So all eyes will be on the markets here and especially in the US tonight after the dramatic and controversial downgrade of America’s credit rating on Saturday, our time.
It will take attention away from the important July economic data from China (and a possibly higher inflation rate), corporate earnings in Australia, Asia, Europe and the US, as well as the July Australian jobs report on Thursday.
That move will dominate everything, especially with the US Federal Reserve meeting tomorrow night our time.
The decision was taken against the strongest opposition from the Obama administration.
Now the Federal Reserve monetary policy meeting will have the chance to discuss it and comment on it in the post-meeting statement to be issued early Wednesday morning, our time.
The Fed issued a statement Saturday, our time, saying the downgrade would not have any impact on the treatment of US debt.
Along with the weak recent economic data (including the marginally solid July jobs figures) and the Fed’s belief that the economy is slowing, the wording of the post-meeting statement will assume even greater importance this time.
The AMP’s chief economist Dr Shane Oliver says the market will be looking for a sign if "the Fed is now seriously considering another round of quantitative easing (QE3) in view of the faltering US economy".
"We think it’s only a matter of time before we see QE3 but given the higher inflation starting point now compared to a year ago it may still be a few months away.
"On the data front in the US, expect July retail sales due Friday to rise 0.2% and the June trade balance due Thursday to record a slight improvement. The NFIB small business optimism survey and consumer sentiment data are likely to remain soft," Dr Oliver wrote on Friday.
Dr Oliver said China’s economic indicators for July are likely to show a further slight rise in inflation to 6.5% (from 6.4% in June) reflecting base effects and the earlier rise in pork prices, a further slowing in industrial production but continued strength in fixed asset investment and retail sales.
"With economic growth and credit growth having cooled and pork prices having softened there is a good chance that the July figures will mark the peak in inflation for this cycle, which should in turn help clear the way for a more relaxed monetary policy stance," he wrote.
Back home and the focus in Australia will be on the first heavy week of corporate earnings and the July labour market data.
Some economists are wondering if July will bring another jobs shock, like April and May did (and June for that matter, with the big rise).
Forecasts range around few if any new jobs, and the unemployment rate edging back up to 5% from 4.9%.
The July ANZ job ads survey, due out later today, is likely to show a fall after a strong rise in June.
July housing finance data is out tomorrow and forecasts a range from flat to 2% growth.
The June half profit reporting season will start to ramp up today with companies such as JB HiFi (today), Cochlear (tomorrow), the Commonwealth Bank (Wednesday) and Telstra (Thursday) due to report.
JB Hi-Fi will be the big test for the retail sector today: if it has a relatively strong sales and profit performance, it could go a long way to settling some of the recent angst.
A weak outcome and the sell-off in retail sales will return, especially if investors are jumpy after the US credit rating downgrade.
Still in retailing, David Jones is down to confirm its downgraded 4th quarter and 2012 sales and profit forecasts later this week.
Dr Oliver wrote on Friday that he is expecting the reporting season "will be pretty tough with softening household demand, rising unit labour costs and the strong Australian dollar all expected to have constrained overall earnings per share growth to around 10% over the last financial year, but with the exception of the resources sector".
News Corp reports on Thursday morning, our time. Singapore Telecom (Optus) reports midweek.
The Adelaide and Bendigo Bank reports this morning and with the National Australia Bank releasing its third quarter update tomorrow we will have a solid context for assessment of the CBA full year profit announcement on Wednesday morning. Stockland and Mount Gibson are also down to report.
Telstra’s result will be lower on Thursday, but all investors will want to know if the 28c a share dividend will continue for another year.
Tomorrow sees not only the NAB update, but profits from Cochlear, Bradken, Challenger Diversified Property Group and Oakton. Interim results are due from Coca-Cola Amatil.
Besides the CBA on Wednesday, results will also come from companies including Computershare, Domino’s Pizza Enterprises, Flexigroup, Stockland and Talent2 International.
Telstra dominates Thursday, along with News Corp early in the morning. Other results include Alumina and Teranga Gold Corporation and Aquarius Platinum.
Pharmaxis is due to release full year figures on Friday.
Australian company meetings will include EGMs and AGMs: Quest Petroleum NL, Amcom Telecommunications, Great Western Exploration, Perth – Scandinavian Resources, Consolidated Tin Mines,
Eco Quest Ltd, Latin Resources Jupiter
