Sunday, 29 September 2013

Trading Places - Excel Markets Week Review and Preview

Ralph Shell, Excel Analyst

Most of this past week, the market has been obsessed with a countdown for the commencement of Obamacare in conjunction with the need for a real resolution to fund the geometrically-growing US Government.  Fearful the government will shut down and the massive deficits will disappear, at least temporarily, equities and the USD have turned soft.

Excel Markets EQUITY : DRAWDOWN Demo Account ContestBut how often do government shut-downs really happen?  Does government spending ever decrease?  Hardly.  Do government employees ever take pay cuts?  Not really, they are reserved for the private sector.  This does not imply there will not be some meaningful money changing hands next week - there will be, but these concerns will likely prove temporary.

With no sign the easy money flow is about to end, those standing closest to the recipients of the $85B monthly stipend of Bernanke's QE money from the Fed will most likely continue on their present investment path.  This suggests that, looking forward to this coming week's data, the US Non-Farm Pay Roll may be the most significant.  It is expected the data will show 180K new jobs created in the report on Friday, up from 169K last month.

Chicago Federal Reserve Bank President Governor Evans, a voting member, is now hinting he thinks the Bernanke Taper may be delayed until the January 2014 Fed meeting.  And why not? After all, QE has been the most notable feature of Bernanke's Central Bank.   

Earlier on Tuesday, we get the US PMI ISM Manufacturing estimated to be 55.1 down from 55.7.  Then, on Thursday, we get the Initial US Jobless Claims - estimated to be 315K, up from 310 -, and the US PMI-ISM Non Manufacturing Composite 57 versus 58.6.

There are some meaningful reports that give us clues to the robustness of the Canadian Economy. On Monday, the GDP (M/M) is expected to recover to +0.5% from a -0.5% in the prior period, and Y/Y it is expected to be up 1.3%. On Friday, we get the CA Ivey PMI estimated to be 53.5 up from 51.

Monday will feature the Australian Retail Sales expected to be up 0.3 on a M/M basis compared to 0.1 in the prior prior period; said report, combined with the Chinese PMI for Manufacturing - 51.6 up from 51 - both of these influence the A$.  This will be followed the next day with an interest rate decision from the RBA.  No change is expected.

There will be various European Manufacturing and Employment reports next week from the larger European countries.  Our sources do not indicate the recovery is gaining momentum; however, we doubt ECB President Draghi will be negative at his Wednesday morning Press Conference.
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