Dates: Some Big Events And Data Releases, Carefully Watch Europe

While August was a rough month for stockmarkets, investors and governments in Europe, Japan and the US, the coming week is shaping up as a nasty replay and reminder of that instability with Australia, Europe and the US are each facing a major test of sentiment.

Already we know the US jobs report for August was terrible: the headline was no net new jobs at all created; the result was a markets sell-off on Friday night.

After a bit of crunching, the best economists could do was perhaps an optimistic 60,000: the real story was probably less than that (strikes and returns to work complicated matters).

The markets got the message with a big fall of 2% or more slump, as did US bond markets where the yield on 10 year bonds fell under 2% for the second time in a month.

In Australia the September Reserve Bank board meeting is in Perth tomorrow, and there's a major speech in Perth the next morning from RBA Governor Glenn Stevens, plus we have Thursday's release of the jobs data for August.

But the most important release here will be the June quarter national accounts on Wednesday which could be better than expected.

Some forecasters (such as the NAB and the AMP), are predicting a quarterly growth rate of 0.9% for the three months to June.

But there could be a significant revision to the March quarter figure which showed a large 1.2% contraction.

This idea of a revision follows a revision in the June quarter investment data from the Australian Bureau of Statistics.

While June quarter investment rose a solid 4.9% (with a 2.2% rise in investment in plant and buildings, which will feed through into the growth figures), the March quarter first estimate of 3.4% growth was more than doubled in the revision to a massive 7.7% jump.

That was due to more investment being found in flood-affected Queensland.

The jobs data on Thursday are forecast to show a rise in the number of jobless after a number of companies cut jobs in June, July and August. Some forecasts see a rise of 5,000 jobs.

And watch the 5.1% unemployment rate, if it doesn't change then perhaps the outlook isn't as glum as we currently suspect.

But while these dates in Australia and the US are important, focus on what will happen on Wednesday in Germany.

It's the big, big day for global markets.

Chancellor Angela Merkel has cancelled a trip to Russia for that day (September 7) because that's when the latest bailout package goes to the Bundestag for discussion and approval, while the country's constitutional court rules on the legality of the EU's bail-out machinery.

If the court rules that the 440 billion euro rescue fund (the EFSF) breaches EU Treaty law or undermines German fiscal sovereignty, it risks setting off an instant bushfire across not only the eurozone, but the entire EU.

If that happens, then Germany will not be able to support the bailout fund, the bailouts of Ireland, Greece (2) and Portugal will be in doubt and the European Central Bank which is currently supporting banks in Spain, Italy, Greece, Ireland, Portugal and other countries (and Spain and Italian sovereign debt at the moment) will be left high and dry and vulnerable.

If the vote is negative, it will set off a selling wave in debt and sharemarkets. We could return to the intense volatility of August.

If the German Constitutional Court rules in favour of the bailout machinery's legality, then this could be the moment that starts changing sentiment in favour of the euro and Europe, even though the various economies are dipping towards a slowdown.

By the way, the second bailout of Greece is hitting the wall, again. On Friday the IMF, EU and ECB have called off a visit to Athens to review the country's progress because the Greek government has a big black hole in its budget which no one wants to fill.

Greece's economy is in a deeper recession than previously thought, the budget deficit will be at least 8.6% of GDP, compared to a target of 7.6%.

As well the IMF and EU inspectors found delays and shortcomings in implementing the bailout plan, which was beefed up in July by an EU agreement for a second bailout of more than 109 billion euros. Greece is in its third year of recession. It can't pay its way out of any bailout.

And Italy has seen yields on its bonds rise for 10 days in a row as it became apparent that Prime Minister Silvio Berlusconi has no real interest in convincing the markets that his government is serious about cutting the budget deficit and boosting revenue.

If The German court finds against the bailout mechanism, it could be one of those 'perfect storms' currently favoured by headline writers.

Europe doesn't seem to have a 'Plan B' to use if the vote is negative. Here's hoping it isn't.

Meanwhile the AMP's chief economist and strategist Dr Shane Oliver says the June half profit reporting season is now finished with 67% of companies have seen profits up on a year ago, and 37% of results have surprised on the upside compared to 27% on the downside.

This is down from the norm though of 45% upside surprise.

What's more, positive and negative outlook statements have been roughly matched which is well down from the last four reporting seasons which have seen more positive than negative outlooks.

The good news though is that profit results haven't been nearly as bad as feared.

Dr Oliver says 51% of stocks have seen their share price outperform the market on the day of their profit release as against 49% who have underperformed.

He wrote on Friday that "key themes have been subdued sales growth, the negative impact of the strong $A, pressure to reduce costs necessitating job layoffs and increased buybacks and dividends.

"While profit growth for 2010-11 has come in at around 11% which is pretty much as expected this masks a huge divergence between the resources sector with 34% profit growth, 11% growth for the banks but a 4% contraction for the rest of the market.

"Mixed outlook statements have seen earnings growth expectations for 2011-12 cut by around 2%, taking them to a still too high 13%. 8% would be a more reasonable expectation."

That results of the reporting season were not as bad as forecast or feared by many investors was supported by the 2.9% fall in the local market in August: the best performance of a major market in a rotten month.