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A Look At Global Economic Events In The Upcoming Week
From Goldman's Thomas Stolper.
Week in Review
Feeling QE-easy after all. The dovish statement from the FOMC meeting earlier in the week led to markets shifting closer to expectations of further QE moves by the Fed. Our US economists think a move in the November meeting is likely if the data continues to show weakness. The reaction in stocks to the FOMC statement were relatively muted, until better data (US durable goods) contributed to a sharp rally on Friday.
Broad Dollar weakness FX saw some of the biggest moves in reaction to the FOMC statement, with broad downward pressure on the Dollar. Most notably in EUR/$, almost touching 1.35 for the week. The EUR move occurred against the backdrop of weaker forward looking macro data (weaker flash PMIs and weaker German IFO expectations) and continued concerns over the European sovereign situation amidst large strikes in France and focus on Irish banks. We’ll get more potentially key events to watch for in the form of budget discussions in France (Sep 29) and Spain (Sep 30). Thoug we remain fundamentally constructive on the Eurozone outlook, the unsettled situation in the near term was part of the rationale behind our recently initiated short EUR/CHF tactical trade. We also reinitiated short MXN/CLP earlier in the week as we still continue to favour the theme of differential exposure to the US slowdown, amidst uncertain risk sentiment.
Week Ahead
Global PMIs and Decoupling We get the usual round of PMI readings from across the globe for the latest read on the global cyclical momentum as well as for further updates on the ‘decoupling’ thesis. China’s PMI reading will no doubt be in focus—we expect the September reading to continue to rise, as does consensus, which is looking for the PMI to rise to 52.8 in September from 51.7. Our China economists think that although production and electricity supply restrictions since early-September have put downward pressure on activity, this should be counter-balanced by the loosening in monetary, fiscal, and investment related policies since July. On the US ISM, we are expecting moderation to 54.0, below consensus of 54.5. More generally, firmer signs of decoupling will be supportive to risk sentiment and Dollar weakness overall, given that the risk vs USD correlations remain strong.
EM central bank meetings We’ll also get central bank meetings in Hungary, Israel, Russia, Poland and Taiwan this week. We expect all to remain on hold, except Taiwan, where we expect a 12.5bps hike to 1.5%, in-line with consensus. In Israel, our expectation is for no change to rates, which is contrary to consensus expectations for a 25bps hike. Our Israel economist view is that the BoI will not accelerate the pace of rate hikes against a backdrop of softening demand conditions and the increased likelihood of further monetary easing in the US.
NJA intervention We continue to keep a close eye on NJA intervention behavior in the next few months in the leadup to key political events such as the US November mid-term elections and the G20 Summit in Seoul. The global focus on Asian FX will likely remain intense next week, as many Asian markets were close for parts of last week. Consistently lower CNY fixes over the last few weeks set the stage for other currencies to follow. Our trade recommendation of long CNY via longer dated NDFs continues to benefit and we think there is further upside until the 1yr forwards price something closer to 6.40 in $/CNY NDFs. Korea we think will increasingly come under the spotlight as well and the trade data this week will be interesting, where are expecting a stronger than consensus outcome, which will add to fundamentally driven KRW appreciation pressure. We expect a higher than consensus export growth of 20% yoy (consensus +13.3%) and a wider trade surplus of US$5 billion, above consensus at around US$4 billion.
Monday 27th
Hungary central bank meeting In line with consensus, we expect the central bank to remain on hold at 5.25%.
Israel central bank meeting We expect the central bank to remain on hold at 1.75%, in contrast to consensus which expects a 25 bps hike to 2.00%.
Tuesday 28th
Russia central bank meeting We expect the central bank to remain on hold in line with consensus.
US Case & Shiller home prices (Jul) Consensus expects a small decline of -0.15% mom, after a small rise of 0.28% mom in June.
US consumer confidence (Sep) Consumer confidence probably slipped a bit further in October, based on the decline in the University of Michigan Index. We are expecting a 2 point drop to 51.5, below consensus at 52.3.
