Major economic headlines last week

Corporate earnings overshadowed economic data for most of last week in the States – after Facebook’s Uber Vater, Meta Platforms unsettled Wall Street with a tired quarterly report.

The social media giant crashed 26.4% overnight, wiping US$240bn off its market value. An etiolated Nasdaq fell into bed Thursday night, (US time) 3.75% lower. Its biggest bleeding in over a year.

But on cue, Friday night (sensible time) the US delivered another surprisingly muscular January jobs read, with non-farm payrolls up by almost 450k.

The participation rate beat expectations, underemployment actually fell and the overall US jobless rate of 4% (estimated 3.9%) is rock solid, impressive even.

US labor secretary Marty Walsh and the entire administration of President Joe Biden said, “America is getting back to work.”

And fair play. They’d be very aware last week the number of Americans Covid-19 has killed topped 900,000. The Johns Hopkins University people say the last 100k have come in under two months.

The PM: earnings season

Meanwhile, getting in under 4% unemployment is what our PM Scott Morrison would like so he can get re-elected.

And the PM isn’t the only one feeling more ballsy after some good, malleable jobs numbers. It was a blockbuster week from the RBA, where a dovish Wednesday address from governor Philip Lowe left a grateful nation reassured nobody really has to do anything yet.

In fact, last week attention began its agonised drift to electioneering. The government’s pandemic-performance, the state of the economy and of course the housing market are all key issues which suddenly look a little less toxic for Mr Morrison.

Totally plausible

“Interest rates could plausibly lift off later this year if the economy continues to outperform expectations,” Dr Lowe floated.

“But he repudiated markets pricing four rate hikes in 2022,” says Westpac macro strategist Tim Riddell.

Still. The All Ords ended the week 2.5% up. The S&P/ASX Emerging Companies XEC jumped, the S&PASX/200 rose by circa 1.5% last week off the back of the 3% Australia Day week retreat. It’s now about 5% below its last peak on the 4th of January.

Since then to January-end, the All Ords fell into a technical correction (down 10.2%) and our first since the near 40% destruction of February-March 2020 – which economic historians probably call the COVID-crash and billionaires call the best buying opportunity since March 30, 1867, when the United States bought Alaska from Russia for about $7m.

The economy this week

US inflation data is the event around which we will constellate.  On Thursday (silly time), the US consumer price index (CPI) is expected to edge up to yet another multi-decade peak; that’s going to be another slap in the face for the transitory inflation crowd.

The US 12-month CPI rate is forecast to have risen by 7.2% in January, up a few percentage points from December and economists are expecting the core rate to jump from 5.5% to 5.9% year-on-year.

Weaker-than-expected readings will be both a slap in the face to the non-transitory team and waved about as proof that inflation is/has/will peak.

Peak Aussie indicators 

Here at home, it’s Pick an Economic Indicator Week, with December retail spending, a bit of household spending, NAB’s business survey, the ANZ/Roy Morgan job ads and various measurements of consumer and business sentiment.

Economic calendar for this week

Monday

The Australian Bureau of Statistics (ABS) will release monthly and quarterly retail spending reads. Data shows that sales fell by 4.4 per cent in December, and we’ll get our first look at the Omicron economy.

 January data on job advertisements from ANZ – Job ads fell by 5.5% in December after an upwardly-revised gain of 9.9% in November.

Australian Industry Group’s (AIG) Australian Performance of Services Index edged up 2.0 points to 49.6 in November, from 47.6. Still a contraction, but at least a slower contraction.

Tuesday

Commonwealth Bank (CBA) January report on Household Spending Intentions (HSI).

National Australia Bank (NAB) releases its business survey for January.

ANZ and Roy Morgan weekly read on consumer sentiment. 

Wednesday

Westpac and the Melbourne Institute – February consumer sentiment – sentiment fell 2% to an 18-month low in January.

Thursday

More of the Australian Bureau of Statistics (ABS) – it’s monthly business turnover; weekly payroll jobs and wages; and small area building approvals data. The new business turnover numbers are a test dummy for the bureau’s experimental indicator which has been jerry-rigged out of some of the monthly Business Activity Statements. Should be worth watching. 

