Good Morning,
Trust that you’ve had a nice weekend.
As we approach May, a lot of questions are being asked on whether global central bank intervention is actually, effective….
Our comments were even echoed on Friday in the India Times, stating that recent measures have simply been ineffective to stimulate growth…
Even the European Central Bank (ECB) agrees with us…..
Mersch, in a speech to the Ambrosetti Workshop in Cernobbio Italy, on Saturday, reviewed the various policy instruments that the ECB and other central banks have used to aid economic recovery.
Central banks’ extraordinary measures to spur growth may eventually show diminishing returns while a key part of the European Central Bank’s quantitative easing program carries a “certain risk” that has been mitigated, ECB Executive Board member Yves Mersch said.
So what does this mean?
It means that we really need to see both Earnings and Margin Expansion to generate higher equity prices…
In this environment, it won’t be easy….
So what can we expect this week?
Focus in the US will be on Retail Sales (Wed), CPI (Thursday) and Consumer Sentiment (Friday)…
Also US earnings ……. We will certainly be keeping a close eye here…
In Oz, the banks will once again be in focus, following a turbulent week last week and we will be closely watching the JPY, as any strength, will certainly impact our terms of trade with Japan (our 2nd largest trading partner)…
As we also approach the May budget, we would expect further commentary in relation to fiscal policy impacting the economy..
What fiscal policy?
So… What's on today?
Local data: Housing Finance Feb at 11.30am
NAB expects a rise of nearly 2% (Forecast +1.8% m/m) a bounce back from the prior month. The data is likely to continue to show that the composition of lending has shifted - as desired by APRA - with slower growth in lending for investor housing and stronger growth for owner-occupied lending growth.
Overseas data: China inflation (March); Taiwan trade balance (March); Japan machine orders (Feb.); Italy industrial production (Feb.).
Overseas earnings: Alcoa kicks off US second quarter results
The SPI up 22 points this morning.
By Niv Dagan
