More of the same this week as last week and the week before – China’s economy, central bankers, earnings and production reports.
Apart from China, Fed Chairman Ben Bernanke is expected to again be clarifying policy, US earnings reports start appearing in volume, while in Australia attention will be on the Reserve Bank’s board meeting minutes from a fortnight ago and production reports from leading mining companies.
China will dominate today – with the second quarter GDP report and important industrial production, retail sales and urban investment figures for June and the first six months of the year.
In Australia, the minutes of the Reserve Bank of Australia’s July board meeting will closely watched by investors and business for any more clues (other than what was said in the post-meeting statement and last week’s speech by Governor Glenn Stevens) as to the future direction of interest rates.
No doubt ‘rate cut looms’ types of stories will be written after the minutes’ release tomorrow morning, especially with the weak jobs report for June in mind.
But the bank will want to wait until August when it will have details of the second quarter inflation report, due out next week.
This week’s economic data including lending finance and car sales won’t change the RBA’s thinking.
The lending data is out today from the Australian Bureau of Statistics and car sales as well.
Wednesday also sees first quarter building activity data released by the Bureau of Statistics.
On the corporate front dual production updates from the major miners – BHP Billiton and Rio Tinto – will be the major news for the week, especially their comments on cost cutting and the outlook for commodity prices (particularly for iron ore which traded around $US125 a tonne on Friday).
In the case of BHP it is the 4th quarter and full year production data which will provide the basis for the flow of 2012-13 profit estimates (The company reports in mid-August).
It releases its production report on Wednesday.
In the case of Rio Tinto it is also the second quarter and first half figures (out Tuesday) that will give analysts the basis new profit forecasts.
Other resource companies releasing production reports this week include Woodside Petroleum and Santos.
Both release second-quarter sales and production updates on Thursday.
Apart from China, the week will see offshore news dominated by the usual half yearly Congressional (House of Representatives and Senate) appearances in Washington by Fed Chairman, Ben Bernanke.
After the Fed minutes last week suggested there was support for the current round of quantitative easing continuing, Mr Bernanke clarified that by saying the central bank would keep its current highly accommodative policy in place for a long time.
Markets kicked higher on that news which completely misunderstood what the Fed chairman was saying – he didn’t rule out a start to winding back the current $US85 billion a month of spending by the Fed later this year.
It can start cutting and the Fed will still be running a highly accommodative monetary policy.
The Fed can end the spending next year and still be keeping a highly accommodative monetary policy by leaving interest rates at the current record lows of 0%- 0.25%.
This week Mr Bernanke will no doubt try to make sure markets understand this point, but sugar-happy investors might not like to hear the news.
It’s also a big week in the US for key economic data.
Retail sales, consumer prices and housing starts for June will be out this week and will give us a good guide as to how US consumers are travelling and the housing sector – both of which are the main drivers in the slow recovery inn the US economy at the moment.
Also out midweek are business inventories for May, consumer prices for June and industrial production figures for the same month.
Thursday housing starts and building approvals for June and the confidence index for the US housing sector.
On Friday, the US Federal Reserve will release its latest Beige Book which is a collection of economic anecdotes and commentary from all 12 Fed reporting districts across the country.
It will have been prepared for the next Fed meeting on July 30, 31.
The US second quarter reporting season picks up this week with around 70 of the Standard & Poor’s Index’s 500 companies reporting results.
Giants such as General Electric, Verizon, Johnson & Johnson, UnitedHealth, Microsoft, Intel, Goole and IBM are due to deliver reports.
And some of the country’s major banks report as well after Well Fargo and JPMorgan Chase produced so-so results on Friday night.
Quarterly reports this week will come from banks such as Bank of America, Citigroup, Goldman Sachs and Morgan Stanley.
US analysts reckon the banks and other financials could be among the stand out reporters in what is looking like a weak reporting season (along with home builders).