Friday

The Reserve Bank of Australia (RBA) Governor Dr Philip Lowe will appear before the House of Representatives Standing Committee on Economics. 

 

International calendar

 

US (NY Time)

Monday

US consumer credit data

Tuesday

Redbook chain store sales data

International trade (exports and imports)

Business Optimism index from the National Federation of Independent Business.

Economic Optimism index from Technometrica Market Intelligence and Investor’s Business Daily. 

Wednesday

Weekly mortgage applications are due from the Mortgage Bankers Association (MBA)

Thursday

US Consumer Price Index (CPI). In December the CPI rose 0.5% to hit a 40-year high. Economists polled by Bloomberg expect the headline CPI lifted 0.5% in the month, to be up 7.3% on the year.

US weekly data on claims for unemployment insurance (jobless claims).

The January budget statement is also released.

Friday

University of Michigan preliminary February data on consumer sentiment. Sentiment is currently at a decade low on Omicron fears and elevated inflation.

 

Asia (AEDT) / Europe (Paris time)

Monday

German industrial production monthly read after sliding 0.2% month on month in November of 2021.

China’s private sector Caixin services purchasing managers’ index (PMI) for January. Expected to slide from 53.1 to 50.5, so still expanding, but ever-so-slightly.

Also, the Caixin China General Composite PMI – which  rose to 53.0 in December from 51.2. An accelerated expansion, the fourth such month of growth in private sector activity and the strongest pace since July.

Tuesday

British Retail Consortium (BRC) Retail Sales. Forecast to come in at 5.6% after a hugely dissappointing December read of 0.6% (14.3% forecast!)

Address by ECB President Christine Lagarde. The ECB maintained key interest rates at record low levels in February 2022 and Lagarde has pledged to trim bond purchases this year, in the face of a record rise in inflation.

Wednesday

The Reserve Bank of India (RBI) interest rate decision. Expected to hold at 4% after the RBI held its benchmark rate steady at its December meeting maintaining an accommodative monetary policy stance “as long as necessary to support economic growth and keep inflation within the target.”

Thursday

China’s monthly credit growth and money supply indicators for January

Friday

UK gross domestic product (GDP) read – expected to be 6.5% by the end of the quarter, according to Trading Economics.

GDP in the UK grew by 8% from a year earlier in November 2021, accelerating from an upwardly revised 5.1% expansion in the previous month and beating market expectations of 7.5%.

 

ASX IPO calendar for this week:

According to the ASX, these companies will make their ASX debut this week.

 

Killi Resources Limited (ASX:KLI) – Mining exploration. Killi owns four major exploration projects in Western Australia and Queensland, including the Mt Rawdon West project situated adjacent to the +2 million-ounce Mt Rawdon Mine owed by Evolution Mining (ASX:EVN) focussing on gold and copper. Listing on the `10th,looking to raise $6m at $0.20 per share.

My Rewards International Limited (ASX:MRI)

Employee and consumer rewards, loyalty and engagement program provider. Raising $7m at $0.20.

Top End Energy (ASX:TEE)

Exploring for oil, gas and other associated product streams (including helium and hydrogen) – and aims to be a net zero emissions energy producer.

The company will hold a 100% interest in a granted hydrocarbon permit in Queensland.

WA1 Resources (ASX:WA1)

The spinout of private project generator Tali Resources will list with three WA exploration projects — the flagship ‘West Arunta’ project approximately 400km south of Halls Creek, plus ‘Madura’ (IOCG) and ‘Hidden Valley’ (nickel, copper, PGEs).

Iron oxide copper gold ore deposits (IOCG) — like BHP’s Olympic Dam mine or more recent Oak Dam discovery  — can be tremendously large, and simple-to-process concentrations of copper, gold and other elements like uranium.

Hidden Valley contains a number of potential intrusive bodies considered prospective for mafic-ultramafic intrusion-hosted Ni-Cu-PGE sulphides, à la Chalice Mining’s (ASX:CHN) Julimar.

IPO is targeting $6m at $0.20