The Murray inquiry is out and will likely provide a welcome distraction for Treasurer Joe Hockey this week before the focus turns back on him and the Budget with the release of the MYEFO next week, which is likely to confirm a severe deterioration in the governments financial position.
Murray suggested a number of sweeping changes, including increasing bank capital levels in order to ensure their strength is “unquestionable” by foreign investors. Murray also suggested independent directors for super funds, more competition in super to drive down fees, and the banning of leverage in self-managed super funds.
You can read the market response here.
While there will be much discussion, and many column inches spent on Murray, on markets the reverberations from the huge 321,000 print of US non-farm patrols for November, released Friday, will see stocks bid once more as US growth accelerates. But the chat now will be when is the Fed raising rates. Could it even be Q1 2015?
Locally there is still a bevvy of important data to get through this week in order to gauge the true strength of the economy and whether, or not, the RBA will cut rates in February and March, as Westpac’s Bill Evans believes.
Most important is the NAB Business Survey on Tuesday, which is the single best economic indicator in the nation. After last month’s surge in business conditions we’re all waiting to see if it was a rogue number or a sign that recent worries about growth are misplaced.
Wednesday brings Westpac’s consumer sentiment data. With consumers steadfastly holding sentiment below the long-run average, the gap between the hoped for economic and consumer lead transition in the economy and current weakness seems unlikely to be resolved.
Thursday is also huge in Australia with the release of the unemployment data for November, if only to see how the ABS fares in the reality stakes.
Offshore Japanese GDP, or at least the second read, will be out Monday and an upward revison has to be on the cards. Wednesdays sees the release of Chinese PPI and CPI.
Otherwise it is a week of secondary offshore data, with market price action, moves in the US dollar, stocks and expectations about the Fed’s interest rate tightening cycle vis a vis the strength of the economic recovery playing out across the week.