A big week for the local market and investors lies ahead of us – not from what happens offshore (and yes, the Fed’s post meeting statement early Thursday morning and US market reaction will be vital, no doubt).

The US Federal Reserve holds the key to the health of financial markets this week – although the full year reports from three of our four big banks will have a major impact here in Australia late in the week.

Global share markets rose on Friday after strong corporate results and reduced concerns over the possible spread of Ebola in America boosted Wall Street.

As expected, stumbling UK retailing giant, Tesco, produced some distressing interim figures overnight Thursday as a sort of first instalment of what is going to be a drawn out saga as the world’s third biggest retailer struggles to remain relevant, and even in business.

Some analysts reckon giant consumer products companies have gone ex-growth and are at best annuities.

It was a case of the proverbial good news/bad news in the latest Chinese economic data for the September quarter and the month of September.

Good news for the banks and the only growth business they currently have – home lending. The Reserve Bank has ruled out any return to the “heavy regulation” of housing loans we saw decades ago as it and other regulators discuss changes to the rules governing home lending.

The great plunge in iron ore prices is starting to inflict a growing trail of damage across the sector.

So where to for financial markets after last week’s surge in volatility and fear?

Inflation figures out Wednesday won’t have any impact on thinking inside the Reserve Bank on interest rates, except that cost pressures remain under control.

There’s another big week ahead of us with inflation in Australia and the US, GDP in China and the UK and the third quarter earnings season in full swing – not to mention the febrile state of markets.

This is the week when deflation reared its ugly head and started reminding investors of the dangers it can pose to economic stability. At times it sounds esoteric, but as the experiences of the 1930’s and of Japan in the past 20 years show, deflation makes life tough for consumers, companies, governments by increasing the cost of debt and strangling economic activity.

Markets around the world were battered overnight by a surge in volatility not seen since the days of late 2008 after Lehman Brothers collapsed, triggering the GFC.

The share and currency markets yesterday ignored a blunt warning of a looming, possibly ‘violent‘ crash from one of the most senior executives at the Reserve Bank yesterday.

It was ‘a flash in the pan’ according to the National Australia Bank in its monthly survey of business conditions and confidence yesterday as it revealed business conditions and confidence both fell in September.

China’s official statistics continue to hold a unique ability to surprise on the upside.