Major economic headlines last week
That convincing impression of a hawk last week by the economic eagles at the US Federal Reserve has distracted, possibly even unnerved market sentiment. This despite a mega all-American midweek GDP read. Markets have been waiting for the next solid signpost, and they’ll get a few this week.
On Wednesday, Fed chair Jerome Powell, finally dropped the innuendo and cut straight to the endo: “(the bank) is of a mind to raise the federal funds rate.”
It’s been a good run, but decades high inflation will do that.
Since 2008-2009, The Fed has gone “Full QE” in 2010, again in 2012 and still hasn’t stopped this last since March 2020.
Last week the Board approved one sweet, final hit of bond purchases bringing the era of quantitative easing – printing money to buy bonds – to a hurried finale in March.
At home, the All-Ords fell by 3.0% over the last week outdoing the 2.9% slide of the week before. It’s now down 8.3% since its last toppy moment on the 4th of January.
But for that welcome furore of trading on Friday the index would’ve been short 10.2%. which does meet the technical “correction” requirements of a slide between 10% and 20%.
Falls over 20% and we’re technically “crashing.”
The economy this week
It’s going to be great week for fans of monetary policy.
Stateside, markets may have come to some kind of uneasy alliance with The Fed’s fab-five projected rate rises for 2022 – which makes the next iteration of nonfarm payrolls (Friday) a good determiner of whether the dollar still has some lithium in the battery.
London. The Bank of England is widely expected to raise rates. Geneva. The European Central Bank is probably a bet either way. Sydney. The Reserve Bank of Australia is likely to try and live up to its name and keep everything in reserve.
Excitingly, the RBA media team is back from a seven week Christmas silence – someone’s given someone a nudge because we’ve got three a-list events in one jam-packed week.
Come for the SOMP, stay for the IMPRO
The Board of G’s has its first ho-down for the year on Tuesday. The policy meet.
Governor Philip Lowe will deliver a speech on Wednesday day to the National Press Club, allowing Lowe to walk back anything that’s been incorrectly presented by the morning edition of the AFR. The week ends with the RBA’s February 2022 Statement on Monetary Policy (SOMP) rich with updated economic forecasts, imbued with a soothing syntax and possibly Q-ANON Easter eggs.
The Governor’s speech should be interesting and the press, already angered by the press club service, will be looking for an explanation for how the RBA inflation forecasts so abjectly missed the mark.
Economic calendar for this week
AUSTRALIA
MONDAY 31
January MI inflation gauge (last 2.8%). Material inflation pressures set to extend into 2022.
December private sector credit (last 0.6%, market estimate 0.9%). Previous result inflated by kick in business lending.
TUESDAY 1
RBA policy decision (last 0.10%, mkt est. – 0.10%). Rates to stay unchanged and shift in rhetoric and as well to Bond buying.
January CoreLogic home value index (mkt est. 0.6%). Growth moderating, more varied by city.
December housing finance, total (last 6.3%).
December retail sales (preliminary estimate) (last, 7.3% – mkt est -2.0%) Westpac says: Some give–back on 12.6% reopening surge through Oct–Nov).
WEDNESDAY 2
RBA Governor Lowe speaking – – – Annual “Year Ahead” speech, Press Club circa 12:30pm
THURSDAY 3
December dwelling approvals (last 3.6%, mkt est –1.0%).
December trade balance (last $9.4bn, mkt est – $9.9bn). Surplus to narrow as imports rise on reopenings
FRIDAY 4
RBA Statement on Monetary Policy (SOMP).
International calendar
US (NY Time)
MONDAY 31
January Chicago PMI
January Dallas Fed index
Fedspeak: Mary C. Daly President and CEO of the Federal Reserve Bank of San Francisco to fedspeak at a Reuters event
TUESDAY 1
Markit manufacturing PMI (last,55.0)
December construction spending (last, 0.4%)
January ISM manufacturing
December JOLTS job openings
WEDNESDAY 2
ADP employment change (last, 807k mkt est, 208k). Omicron has owned employment momentum.
THURSDAY 3
US Q4 productivity (last, 5.2% mkt est, 2.3%)
Initial jobless claims (last, 260k)
Jan Markit service PMI (last, 50.9)
FRIDAY 4
US January non–farm payrolls (last, 199k mkt est, 178k). Omicron v momentum again.
Jan unemployment rate (last 3.9% mkt says 3.9%). US employment looking pretty full
EUROPE/UK (London time)
MONDAY 31
EU Q4 GDP (last 2.2%, market estimate 0.4%) – Omicron restrictions to weigh on growth
TUESDAY 1
January EU Markit manufacturing PMI (last 59.0)
December EU unemployment rate (last 7.2%, mkt est. 7.2%)
UK December net mortgage lending last £3.7bn)
UK January Markit manufacturing PMI (last 56.9)
WEDNESDAY 2
January CPI (last 5.0%, mkt says 4.0%). Surging inflation? ECB says meh, temporary.
THURSDAY 3
EU January Markit services PMI (last 51.2)
ECB policy decision (last 0.0% mkt says 0.0%) Easy being an ECB boffin? Well, now they have to find a way up.
UK January Markit services PMI last 53.3)
BoE policy decision (last 0.25%, mkt est 0.50%. Expected to raise by 25bps.
FRIDAY 4
EU December retail sales (last 1.0%, mkt est –0.5%) Omicron squeezed at year end.
ASX IPO calendar for this week:
According to the ASX, these companies will make their ASX debut this week.
My Rewards International Limited (ASX:MRI)
Employee and consumer rewards, loyalty and engagement program provider. Raising $7m at $0.20.
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.
5E Advanced Materials (ASX:5EA)
5EA is set to become the new name and parent company of American Pacific Borates Limited (ASX:ABR) – with the company set to list the US via a Nasdaq Direct Listing in February.
All shares held by ABR shareholders will be transferred to 5EA – and ABR says it will be possible to transfer holdings from ASX CDIs to NASDAQ shares and vice versa.
The focus is still on the development of the Fort Cady Borate Project.
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