Bigwigs Galore to Calm the Markets This Week

Sunday, June 05, 2005

The coming week will bring an unusual high frequency of central banker's speeches, keeping central bank watchers very busy. The financial world is likely to revolve around Fed chairman Alan Greenspan this week again. On Monday Greenspan will take part in a public discussion with his fellow chairmen Jean-Claude Trichet (ECB), Toshiro Muto (BoJ) and Zhou Xiaochuan (PBoC) in Beijing. I guess all four will love to talk about the growth outlook and just about any other topic in order to avoid the currency issues burning under investors' fingers. But don't forget to check out the cluster of European financial and political bigwigs who have a week of market-calming ahead of them as well, now that the EU constitution has been buried by the people.
On Thursday Greenspan will answer questions from the congressional Joint Economic Committee in Washington. After last week's hi-ho from Fed Dallas president Fisher ("eight inning", posted here) and Fed governor Ed Gramlich, who countered he does not know at what inning the Fed stands now, market participants will look for further clues about the to-be-expected interest rate policy.
My guess is the Fed itself is looking for new clues since last Friday's employment report has not confirmed the Fed's view that the weakness in Q1 was a soft patch in the growth picture. Oil's rise above 55 dollars a barrel won't make it any easier for the skipper of the world's biggest economy.
Maybe these indicators will help the FOMC:
Tuesday: Consumer credit April, consensus 6.5 to 7.2 billion dollars, previous 5.6.
Wednesday: Wholesale inventories, consensus +0.5 %, previous 0.4.
Thursday: Jobless claims, consensus 333,000, previous 350,000.
Friday: Trade deficit, consensus 57.3 to 58 billion dollars, previous 55.0.
Import prices, consensus minus 0.2 %, previous plus 0.8 %.
In Europe the meeting of the Euro zone finance ministers on Monday will probably result in a joint statement saying "all is fine" though nothing is. The same can be expected from Tuesday's meeting of the EU finance and economy ministers on Tuesday.
Calm the markets, calm the markets, calm...
The need to calm the markets will also be the red thread at a conference of the German Bundesbank on Wednesday on the topic "The IMF in a changing world", attended by IMF head Rodrigo Rato. Watch out for some substance in ECB chief economist Otmar Issing's speech "The Euro and the ECB - experiences and challenges" on the same day. It should show up on the newswires after ECB head Jean-Claude Trichet delivers a speech at a conference of the central bank of Singapore.
As if that would not be enough, Issing will talk about "Europe and the Lisbon goals" on Thursday in Munich. The Lisbon agreement is the precursor to the now stalled EU constitution.
On Thursday the G7/G8 finance ministers will gather in London for a two-day meeting. Expect some statements that will note the necessity to straighten out global imbalances, discussed in this earlier post. Pure speculation is my thought that they will also publicly address the recent shifts in the currency markets as the strong dollar only benefits dollar debt holders but not purchasers of dollar priced commodities and energy.
The strength of the European economy can be taken from the following indicator releases.
Monday will bring German factory orders in April. Thursday will bring German May inflation and German foreign trade data from April. Also due on Thursday is the ECB's monthly report. On Friday Germany will publish April producer prices.
Overall I assume central bankers will go out of their way to present the globe as still being in an equilibrium although the worsening economic growth outlook and the growing indebtedness of consumers in all major western economies tells otherwise.
NOTE: If you want to read more about high frequency media star Alan Greenspan, follow this link.
SPOTTED IN BLOGOSPHERE: A Fistful Of Euros stays on top of the debate on the future of the Euro.
New Economist has travelled blogosphere for yet more interesting posts on the EU/Euro crisis.
Stumbling an Mumbling points to a good all-in-one site on economists.
Brad DeLong shows us that German engineering is still atop of the world.
Calculated Risk sums up Robert Shiller's ("Irrational Exuberance") opinion on the housing bubble.
Completely OT, but nice reading is my daughter's blog about setting up a tent without parental help (in German.)


Wikinvest Wire