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Friday 05th of December 2008
July 14, 2008

This week’s Economic data unlikely to cheer markets


by Brian Turner
This week's Economic data unlikely to cheer markets

A raft of economic data and company reports are due out this week, and unlikely to cheer markets already reeling from the collapse of the Indymac bank, and the Fed’s emergency support for Freddie Mac and Fannie Mae.

Despite brief optimism this Monday morning, markets are turning bearish again, and reports over the next few days are unlikely to offer bull traders much hope.

Economic data

US economic data is likely to paint a picture of continued slowdown, reduced consumer spending (adjusting for the recent tax credit), rising inflation risk, and a continued downturn in the property market.

The following reports are due this week:

July 15th:

  • Producer price index
  • Core PPI
  • Retail sales
  • Retail sales ex-autos
  • Empire state index
  • Inventories

July 16th:

  • Consumer price index
  • Core CPI
  • Industrial production
  • Home builders’ index
  • Jobless claims
  • Housing starts
  • Philly Fed

Investment Banks

In addition, a string of investment banks are due to produce interim reports this week, which are likely to show continued substantial losses:

  • Citigroup due to post second quarter results, and expected to post continued write downs to the tune of $3.7 billion.
  • JPMorgan Chase & is expected to post a profit, but down 55% on the previous quarter.
  • Merrill Lynch is expected to post a further loss of around $1.5 billion for the quarter.

Analysts and government regulators remain concerned that major banks are still deferring massive losses through SIV’s (Structured Investment Vehicles), which are being kept “off balance”, ie, not reported in the quarterly accounts - yet could bring with them massive liabilities.

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