-80%. According to Econoday.com, the yearly Nonfarm Payroll yearly % change is now in negative territory after starting to decline in Q1 2006. While there may be some more upside potential, it is arguable that the route may not be as direct as it was over the last week. A no touch higher returns a profit if a certain level isnt touched before the trade expires. A trade predicting the S&P 500 not to touch 1508 in the next 25 days could return 14% over the next 25 days.

David Evans

Google Rips Microsoft's Proposed Takeover of Yahoo, Saying It Would Stifle Internet Innovation

Google Inc. raised the specter of Microsoft Corp. using its proposed $42 billion acquisition of Yahoo Inc. to gain illegal control over the Internet, underscoring the online search leader's queasiness about its two biggest rivals teaming up.

The critical remarks, posted online Sunday by Google's top lawyer, represented the Mountain View-based company's first public reaction to Microsoft's unsolicited bid for Yahoo since the offer was announced Friday.

"Microsoft's hostile bid for Yahoo raises troubling questions," David Drummond, Google's chief legal officer, wrote. "This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation."

Google's opposition isn't a surprise, given that Microsoft views Yahoo as a crucial weapon in its battle to gain ground on Google in the Internet's booming search and advertising markets.

Redmond, Wash.-based Microsoft has been trying to depict a Yahoo takeover as a boon for both advertisers and consumers because the two companies together would be able to compete against Google more effectively.

But Google is painting a starkly different picture, asserting that Microsoft will be able to stifle innovation and leverage its dominating Windows operating system to set up personal computers so consumers are automatically steered to online services, such as e-mail and instant messaging, controlled by the world's largest software maker.

In a move that illustrates just how badly Google wants to torpedo the deal, Google Chief Executive Officer Eric Schmidt called Yahoo CEO Jerry Yang Friday to offer his help in repelling Microsoft, according to a report Sunday on The Wall Street Journal's Web site, which cited anonymous people familiar with the matter.

The assistance didn't include a counterbid, but may have included supporting other potential suitors, or a revenue guarantee in exchange for an ad partnership with Yahoo, the people said, according the newspaper.

AT&T Inc., Time Warner Inc. and News Corp. aren't planning to enter the bidding, the Journal said, citing the people familiar.

To help make its point, Google pointed to the way Microsoft previously used Windows to help extend the reach of its Web browser and other applications -- a strategy that triggered a U.S. Justice Department lawsuit alleging the software maker illegally used its operating system to stifle competition. The dispute ended with a 2002 settlement that required Microsoft to abandon some of its past practices.

"Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?" Drummond wrote.

Brad Smith, Microsoft's general counsel, said preventing Microsoft from buying Yahoo would undermine competition by allowing Google to become even more dominant than it already is on the Internet

"Microsoft is committed to openness, innovation, and the protection of privacy on the Internet," Smith said. "We believe that the combination of Microsoft and Yahoo! will advance these goals."

If they get together, Microsoft and Yahoo would have about 16 percent of the worldwide Internet search market -- still far behind Google's 62 percent share, according to comScore Media Metrix. But Microsoft and Yahoo already are far bigger in than Google in e-mail and instant messaging, and conceivably would be in a better position to squash rival services if they combined.

Illustrating the enormous stakes involved in a deal that could reshape the technology and media industries, Google and Microsoft are already debating the pros and cons before Yahoo has responded to the offer.

Yahoo so far has little to say except that its board will carefully examine Microsoft's bid -- a process that "can take quite a bit of time," according to a message posted on the Sunnyvale-based company's Web site.

The review "will include evaluating all of the company's strategic alternatives, including maintaining Yahoo as an independent company," Yahoo said on its Web site.

Most analysts believe Yahoo will have little choice but to sell to Microsoft, with its stock price near a four-year low at the time of the bid and its profits falling since late 2006. When it was first announced, Microsoft's offer was 62 percent above Yahoo's market value -- a premium analysts doubt any other suitor will be able to top.

If Yahoo accepts, antitrust regulators in both the United States and Europe are expected to begin an exhaustive review that some experts think could last a year. Microsoft believes it could get the necessary approvals to take over Yahoo late this year.

If nothing else, Google probably will try to raise enough alarms about the Microsoft-Yahoo deal to delay its approval for as long as possible. By doing so, Google would have more time to draw up plans to counteract the combination.

Google also is borrowing a page from Microsoft's book by urging antitrust regulators to take a hard look at the proposed marriage between its two rivals.

Just days after Google struck a $3.1 billion deal to buy online ad service DoubleClick Inc. last year, Microsoft began lobbying regulators to block the transaction. U.S. regulators blessed Google's DoubleClick acquisition late last year after an eight-month review, but the antitrust inquiry in Europe remains open.