An ugly way to start the week as markets in Asia played catch up to the ugliness which ended last week in the US. We believed this would be a dramatic week on the European continent and it is did not disappoint. Politics have taken the wheel and the markets are not liking what they see.
German Chancellor Angela Merkel’s party lost a key election in her own home district, which will prove challenging to keep her coalition together. The Italians are scheduled to face a general strike nation wide tomorrow. But their problems have manifested themselves further politically as well. A government which has lost confidence from its electorate as well as the markets.
Moody’s and S&P both have them under review with GDP scheduled for release later in the week and austerity looking more and more like a piece of Swiss cheese. A downgrade was thrown around as part of the reason for the aggressive sell-off across the continent on Monday. European markets were down between 3 and 5 %. Germany being the worst performer as the surprise loss in the election plus the expectation of further bills heading its way, was too much to handle.
The German Courts on Wednesday are scheduled to decide on the constitutionality of the European bailouts. The Finns are still holding out for collateral from the Greeks. Speeches galore are expected. Jean Claude Trichet will render his last interest rate decision as the head of the ECB on Thursday.
The President of the United States will try to get a jobs bill through an uncooperative Congress by using the ultimate bully pulpit, a speech before a joint session of Congress. Speeches are also expected form Vice Premiers, Treasury Secretaries, numerous Fed heads past and present, Chancellors, Finance Ministers and Bundesbank members!
We need more action and less speeches! How do you cure a crisis in confidence? Hard to determine when many policy makers are pushing and pulling in opposite directions! Have a great week ahead.
Asia– China will release their HSBC Services PMI. The previous reading was 53.5. Markets will be watching closely to see if a soft landing is being achieved, especially after the bloodbath in Europe today.
Asia– A quiet macro day across the Pac-Rim. Australia will render an interest rate decision where no change is expected.
Europe– Swiss CPI is expected to come in -0.2% MOM as the effects of the Franc strength are reverberating across the board. The Euro-Zone will release GDP figures where a quarter over quarter reading of 0.2% is expected. Germany will release Factory Orders where a reading of -1.5% is expected versus 1.8% prior. The Germans, Dutch and Finns will be meeting in Berlin while a general strike is expected to cripple Italy.
North America- ICSC Chain Store Sales and Redbook data will be a precursor for ISM Non-Manufacturing Composite where a reading of 51.2 is expected versus 52.7 prior.
Asia– A rate decision will be imminent out of the Bank of Japan. Also forthcoming will be their Leading and Coincident Index readings 108.9 and 105.9 are expected respectively. Australia will be releasing GDP data where a quarter over quarter reading of 1.0% is expected.
Europe– another busy day on the continent. An interest rate decision from the Swiss National Bank is on tap. Both the UK and Germany will release Industrial Production data. Chancellor Merkel is set to speak and the German Constitutional court is set to render a decision on the validity of the Germans participation in the European bailouts. Portugal will head to the markets with an important bond auction.
North America– Canada will issue interest rate policy which is expected to stand pat at this time. Moving to the US, MBA Mortgage Applications, the FED’s Beige Book and API Crude Inventories will all highlight.
Asia– Again all eyes will be on Japan and Australia. Japan will release Machine Orders data where a consensus reading of -4.2 is expected. Australia’s Unemployment Rate will be in the spotlight as well.
Europe– Rate Decisions from the Bank of England and ECB will get much attention. A dovish stance from the ECB is expected after a one off rate rise which has proven to be a mistake. The press conference after the rate decision will take on added importance as it is Jean Claude’s last. Germany will pitch in Current Account and Trade Balance data, while France will issue their Unemployment Rate.
North America– Initial/Continuing Jobless Claims will be much talked about as the pesky unemployment rate does not seem to budge. US Trade Balance data will also be released where a reading of -$50 billion is expected month over month. Natural Gas inventories and DOE Crude Inventories will also be released during the early part of the trading day. Consumer Credit will be the last macro data item of the day, with a reading of $6 billion dollars.
Asia– Japan will release GDP data as well as Consumer Confidence numbers. China is scheduled to release a full slate of macro data which will all be watched closely. CPI,PPI,Industrial Production and Retail Sales will all be forthcoming.
Europe– German CPI and Wholesale Price Index. French Industrial Production and Manufacturing Production. Italian GDP and UK PPI will all be released on this Friday.
North America– our neighbors to the North will release their Unemployment statistics as well as Housing Starts data. US data will end the week with one important data point, Wholesale Inventories which are slated to come in at 0.8%.
-Eric J Schumacher
Tim Kelleher has been in the middle of the electronic securities trading industry for the past two decades. Beginning at Instinet in 1992, Tim moved on to Broadway Trading in 1997 where he became a full-time trader. Trading with the Boca Raton Broadway “SOES Bandits”, Tim developed a style and eye for momentum trading and scalping. Over the years Tim has founded and worked with several top trading education companies. Tim is currently a registered T3 representative. Tim excels in pre-market trading events, as well as trading morning gaps and opening inefficiencies. Tim is also versed in and employs intra-day trending trades, capitulation trades, fundamental news trading, and technical analysis-based trades. In almost 20 years of trading, Tim has extensive experience with most types of profitable trading styles.
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