Summary Of Key Events In The Upcoming Week

Tyler Durden's picture

From Goldman Sachs

Week in Review: An awful lot of data disappointments

It is tough to find a positive data print amongst the slew of disappointing data last week. Arguably it was the encouraging production plans which accompanied Japanese IP. As has been catalogued elsewhere, the majority of the business surveys generated significant negative surprises, for reasons that are not entirely clear at this point. Analysing the business surveys also presents a quandary between levels and changes. The sharp declines are clearly worrying, but the level isn’t necessarily. After printing at multi-year highs in recent months, the levels are closer to ‘normal’. Indeed the Euroland PMIs suggest growth is tracking at 0.6%qoq, above our forecast of 0.4%. If the drops are related to supply chain issues from Japan, they could be reversed next month given Japanese production plans.

However the breadth of the weak data, which was not just confined to business surveys raise questions about the strength of global momentum. Indeed the GLI reading for May recorded momentum at zero, which does point to an uncertain outlook for global IP. Away from industrial activity, US payrolls only rose by 54k, with the weakness concentrated in manufacturing, retail trade and leisure/hospitality. In our view, only about 15-20k of the downshift in employment growth is attributable to supply-chain problems in the auto sector (adding together changes in job growth for manufacturing firms and vehicle dealers).

Market reacted to this news with a rally in fixed income, weakness in equity markets and renewed broad Dollar weakness, in particular against the Euro.

Week ahead: It is all about IP

The week ahead brings a barrage of IP data for April from all round the world, the momentum of which will be closely examined after the sharp drops in the manufacturing business surveys last week. Expectations – both ours and the consensus – are a mixed bag, but broadly, we expect momentum to slow in April. The data will be dissected for evidence of supply chain issues – which probably should be faded given the Japanese production plans published last week – and for evidence of a broader slowdown. In addition, manufacturing orders data from Germany, Taiwan, Japan and Sweden will be watched similarly.

Away from IP, the week brings a bunch of inflation prints, which are all broadly expected to show a further rise in the headline readings. In addition the week brings interest rate decisions in the UK, Euroland, Poland, Indonesia, Korea. We expect a 25bps hike in both Poland and Korea, on hold everywhere else.

Outside of the data, developments in Greece will remain on the radar screen, particularly any colour on a new package.

We expect activity data to broadly stabilise relative to increasingly low expectations, and we also expect gradually declining contagion fears linked to the Greek fiscal situation. Together this would suggest that the Dollar could remain under pressure, for which we remain positioned across our trading recommendations.

Monday 6th June

Spanish IP (Apr): Consensus expects a rise of 1.5%yoy after -0.9% previously. Spanish IP has hovered just above zero in yoy terms since early September.

Also of interest: Czech IP (Apr), Mexico IP (Apr), Canada PMI (May).

Tuesday 7th June

RBA meeting: The June RBA Board meeting is shaping up as the most uncertain for the year thus far. Though the majority of economists still expect the RBA to remain on hold, 5 of 28 surveyed expect a 25bp rate hike. The RBA laid out a clear tightening bias in the Statement on Monetary Policy three weeks ago, but the subsequent domestic data has been all but universally soft. Additionally there have been global growth downgrades and rising global uncertainty, which also argues for holding steady for the time being.

Philippines CPI (May): Consensus expects a rise of 5%yoy after a previous reading of 4.5%. We expect a higher reading of 5.1%.
Taiwan CPI (May): Consensus expects a rise of 1.6%yoy after 1.34% previously.

Switzerland CPI (May): We expect a print of 0.4%yoy, after 0.3% previously. Consensus: 0.3%yoy.

Euroland retail sales (Apr): Consensus expects a rise of 0.3%mom after a decline of 0.9%mom previously.
Germany Manufacturing orders (Apr): We expect a rise of 1.2%mom/ 7.9%yoy after -4%mom/9.8%yoy previously. Consensus expects a rise of 2.1%.

Also of interest: Hungarian IP (Apr)

Wednesday 8th June

Taiwan trade balance (May): Consensus expects exports to rise by 7.4%yoy after 26.4% previously.

Poland MPC meeting: We expect NBP to hike rates by 25bps to 4.5% however, we also see the risk that the MPC may want to stay on hold and wait for the revised inflation forecast due in the July Inflation Report.

Germany IP (Apr): We expect a decline of 0.5%mom, 9.2%yoy after 0.7%mom and 10.9%yoy previously. Consensus expects a rise of 0.2%mom/10.3%yoy.

Also of interest: Turkey IP (Apr), Norway IP (Apr), Japanese BoP (Apr), Australia Westpac consumer confidence (Jun), German exports (Apr).