Chile IP (Aug) Consensus is looking for a rise of 4.3% yoy, slightly above our 4.0% yoy forecast and up from 3.3% yoy in July.
Wednesday 29th
Japan BOJ Tankan (Sep) The focus is on the degree of improvement in the present conditions DI and the future DI. Up to this time, signs have pointed toward improvement, fueled by government stimulus and export growth. The future outlook, however, is for conditions to deteriorate due to the disappearance of these boosts.
Poland central bank meeting We see no change in policy stance from the NBP, with the policy rate remaining on hold at 3.50%, in line with consensus.
Euro zone business & consumer confidence (Sep) We expect a reading of -5.5 for business confidence, down from a reading of -3.9 in August. We are slightly below consensus. For consumer confidence, we are similarly slightly below consensus as well, and are looking for a reading of -13 against the previous reading of -11.4.
Switzerland KOF (Sep) Consensus is looking for further slight moderation to 2.11 from 2.18 in the previous reading, which would still leave this index at very elevated levels relative to its history.
Thursday 30th
Taiwan central bank meeting We expect – in line with consensus – that the Taiwan central bank will raise its policy rate by 12.5 bps to 1.50% from 1.375% in the upcoming policy meeting. We also believe the central bank will continue to absorb excess liquidity via negotiable certificates of deposit (NCD) issuances.
Korea IP (Aug) We expect industrial output to grow double digits yoy on robust exports, but the sequential pace is likely going to moderate. Consensus expects a decline of -1.4% mom, down from +1.1% growth in July.
Euro zone CPI (Sep) We expect inflation to rise to 1.8% yoy, in line with consensus, up from 1.6% yoy in August.
United States initial claims (Aug) Consensus expects initial claims to be 460k, down from 465k the previous week.
US 2Q GDP (third estimate) We and consensus expect a third reading of 1.6% qoq, which would be unchanged from the second reading and down from 3.7% qoq in the first quarter.
Chicago PMI (Sep) We expect a slight moderation to 56.0 from 56.7, in-line with consensus
Friday 1st
Global PMIs (Sep) We get the usual round of PMI readings from across the globe for the latest read on the global cyclical momentum as well as for further updates on the ‘decoupling’ thesis.
China PMI (Sep) We expect September PMI to continue to rise, as does consensus, which is looking for the PMI to rise to 52.8 in September from 51.7 in August. Though production and electricity supply restrictions since early-September have put downward pressure on activity, we believe they were counter-balanced by the loosening in monetary, fiscal, and investment related policies since July.
Korea CPI (Sep) We expect a high print of around 3.0% yoy, above consensus which is looking for a 2.8% yoy and is up from 2.6% yoy in August. This will likely be a catalyst for a rate hike in the October central bank policy meeting.
Korea trade balance (Sep) We expect September exports to show solid double-digit growth of around 20% yoy, while consensus expects a lower pace of growth at 13.3% yoy. The trade surplus is likely to be around US$5 billion. Again, we are above consensus which is around US$4 billion.
Japan CPI (Aug) The CPI trend remains unchanged. We estimate that core CPI declined again by 1.0% yoy in August, after falling 1.1% in July. We forecast the core-core CPI to remain negative as well, falling 1.3% yoy after falling 1.5% yoy in July.Consensus expects CPI to be -0.9% yoy, a slightly lesser pace of deflation than the -1.0% yoy reading in August. We expect deflation to remain firmly entrenched, and are looking for a reading of -1.1% yoy.
United States ISM (Sep) Our preliminary estimate is a drop from 56.3 to 54.0 (below consensus at 54.5), but we may revisit this based on the other business surveys--Richmond, Chicago, and the GS Analyst Index that will be released this week.
United States PCE core inflation (Aug) We expect the core PCE reading at +0.14% mom, a bit higher than the 0.04% core CPI in August, in part because the very low readings for rent and owners equivalent rent receive lower weights in the PCE index. Consensus expects a reading of 0.1% mom.
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Futures are surging on no news... or have I missed some more QE news!
