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Dramatic data days ahead

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by Peter Switzer

The correction of the stock market is now re-correcting — let’s call it a rally — with the Dow Jones up 5.28 per cent last week. However, while we had a good week, up 3.72 per cent, it was not a great week.

Though begging bulls can’t be choosers.

Fortunately, there seems to be a sentiment shift happening but it will have to be reinforced by better than expected US corporate earnings results, which kick off on Monday, US time.

At the same time we have to have Europe not delivering any left-field debt or bank default concerns. If we could pull off this double play, then we just might be able to build a sustainable rally.

The week ahead in the US

The week ahead will be a big show and tell for the Yanks.

On Monday, the Fed boss Ben Bernanke speaks and this always catches the media’s attention, and of course Alcoa reports.

On Tuesday, the latest small business optimism report and earnings reports from Intel and Yum are released.

Wednesday brings retail sales figures, business inventories and the most recent Fed minutes, which gives more insights from the US central bank on the US economy and interest rates, which look set to be near zero for most of this year and into next!

Thursday, there’s business inflation data, the Empire State survey, industrial production, the Philly Fed survey and earnings from JPMorgan, Novartis and Google.

And finally on Friday, there’s consumer inflation, consumer sentiment and then a doozey of a reporting day with earnings from Bank of America, Citigroup and GE.

I think this first week with its combination of economic revelations and corporate earnings as well as outlook statements will either make or break this fledgling rally.

The week ahead in Australia

Locally, this week we get housing finance for May, credit card lending, the June NAB business survey, lending finance for May, the important consumer confidence for July and finally June new car sales.

These indicators will help form the picture of what the Reserve Bank board will look at in its next interest rate board meeting in August. While just about every indicator says the economy is not growing strongly or is mixed, the labour force data says another interest rate rise would not hurt job creation, which seems weird to most economists.

Look to inflation data

The inflation data out later in July could seal the fate of those Aussies praying for no more interest rate rises this year and that includes mortgagees as well as many small business owners.

Of course, if the US corporate season disappoints big time, the stock market would sell off and rate rises would be put on hold and could even lead to rate cuts. However, such a scenario could KO your business or take away your job.

You can see why economics is often called the dismal science.

For advice you can trust, contact Switzer Financial Services.

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Published on: Monday, July 12, 2010