Thursday 9th June

RBNZ Meeting: Consensus expects unchanged at 2.5% as do we. We expect the RBNZ to acknowledge both the improving signs in the domestic data but also the number of risks that still remain. However, in general, and with inflation pressures becoming less favourable, there are likely to be a few more warning shots fired by the RBNZ in this statement around the medium-term inflation outlook. While we are not expecting a hawkish statement, it is likely to be one that is less dovish than recent communications.

Australia Employment data (May): After the decline of -22.1k in April, we expect a rise of 15K, a smaller rise than the consensus, which expects a rise of +25k. We expect unemployment to rise slightly to 5.0%, consensus expects unchanged at 4.9%.

BI Meeting: Consensus expects rates to remain unchanged at 6.75%, as do we.

ECB meeting: We do not expect a rate hike however the June statement should prepare the ground for a July increase in official interest rates.

BoE Meeting: We expect rates to remain at 0.5%, as does the consensus.

US Trade balance (Apr): We forecast a narrowing in the trade balance in April to -$47.5bn from -$48.2bn previously. Although higher commodity prices likely lifted the nominal value of imports, we believe this was more than offset by weaker import volumes from Japan. Consensus expects a slight widening of the deficit to US$48.6bn. The data is accompanied by annual revisions.

Also of interest: South Africa IP, US jobless claims, Czech CPI (May), Malaysia IP (Apr), Japanese Machine tool orders (May P).

Friday 10th June

BoK Meeting: Consensus is evenly split between unchanged at 3% and a hike of 3.25%. We expect a 25bps hike on the back of high inflation and robust growth.

China trade balance (May): Consensus expects exports to rise 21.8%yoy after 29.9% previously and imports to rise by 22.3% after 21.8% previously. If realised this will cause the trade surplus to rise from $11.6bn to $17bn.

Indian IP (Apr): Previous reading 7.3%.

French IP (Apr): Consensus expects a rise of 0.4%mom after a decline of 0.9% previously.

Sweden IP (Apr): We expect a rise of 0.5%mom, the consensus expects a smaller rise of 0.3%.The previous reading was 0.9%mom.

UK IP (Apr): consensus expects a rise of flat mom/1.3%yoy for headline IP after 0.3%/0.7% previously.

Norway CPI-ATE (May): We and the consensus expect a moderation to 1.1% after the previous reading of 1.3%mom.

Also of interest: Philippines exports, Canada employment (May), Sweden industrial orders (Apr).

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Zon's picture

The economy will collapse this week.

chump666's picture might just.  huge CDS and Bond bubble in Asia, BS in Europe and the US economy going into double dip

Dapper Dan's picture

May just be hubris but the boys at the LHC got lucky,  we have a violation of CPT symmetry,  we won't need thermonuclear energy to keep the world on edge in a year or two. Got something better than better.,2817,2386429,00.asp

Manthong's picture


Now the Vulcans will be arriving.

There goes the neighborhood.

phungus_mungus's picture



Someone remember to bring the beer!

FeralSerf's picture

Chalk one up to the Good Guys:

Then again, on the other hand:

"The US government sure has an interesting way of defining war these days. Just a few months after the Obama administration played word games with the public by insisting that air strikes in Libya were just "kinetic military action," not acts of war, the Pentagon has now come on the record stating that it will treat all acts of cyber-hacking against the US as "acts of war.""

kito's picture

f*ck goldman ball sacks

chump666's picture

The financial markets have lost the plot, so we gonna see some massive volatility coming weeks.  Swing trades all over the place.

All we need is a HFT going nuts as we say in May 2010.   Albert Edwards may see the slaughter on the 10ry yield. Maybe, just maybe the market will discount QE 1 and 2 has a HUGE failure. ANd we get a deflation/deleverage trade

Atomizer's picture

We are at the pivot point, in which the politicians & O'Bama administration will begin their doom campaign; in efforts to raise the debt ceiling and pass new economic recovery taxes.

Threeggg's picture

One thing I have learned since 2008 is never underestimate the power of the printing presses.


Never !

CPL's picture

Printing press?

They have a macro on the FED keyboard.  Press F3 for 100 billion dollars at your leisure.

buzzsaw99's picture

A real snewser week ahead. Summer doldrums setting in?

Arguably it was the encouraging production plans which accompanied Japanese IP...

Everything to do with production in Japan will look good when compared with March. Rule #1: Always set the bar low initially.

chump666's picture

Japan the biggest market manipulators and govt stats fudges (China a close second).  I just follow their stocks, market is saying Japan is FUBAR.  even if they print, oil inflation will kill them

GOSPLAN HERO's picture


Comrade President Obama has ordered higher production at state auto plants.

Obama praises workers' councils at state factories for adopting the Kiev Tractor Works' production model.


knowless's picture

dawn of the dead(78) streaming, sorry if thats illegal.

PaperBear's picture

Inflation sees silver goes up, deflation sees silver .... goes up.

And COMEX with see all of their 30MN of registered silver gone by the end of July.