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Monday, August 4, 2008

Economic calendar for week 4th - 8th August 2008.

BetOnMarkets Weekly Briefing
Contents This Week:
Economic calendar for week 4th - 8th August 2008.
Commentary: The week ahead.
Economic Calendar for week 4th - 8th August 2008

PLEASE NOTE - All times GMT not BST. BST is +1 Hr.

Monday Aug 4th:

EU - 08:30 - Sentix Investor Confidence.
UK - 08:30 - Construction PMI.
EU - 09.00 - PPI M/M.
US - 11.30 - Challenger Job Cuts Y/Y.
US - 12.30 - Core PCE Price Index M/M.
US - 12.30 - Personal Spending M/M.
US - 12.30 - Personal Income M/M.
US - 14.00 - Factory Orders M/M.

Tuesday August 5th:

UK - Tentative - Halifax HPI M/M.
EU - 08:00 - Services PMI.
UK - 08:30 - Manufacturing Production M/M.
UK - 08:30 - Industrial Production M/M.
UK - 08:30 - Services PMI.
EU - 09:00 - Retail Sales M/M.
US - 14:00 - ISM Non-Manufacturing Composite.
US - 18:15 - FOMC Statement.
US - 18:15 - Federal Funds Rate.
US - 23:01 - Nationwide Consumer Confidence.
US - 23:01 - NIESR GDP Estimate.

Wednesday August 6th:

UK - 09:30 - BRC Shop Price Index Y/Y.
GE - 10:00 - Factory Orders M/M.
US - 14:35 - Crude Oil Inventories.

Thursday August 7th:

GE - 06:00 - Trade Balance.
FR - 06:45 - Trade Balance.
GE - 10:00 - Industrial Production M/M.
UK - 11:00 - Official Bank Rate.
UK - Tentative - Advance GDP Price Index Q/Q.
EU - 12:30 - ECB Press Conference.
US - 12:30 - Unemployment Claims.
US - 14:00 - Pending Home Sales M/M.
US - 14:35 - Natural Gas Storage.
US - 19:00 - Consumer Credit M/M.

Friday August 8th:

FR - 06:45 - French Government Budget Balance.
US - 12:30 - Prelim Nonfarm Productivity Q/Q.
US - 12:30 - Prelim Unit Labor Costs Q/Q.
US - 14:00 - Wholesale Inventories M/M.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany

The week ahead.

As another volatile trading week draws to a close, it is interesting to note that almost no major stock market made any traction in either direction over the last 5 trading days. The Dow swung over 450 points from high to low and the FTSE 200 points, yet both markets closed virtually flat for the week.
It was a week of dire earnings figures with UK banks posting huge year on year profit reductions. Lloyds TSBs pre tax profits fell 70% while HBOS saw returns drop by an almost identical figure. In what will be their last report as in independent company, Alliance & Leicesters profits evaporated by an incredible 99%. In the US, Merrill Lynch was punished heavily for releasing details of a write down announcement less than a fortnight after their earnings figures. It wasnt just the banks feeling the pinch, British Airways reported an 88% slump in profits and BT saw its shares fall to their lowest level for five years.

On a positive side stocks soared on Tuesday and Wednesday, as oil fell further towards $120 on speculation that a slowing global economy will check demand. It was to be further bad news for hedge funds, who recently endured their worse month for many years, as the leveraged oil trades unwound with falling prices. Stalling oil prices were also not helping BP, as it pulled back further from previous highs. The headline results were impressive, but a significant proportion of those profits come from their Russian joint venture, which looks like it will be torn apart over the coming months.

Elsewhere the US house price collapse continues to accelerate. The S&P/Case-Schiller Index shows annual declines in prices of existing single family homes of 15.8%. With UK politicians discussing plans to help out mortgage lenders, they would be well served to use the US housing market as an advanced proxy of what could happen in the UK.

Initial reactions to Fridays US Nonfarm payrolls were positive as the headline figures fell less than expected. However, on close inspection, the figures still make grim reading. The US unemployment rate increased to 5.7%, which was 0.1% above expectations, and since December 2007 463,000 jobs have been lost. Although the jobs report was the Friday's big story, GMs earnings announcements was a big drag on US and by consequence, UK indices. General Motors announced a $15.5 billion loss, which when you consider GM has a market cap of just $6.3 billion, the loss equates to around 2.5 times the net worth of the company.

Next week is unlikely to bring an end to the recent volatility with some major top tier economic announcements due. On Tuesday morning we have UK manufacturing data and services PMI, followed by US ISM non-manufacturing composite early in the afternoon. On Tuesday evening, we have the big one, the US interest statement. Although a no change is largely expected, as ever it is expectations for the future that will excite. It is Europes turn on Thursday, with the release of the MPC and ECB statements. Both are again expected to be no change, but the statements and overall timbre will be analysed and re-analysed with regard to future expectations.

Markets have been working themselves out of oversold territory and now it is crunch time. The recovery since the lows of July, could be the bulls last rally for the short term, unless any gains can actually be held over the next week or so. What has been impressive about the last two or three weeks is the bulls ability to rally markets in the face of dark news flows. Now the rally has stalled, there may not be enough momentum left to withstand further bleak economic headlines.

Next week has the potential to be another volatile week, especially with so many top tier economic announcements due. A double touch trade returns a profit if both pre determined levels are touched within the time frame specified. A double touch trade on the FTSE 100 predicting that the 5450 and 5100 levels will be hit over the next 51 days could return 140%.