June 2012 is like a big ticket casino; whatever your pleasure, it will deliver. Looking for a little Chinese economic data? It's got that right by the slot machines over there. Interested in some U.S. jobs data? Look beside the roulette table. Is it ECB or euro leader meetings that tickle your fancy? Well walk down this aisle, make a left at the Pai Gow table and there you go. More of a high roller and are hankering for a little FOMC meeting action? Well walk into the high stakes parlor and look beside the $10,000 a hand blackjack tables. June 2012 offers you all the same thrills, chills, and money making potential of your favorite Las Vegas Casino.
June could either be the turning point or the edge of the cliff for the markets. Below I will outline the key dates, data points and events that we should be paying attention to.
June 1st 2012:
1) U.S. May Unemployment Report
This report is expected to show an increase of 165,000 jobs in May but market reaction to this number will be hard to predict. If the jobs number misses and it is weak, we could actually see a market rally as investors think this will force the Fed's hand at the FOMC meeting June 19-20 to implement QE3. An inline or a beat could have a muted upside movement as this jobs number is far from robust jobs growth but could cause the Fed to sit on their hands a bit longer and not implement QE3.
2) Chinese PMI Data:
Could we see continued weakness? If this number is weak, I'd expect commodities and thus the TSX to drop since we all know, as China goes, commodities go.
3) John's Birthday (Monkeys & Elephants site Admin)
It's a known fact that if John blows out all of his candles in one breath, the markets rally, in 2 to 4 breaths we get a flat market, and if we get a repeat of John's 6 breath performance in 2008 … well we all know how the market fared in 2008
June 6th 2012:
We get the ECB rate meeting. Will the ECB cut rates to spur growth? Will they signal that they are getting ready to ease (print more euros)? If the answer to one or both of these are "yes," then the markets will rally as the investors will see that Europe is serious about controlling this crisis. If we get nothing, well then that's what you should expect from the market.
June 7th 2012:
Bernanke will be testifying before the Congressional Joint Economic Committee. Investors will be paying close attention to what Bernanke says, as they will try to gather clues as to whether he is planning to announce QE3 at the June FOMC meeting. If Bernanke hints that another round of QE could be on its way, well then the markets will rally. The jobs numbers on June 1st would have to be pretty bad for him to tip his hand and suggest easing is on the way. I expect he will keep the same language as his previous few meetings where he states that the Fed is monitoring the situation and will step in if need be.
June 8th 2012:
Chinese Economic Data is released. This is the same as Chinese PMI data, if it's strong: commodities up, market up! If it's weak: commodities down, market down. However, if the data is weak AND Chinese officials state and outline their easing strategy (cutting interest rates and reserve rate), then we'll get a rally in both commodities and markets.
June 17th 2012:
Greek Elections! This is probably the second if not most important event in June. If the SYRIZA party, who is anti-bailout, gets elected then I expect all hell to break loose and European markets to drop 3-4% and North American markets to drop 1-2% due to the news. The election of the SYRIZA party would most certainly result in a disorderly Greek exit, and cause a major panic.
June 18th-19th 2012:
G20 leaders meeting in beautiful Los Cabos, Mexico. If the Greek elections don't go well, then that nice tan each leader was working on will turn into a sunburn! I don't expect this to have a big effect on markets unless they announce that they will convert all of Greece's euro denominated debt into gyro denominated debt.
June 19th - 20th 2012:
Fed Open Market Committee Meeting. This meeting comes down to QE3 or No QE3. Yes QE3? Markets rally. No QE3? Markets sink. If Greek elections go the wrong way and it looks like Europe is heading off of a cliff, then I would say QE3 is more likely. If the Greece situation appears to be under control and the jobs number June 1st was ok, then we'll get re-affirmation that the Fed will continue to monitor activities and stand ready to act.
Also Operation Twist ends in June and I expect that they will let it expire, either way. I think that the Fed is either going to ease, or not ease, they wont do another Operation Twist type program.
June 28th -29th 2012:
The EU Leader's Summit. This will again depend on the outcome of the Greek elections. If Greece is on the verge of euro exit, then this meeting will be how to stop the spread to Spain, Italy and Portugal. We should be looking for news about euro bonds, recapitalization of the banks, and whether the EU will do its own round of quantitative easing. The market will rally if the EU leaders show that they will DO something! This whole euro crisis has been plagued with inaction and in-fighting between euro nations. If the markets see unity and action, the markets will rally.