Nope, just the usual night time futures surge. Bit too early, it'll either run more or get knocked down by japans open. I'm sick of the smug bastards kicking back thinking stocks will rise on good news or bad because of qe. If its too good to be true, it is.
12 handle open on the SPX, guaranteed. No fucking problem. I've seen this movie before.
Get the vaseline out for the overnight shorts.... again...
Any dope short this move doesn't deserve vaseline.
We All know the game. But who knows when it gets ugly. I'd rather profit that stand on principal.
Futures jump around too much anyway. Without a solid triple digit move or news who knows what the open is.
They'll serve up a triple digit open. I've seen this time and time again. It's the same old playbook.
News? Who needs news. Alls the fed has to do is press the button. Very simple operation.
Yep, no transparency, no auditing, e-money that literally doesn't exist, electronically traded (and tracked by the overseer) trades and positions, blatant currency interventions, you name it and it's being done.
I would have went with 'flip a switch' but 'press a button' certain captures the ease of it.
There are two buttons. Markets up, Markets down. Along side the buttons are knobs that control the amount and volume. Tonite, The ES futes up button was pressed.
PPT!!! What short seller can compete with the FED who creates money with a keystroke?
Yea, I just saw that also. Man, let me tell you something. We've hit max corruption at all levels, at this point.
They will fucking jack this thing literally to the moon in the next 40 days. They literally do not care.
What to do after running it up for 3 weeks and a 200 point Friday and after nationalizing the credit union industry....why run it the fuck up again, of course.
I'm literally so fucking sick of this non-sense. I'm sure the USD will take a dump again.
I doubt we will end the week up again EOQ and EOM. Too Manu banking on QE and too Manh playing the elections bullshit.
The Friday news on credit unions was a bombshell and you'll see who's the fucker in tank if they don't address it or brush it off.
I like your spirit but I think you're wrong. What are we going to do? Write a nasty letter to Ben? Give me a break. They are telling the courts to fuck off, blowing off FOI orders, disallowing audits, and clearly violating securities laws.
Sorry man, if you're hoping on 'justice', it left the building several years back. This is as lawless as it gets. There isn't any stopping this shit now.
I'm not banking on justice. I'm banking on the stupity of greed. We are being fed delusional lines that it's a win win no matter what. Sure they bought into that Friday. But it's a Mexican standoff and they will be quick to the trigger, and dump.
I understand where you are coming from. But, I just disagree. We are quickly going to full-on banana republic status. There will be no stopping it because there will be no enforcement of laws and/or they'll simply change the laws. They're fully committed at this point, in my opinion. We'll quickly drift into a land of have and have nothings. I've travelled the world (to some extent) and have seen it. We're heading that way quickly. You can be sure that the elites are FULLY protected from it and 'included' in the grand plan. You, me, the other Joes here...fucking please.
Oh I totally agree. We are heading down big time. Most people have no clue. My comment was on the current market environment 1-2 months here.
But don't feel bad because your logically on the correct side of the trade. Anything can trigger a massive selloff. Even the ol profit taking will snowball.
S&P 1220 before this upmove ends.
Yep, and to show how much effort they are willing to put into this level of corruption that making sure that they keep that old rot gold peg back too.
Yes, The Futures and Markets are controlled by the Fed. With the touch of a button, The markets rise, The markets fall. It is what it is.
What is this "markets fall" you speak of? Can you point me to a chapter or page in a history book where i can read up on this uncommon phenomena?
Flash crash.
What I find amusing about the 'flash crash' is that everyone seems to forget about the magical 700 point run up in about 90 seconds. I don't care who the sellers were; I want to know who the buyers were and especially at that moment.
700 point run up occurred when the commencement of the Up button was pressed
Gold getting slammed
ES futures on fire
Robo, are you getting your headlines (and financial "advice") from Business Insider now?
I follow those guys somewhat and their headlines do bug me. Always something extreme.
Gold getting slammed? its down nineteen cents...Who cares until tomorrow morning anyway?
Gold is up 9 years in a row.
Chasing gold at this level is no different than chasing AAPL, BIDU, NFLX, etc.
Very dangerous.
