AUSTRALIAN DIARY: Everything You Need To Know About The Week Ahead

Getty/Michael Steele

Michael Cheika has his streak. One from one in the European tour on the Test level.

Two from two in Europe.

We talk about the good kicker being the game-changer in a game of rugby. Maybe we should start looking at how influential the central bankers are in the equations of various economies and their currencies.

Worth asking, if you’re being smart about the week ahead.

Either way, here we go: stocks in the US continued their streak rallying for the 3rd week in a row.

Key to the strength of the rally remains free money and quantitative easing.

This week’s move by the ECB to join the BoJ in using its balance sheet to increase perceptions of inflation and so boost spending has the natural corollary of also boosting risk appetite in stock markets.

But while stocks in the US made new all-time highs bond traders don’t see the economic consequences of free money as greater global aggregate demand otherwise US 10’s would be higher than 2.3% and 10 year Bunds would not still be still be sitting at 0.78% – near all-time lows.

It all sets up for another big week for local markets with the Aussie recovering off 4-year lows, iron ore up a little and even gold and copper off their recent lows.

Risk seeking because of quantitative easing is very different to the animal spirits Glenn Stevens and central bankers around the world are looking for but it is fuel for the fire of the global equity market rally.

But is it enough for the Australian economy?

In Australia we have this important political question: can you make business decisions?

The government isn’t able to promise you anything. They can’t look you straight in the eye and say yes.

After a poor week of AiG data which suggests that the economy could have already passed its sweet spot the release of the NAB’s Monthly business survey takes on more importance than usual. It is a window into the conditions, confidence and intentions of Australian business and it’s out at 11.30am on Tuesday.

You cannot read this without understanding that Joe Hockey’s position as Treasurer has been a significant point of discussion in political circles lately. There is NO indication that Hockey might be deposed because the G20 is coming up and to depose a Treasurer is a massive deal. Won’t happen.

Data-wise, the week kicks off with Housing Finance in Australia on Monday and crucial Chinese CPI and new loans data. Equally important will be the release of the Fed’s new labour market conditions index.

Tuesday is a holiday in Europe and the US for Veterens, Armistice and Remberence day. In Australia, though, we get the house price index and NAB survey while Japanese consumer confidence and eco watchers survey is out.

On Wednesday traders of the Aussie dollar will be paying attention to RBNZ Governor Wheelers speech and what he says about the Kiwi and what it might do to the Aussie dollar. Westpac consumer confidence is out along with Wage prices. In the UK earnings and unemployment data is out along with the very important BoE inflation report.

Thursday the big number is Chinese retail sales and industrial production while German CPI is vitally important along with a raft of other European CPI.

Rounding out the week is German GDP along with EU CPI and GDP.

Last week was about the US this week, China and Europe take the lead.

And of course we have Jacqui Lambie and the PUP party shenanigans to keep us going. Our tip: expect a few more billion ($20 billion) in Budget measures to be passed by year’s end.

Saturday the Wallabies play France – go boys, let’s make Europe 3 from 3 and go for the Grand Slam.

As usual here is Westpac’s excellent Calendar of all the key events for markets. And @JordanEliseo gets a special mention this week, having picked the Non-Farm Payrolls in the US closer than any of the rest of us.

Looking forward to seeing you guys in the week ahead.

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