Weekly Preview: 5 Things To Watch Next Week

 |  Includes: DIA, IVV, QQQ, SPY, VTI
by: Cliff Wachtel

Part 2: Coming Week Market Movers

1. Market reaction to IMF expanded war chest for EU crisis

With the IMF getting its desired bailout fund increase, this could be enough of a reason to give markets a boost early in the week as it could be enough of an excuse for a bout of EU optimism now that there's enough cash on hand to deal with Spain. As noted in Part 1, conservative estimates suggest a Spain bailout could total

As always, stay alert for movements of bond yields and CDS spreads on GIIPS debt, should these start moving, that alone can move markets.

2. FOMC Meeting & Press Conference Wednesday

The meeting is not expected to yield any change in Fed policy, but markets will nonetheless be sensitive to even minor hints of possible changes. Bernanke is expected to sound less optimistic than he did last month.

Still, the consensus is that there will be no new easing unless things get much worse for the US, especially because it's far from clear that QE has done more harm than good. Indeed, it's hard to see how lowering borrowing costs improves things when most of the US is still trying to reduce debt.

The expected dovishness could further pressure the USDCAD, because the BoC is expected to raise rates.

3. Earnings Season Week 3

Earnings reports have one more week of influence. They tend to be influential for the first three weeks of reporting season, after which time the theme is set.

4. Election Results In France, Greece

Both are more likely to yield anti-market results, if anything, and pressure the EUR.

5. Other Top Calendar Events

Top events of the week include:


A big day for manufacturing PMIs. By themselves not dominant news, but if they all show the same theme they could indeed set market mood.

Australia: PPI - the RBA is already considering further easing, and that will become more likely if inflation remains a non-threat.

China: HSBC flash Mfg PMI

EU: French, German, EU Mfg PMIs


UK: Public sector net borrowing

All: G-7 Meeting - look for more spin control to calm markets about Spain and the rest of the GIIPS

US: New home sales, CB consumer confidence


UK: Preliminary GDP- expected to show a modest increase. The GBP has been on a tear recently, and this may signal profit taking time for the shorter term positions.

US: Durable Goods, FOMC press conference (see above)


US: Pending home sales, weekly first time jobless claims


Japan: BoJ rate statement and press conference: further easing steps expected, good for stocks and other risk assets, bad for the JPY bulls.

US: Advanced GDP

Disclosure/disclaimer: No positions. The above is for informational purposes only. All trade decisions are solely the responsibility of the reader.