If you don't know the difference AAPL,BIDU,NFLX,,, vs Gold your future analysis will be content free..
To get gold ,,,put on a helmet..
here we go again robo. gold isn't up. the dollar is down. it's just paper with ink on it, nothing there. being counterfeited every day by the federal reserve private banking cartel for the benefit of its owners -- large global bankers, not you! WAKE UP your future is being robbed.
aiight, let's lighten' it up a little:
http://www.youtube.com/watch?v=EUtwNtE1NBA
BUD has a nice gap 'n go chart
My view is that fiat is way too dangerous to be in at this time...
how about a volvo? :-)
Volvo's are perfectly safe. Vajj's are about as dangerous as fiat....
They're gonna dump on gold. I don't know it'll work. They can't have us worrying about our almighty dollar.
China tried to position itself instead as a reliable supplier, partly to discourage other nations from digging their own rare earth mines.
The House Armed Services Committee has scheduled a hearing on Oct. 5 to review the American military dependence on Chinese rare earth elements.
The Defense Department has a separate review under way on whether the United States should develop its own sources of supply for rare earths, which are also used in equipment including rangefinders on the Army’s tanks, sonar systems aboard Navy vessels and the control vanes on the Air Force’s smart bombs.
Japan has been the main buyer of Chinese rare earths for many years, using them for a wide range of industrial purposes, like making glass for solar panels. They are also used in small steering control motors in conventional gasoline-powered cars as well as in motors that help propel hybrid cars like the Toyota Prius.
Ripple, and I do not mean wine.
Baker and the BlackSmith... Mises
http://www.youtube.com/watch?v=R0cKykFcWOM&feature=related
Edit the Sad parts. " Can you point me to a chapter or page in a history book where i can read up on this uncommon phenomena? "
I think its all a bluff and will be brushed aside. Just flexing muslce.Anything they pull on japan will bring the us into some situation and the chinese don't want to go to any extreme.
Rare earths are Everywhere, just so cheap get from china why shop elsewhere.
http://www.msnbc.msn.com/id/39338579
How long do they take to make a decision in China?
"It is fact that there is a delay in several shipments,"
http://agmetalminer.com/2009/10/23/displacing-china-as-a-rare-earth-producer-is-no-small-feat/
suggests that only ten projects receive funding as it will still take ten years to bring the mines to market but will yield three to four new mine openings. A Lynas mine in Australia and Molycorp, with its mine at Mountain Pass, California will likely become the two new supply sources to come on line first.
May be a bluff but may be not. Given the US official and unofficial wartime commitments as well as domestic issues, I'm guessing the Chinese aren't that afraid. I agree this is probably sabre rattling but being done to see who says uncle first.
no steering control motors, in gas engine cars, they are all hydraulic
For what it's worth, I think the RBA will raise its target cash rate in about a week.
Based on last fridays data anyhow.
You know, lots of people spout opinions on this website yet don't seem to go to the source for their info. Try your local, friendly, central bank, they go to a lot of trouble to produce & publish statistics. I'm sure they'd be happy to see lots of 'hits' on their website.
Central wBanksters ... grin, grin,.. believe us, believe us, it is all swimmingly beautiful, join us....
look deeeeeep into our eyessssss.....
Reason for the futures goosing? Propaganda at it's finest, cover both side and they can never say you were wrong in hindsight.
UK banking sector grows at fastest rate since 2007http://www.bbc.co.uk/news/business-11414386
Finance firms' Q3 growth disappoints
http://uk.news.yahoo.com/22/20100926/tuk-uk-britain-financial-cbi-fa6b40...
The reason for the goosin is to take the pressure off Gold expiry tomorrow.
It will be a tough fight until then
There is "HUGE" money flowing into Gold as we speak
The pressure will continue to build.
Charts
Houston...er...Washington, we have a problem. The BRICs have liftoff of USD!
http://99ercharts.blogspot.com/2010/09/dx_26.html
Er...Washington? "Cry Uncle" Ben has a problem.
http://99ercharts.blogspot.com/2010/09/es_26.html
I need a black swan event this week.