The US Federal Reserve’s two day meeting this week dominates all markets around the world.
But in Australia there’s a different story. While attention will again be on the Reserve Bank’s monthly board meeting minutes tomorrow, equity investors and others in the market will be focused on the run up to the shoot out at the Westfield corral on Friday morning in Sydney.
That’s when the securityholders in Westfield Retail Trust (WRT) again meet to vote on the controversial Westfield Group (WDC) restructure deal that saw a similar meeting in late May abandoned when it looked as though the proposal would be defeated.
The restructure as originally proposed would see Westfield Group’s Australian and New Zealand shopping centres and related businesses separated from its international ones, and combined with Westfield Retail Trust to form a new internally managed Australian based retail property group, Scentre Group.
Westfield Group would be renamed Westfield Corporation, and own an internally managed portfolio of shopping centres in the US, the UK and Europe.
Westfield Retail Trust would own all the centres in Australasia, but would have higher debt, leverage and a higher interest bill, which is the major point of contention for investors opposed to the re-arrangement.
Proxies for Friday’s meeting close on Wednesday at 10 am. The management and boards of both Westfield meetings will know that day how the proxies have been voted.
That’s why they should really be disclosed as soon as possible (to inform the market), as Nexus Energy (NXS) did ahead of its special meeting late week which saw the takeover bid from Kerry Stokes’ Seven Group Holdings (SVW) rejected.
For the May 29 meeting, shares voted in favour failed to reach the required 75%, according to details of the proxies voted given to the meeting.
That put the deal in doubt, and knowledge of that vote saw Frank Lowy warn at the Westfield Group meeting, held earlier that day, that a new company would be set up if Westfield Trust securityholders did not vote in favour of the restructure, part of which required Westfield Retail to buy back the management rights from Westfield Group and take on billions of dollars in new debt.
Westfield Retail’s board have appealed to securityholders to support the deal, but some big investors who opposed the original deal, remain very much opposed.
Judging by the comments at and since the meetings in late May, the issue is become highly emotional and it wouldn’t surprise to see more sniping from both sides of the argument over the next four days.
Elsewhere in Australia economic data is light on this week – car sales for May tomorrow from the Bureau of Statistics which also releases more detailed labour force data on Thursday for May.
As well the RBA’s new Assistant Governor Christopher Kent makes his first speech to the Labour Market Developments conference later today.
And the Reserve Bank’s latest Bulletin is out on Thursday.
NSW produces its 2014-15 budget tomorrow with higher spending on hospitals and transport expected to be confirmed.
And shareholders in Woolworths Holdings are expected to approve their company’s $2.1 billion bid for David Jones (DJS) at a meeting tomorrow, along with a $1 billion rights issue to help fund the takeover offer.
In the US the main focus will be on the Fed’s post meeting statements and forecast, plus press conference after the two-day meeting which wraps up early Thursday, our time.
The meeting is expected to continue to taper the monthly asset purchases by another $US10 billion, reducing them to $US35 billion a month.
The statement will note the better economic data of late and the economy’s rebound from the winter slowdown.
However, most interest will be on the Fed’s new quarterly economic projections and chair, Janet Yellen’s post meeting press conference.
The AMP’s chief economist, Dr Shane Oliver says the new economic projections "may be seen as confusing as they are likely to show downwards revisions to growth and unemployment rate forecasts but an upward revision to inflation forecasts".
He says as well, “Some Fed officials (may) bring forward their timing for the first rate hike and some reducing their projected long run level for the Fed Funds rate.
"However, Janet Yellen is likely to reiterate that the Fed has a way to go yet to meeting its unemployment and inflation objectives and thus that a considerable time is likely to lapse between the end of quantitative easing and the start of rate hikes," according to Dr Oliver.
"My best guess for the first rate hike remains mid next year, but this doesn’t mean financial markets won’t start to worry about it earlier," he added.
Elsewhere in the US there’s two regional manufacturing surveys (tonight and Thursday night, our time), May industrial production from the Fed (also tonight, our time) and further evidence housing indicators are picking up again with a survey of home builders’ conditions, housing starts and permits out tonight and tomorrow night.
US CPI inflation for May is out tomorrow night as well.
The final S&P 500 company reports its first quarter figures this week and that’s the Kroger supermarket chain which releases on Thursday.
As well several companies with April balance dates release this week including the freight giant Fed Ex, the tech heavyweight Oracle and the tech products group Adobe.
In Europe, final inflation figures for the Eurozone are out tonight, our time.
Inflation figures for the UK are out tomorrow night, our time, with retail sales data released on Thursday.
Trade data for Italy is also released tomorrow.
Current account data for the eurozone is out on Friday.
In Asia, the Bank of Japan issues its latest monthly report later today. The bank last week maintained its current easing stance.
On Wednesday there is Japan’s May trade data, along with China May home prices which will be closely watched for further signs the slide in the property sector is accelerating (home sales are down 10% in the five months to May).
