US Q1 EARNINGS START/DUBLIN EURO GROUP MEETING/US T-SECRETARY LEW IN BERLIN-PARIS/US-FRANCE-ITALY GOVT BOND AUCTIONS/FRANCE NATL ASSEMBLY VOTES ON LABOUR REFORM/VENEZUELA ELECTIONS
World markets have started the second quarter in an oddly indecisive mood given that Q1 turned out to be yet another bumper start to the year, looking to extend record stock market highs on Wall St but lacking the juice of new information to make a decisive break while Europe splutters and emerging markets and commodities head south. Two important pieces of the U.S. jigsaw will likely emerge over the coming week with this Friday’s US employment report and the start of the Q1 corporate earnings season next week.
But there’s clearly been a more general rethink further afield among global investors given the breakdown in cross-asset and cross-border correlations – meaning it’s no longer enough to just get Wall St right and adjust your global risk button accordingly. It looks much harder work to get regional or asset allocations and positioning right. As Wall St flirts with new highs and US and Japanese equity funds continue draw hefty inflows, there’s been a pullback from all things Europe surrounding the Cyprus saga and parallel growth disappointments across the region and EPFR data last week showed redemptions from euro stock, bond and money funds continued.
Euro stocks, as a result, are now flat for the year after two consecutive months in negative territory wiped out all of frothy January. And while you’d have made a cool 10 percent in developed market equities collectively in the first quarter and almost 9 percent on Wall St alone, you’d be in the red in emerging markets and badly burnt in gold, metals and commodities at large. So while the headline equity story suggests a G7 global recovery is underway at last, as the OECD suggested last week, that’s not the signal from commodities and the emerging world. Could it really be just be a domestic US recovery story all on its own?
As a result it’s hard to find a binding theme so far in early April and market pricing this week reflects that somewhat, even though Easter-related holidays in many western markets contributed to the lack of direction. Apart from earnings season starting bell, next week has the euro group meeting in Dublin, new US Treasury Secretary Jack Lew in Berlin and Paris and a hefty slate of data and debt auctions everywhere.
GLOBAL DATA/EVENTS TO WATCH
French govt bond auctions Mon
German Feb industry output Mon
US Q1 earnings Mon: Alcoa
Bernanke speech Mon
ILO regional meeting Mon/Tues
China March inflation Tues
US Treasury Secretary Jack Lew in Berlin/Paris Tues
French national assembly votes on labour reform Tues
Swiss March jobless/inflation/retail data Tues
German/French Feb trade reports Tues
UK Feb manufacturing/industry output/trade Tues
US 3-yr Treasury auction Tues
China March trade data Weds
Japan March bank lending Weds
France/Italy Feb industry output Weds
OECD leading indicator Weds
Poland rate decision Weds
Obama meets Republican senators on 2nd term agenda Weds
US 10-yr Treasury auction Weds
SKorea/Indonesia rate decisions Thurs
Japan Feb machinery orders Thurs
Italy govt bond auction Thurs
German/French March inflation Thurs
US 30-yr Treasury auction Thurs
Euro zone finance ministers meet in Dublin Fri
Italy March inflation Fri
EZ Feb industrial output Fri
US Q1 earnings Fri: JPMorgan
US March PPI/retail sales/April consumer confidence Fri
Bernanke speech Fri
ECOFIN in Dublin Fri
Venezuela Presidential election Sun