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Trading Radar: Investors Have Prepared Themselves for the ECB to Act

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Economics, earnings reports, and market events for the week ahead.

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At the end of this past week, the general theme continued to be the re-rating of possible ECB action at its meeting next week in the form of a rate cut or a larger asset purchase program. Similarly, markets continued to generally ignore the situation in Ukraine unless the "nuclear option" was used on an economic level. One option is for the EU to ban all Russian citizens and corporations from the SWIFT Banking System, which effectively would mean that Russia would not be selling any natural gas to Europe. It obtains 30% of its gas from Russia. That would be very, very bad for Russia, but if it did end up happening there would be a large number of opportunities for US-based natural gas producers to quickly boost exports.

I could wax poetically about how important the second quarter Eurozone GDP is next week, or other economic reports, but the fact of the matter is that the only thing that matters is how fast and how large the ECB wants to do whatever it takes. Since Mario Draghi's speech last Friday at Jackson Hole, many investors have begun to re-price the expectations of full-blown QE from the central bank and a rate cut at the coming meeting next Thursday. A number of forecasters have called for the ECB to announce a sovereign bond purchase program at the meeting and most now think that it will cut all of its rates by 10bps. That would lower its deposit rates to -0.20% and main refinancing rate to 0.05%. Overnight rates in Europe are already at a fraction of a basis point expecting this move.

In the US, the government nonfarm payrolls report on Friday is the main event for the week. Many economists believe that if this report continues to show strength near the 240K average from the past six months it will cause the Fed to bring forward its normalization schedule to early 2015. The fact still remains that real wage growth is near zero and that will most likely keep the central bank on a more gradual pace of future tightening and end at a level below 3%.

There will be only a few earnings reports next week and US markets will be closed on Monday for the Labor Day holiday.

Monday, September 1

US Economics (Time Zone: EDT)
 
US markets closed for Labor Day holiday
11:00 Fed selling $1.75b-$2.25b Treasuries in 25 to 30-year range

Global Economics (Time Zone: GMT)

JPY Capital Spending, Company Profits
01:00 CNY Manufacturing PMI (Aug)
06:00 EUR German GDP (2Q final)
08:00 EUR Eurozone Manufacturing PMI (Aug final)
08:30 GBP Net Consumer Credit
08:30 GBP UK Manufacturing PMI
 
Earnings
 
No reports

Tuesday, September 2

US Economics (Time Zone: EDT)

10:00 ISM Manufacturing (Aug) - expected 57.0, prior 57.1
10:00 ISM Prices Paid - exp 59.0, prior 59.5
10:00 Construction Spending MoM (Jul) - exp 0.8%, prior -1.8%
11:00 Fed purchasing $1.5b-$2b notes in 10 to 20-year range
11:30 Treasury to sell $28b 3-month bills, $24b 6-month bills, $15b 11-day CMB

Global Economics (Time Zone: GMT)

01:30 AUD Building Approvals
04:30 AUD RBA Rate Decision
05:45 CHF GSP (2Q)
08:30 GBP UK Construction PMI
09:00 EUR Eurozone Producer Prices

Earnings

Before:
Conn's (CONN)

Wednesday, September 3

US Economics (Time Zone: EDT)

07:00 MBA Mortgage Purchase Index
09:45 ISM New York
10:00 Factory Orders (Jul) - expected 10.8%, prior 1.1%
5:00 Total Vehicle Sales (Aug) - expected16.60M, prior 16.40M
5:00 Domestic Vehicle Sales - exp 13.20M, prior 12.95M
11:00 Fed to buy $1.75b-$2.25b Treasuries in 25 to 30-year range
11:30 Treasury to sell 4-week bills

Global Economics (Time Zone: GMT)

RBA's Stevens speaks in Adelaide
01:00 CNY Non-manufacturing PMI (Aug)
01:30 AUD GDP (2Q)
01:35 JPY Japan Services PMI
01:45 CNY HSBC China Services PMI (Aug)
08:30 GBP UK Services PMI
09:00 EUR Eurozone Retail Sales MoM (Jul)
09:00 EUR Eurozone GDP (2Q prelim)
14:00 CAD Bank of Canada Rate Decision

Earnings

Before:
Toll Brothers (TOL)
 
After:
H&R Block (HRB)
PVH Corp (PVH)

Thursday, September 4

US Economics (Time Zone: EDT)
 
07:30 Challenger Job Cuts - prior 24.4%
08:15 ADP Private Payrolls (Aug) - expected 220K, prior 218K
08:30 Initial Jobless Claims - expected 300K, prior 298K
08:30 Continuing Claims - prior 2527K
10:00 ISM Services (Aug) - exp 57.5, prior 58.7
11:00 Fed to purchase $4.25b-$5.25b Treasuries in 8 to 10-year range
 
Fedspeak
 
12:30pm Mester (presumed hawk, voter) speaks in Pittsburgh
8:15pm Fisher (hawk, voter) speaks in Dallas
9:00pm Kocherlakota (dove, voter) speaks in Montana

Global Economics (Time Zone: GMT)

01:30 AUD Trade Balance and Retail Sales
06:00 EUR German Factory Orders
07:30 EUR German Construction PMI
11:00 GBP Bank of England Rate Decision
11:45 EUR ECB Rate Decision

Earnings

Before:
Joy Global (JOY)
Ciena (CIEN)
Mattress Firm (MFRM)
 
After:
Quiksilver (ZQK)
Finisar (FNSR)
El Pollo Loco (LOCO)

Friday, September 5
 
US Economics (Time Zone: EDT)

08:30 Nonfarm Payrolls (Aug) - expected 225K, prior 209K
08:30 Private Payrolls - exp 205K, prior 198K
08:30 Manufacturing Payrolls - exp 20K, prior 28K
08:30 Unemployment Rate - exp 6.1%, prior 6.2%
08:30 Average Hourly earnings YoY - exp 2.1%, prior 2.0%
08:30 Average Weekly Hours - exp 34.5, prior 34.5
 
Fedspeak
 
3:45pm Rosengren (moderate, nonvoter) speaks in Boston

Global Economics (Time Zone: GMT)

05:00 JPY Leading Index (Jul prelim)
06:00 EUR German Industrial Production
 
Earnings

No major reports scheduled


Twitter: @MichaelSedacca

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