Once more the coming week will resemble the preceding couple of weeks for financial markets.

The issues are familiar, with only the emphasis changed in some cases.

They include the ongoing brawl over Europe, Greece, and EU banks; U.S. earnings and U.S. economic growth; Australian inflation, Australian interest rates and our annual meeting season; and whether the Chinese economy is slowing or sliding.

Greece and the question of recapitalising EU banks and other issues won't be resolved until Wednesday, hopefully, but an awful lot can happen between now and then to upset the world economy.

First up, central banks in Canada, India, New Zealand and Japan are all expected to leave monetary policy on hold at meetings this week.

That's despite another rate cut by Brazil late last week, the second in a month.

Thailand's central bank left rates steady last week, despite the terrible floods in and around Bangkok which have cut exports and seem sure to impact the economy (as the Queensland floods did in Australia earlier in the year.

For us in Australia, inflation and interest rates will dominate the week with the release of the September quarter's Consumer Price Index on Wednesday after Producer Price Indexes are released later Monday.

Comsec economists say a CPI of 0.6 per cent or less will raise the changes of a rate cut when the Reserve Bank board meets tomorrow week, while a reading of 0.9 per cent or more will make a rate cut very hard to sustain for the central bank.

The AMP' chief economist, Dr Shane Oliver says his group expects "headline inflation to rise 0.6 per cent taking the annual rate to 3.5 per cent, but see underlying inflation rising by 0.5 per cent which would leave the annual rate calculated on the basis of revised ABS weights and seasonal analysis sitting comfortably just below the middle of the inflation target.

"We would see a 0.5 per cent rise or less in underlying inflation as paving the way for a rate cut given the deterioration in the global outlook and the softness in domestic demand. "

Westpac's Bill Evans said in commentary at the weekend: "We expect a print of 0.6 per cent for the quarter for the average underlying core measure, taking annual core inflation to 2.6 per cent for the year."

He said that would enable the bank to cut rates at next week's meeting, or, more likely, at the December meeting.

The events in Europe this week will help the Reserve Bank of Australia (RBA) a believable resolution and plan to handle the current and future problems will give the central bank a bit more time to assess the situation.

More disagreement between the EU and eurozone members this week and real lasting agreement, could spark a slump in markets and force the RBA's hand next week.

For those reasons, comments from RBA Deputy Governor Ric Battellino (who speaks in Sydney tomorrow) will be closely watched by the market for an update on the central bank's thinking.

The first major bank profit report will be issued on Thursday with the NAB reporting its 2010-11 full year figures, followed by Macquarie Group releasing its interim data on Friday.

Macquarie's figures will be examined very closely to see if it has been hit hard by the loss of trading volumes and revenues in some areas of the markets, as the likes of Morgan Stanley and Goldman Sachs have reported in the past week or so.

Macquarie has already warned that the first quarter would be down on a year ago.

The National Australia Bank is expected to report higher earnings and dividend, and perhaps more on what is happening with its UK banks.

Analysts think the bank will earn around $5.6 billion, a record and up 22 per cent on the 2010 result.

Woolworths reports first quarter sales on Thursday, the AMP releases a third quarter trading update and the Ten Network releases its full year profit (August 31 balance date) all on the same day.

Quarterly trading updates are also expected from Austar and GPT.

Macarthur Coal releases its first quarter production report on Thursday which is likely to be its last as an independent company with Peabody/Arcelor Mittal's bid to win control with their takeover bid.

The AGM season continues, with the Harvey Norman AGM on Thursday to be watched for comments on trading conditions.

Super Retail Group's AGM on Wednesday will no doubt see discussion of the company's planned acquisition of the Rebel sports chain of store for $610 million.

Other leading companies holding meetings include Origin Energy, Bendigo Bank, Foster's Group, Insurance Australia Group, Newcrest Mining and Qantas Airways on Friday which could become heated given the bitterness of the industrial dispute damaging the airline's operations.

Billabong International holds its AGM, as do Stockland, Waratah Gold, Transurban, Pacific Brands, Argo Investments, Southern Cross Media, Treasury Wine Estates, WorelyParsons, Group, Tabcorp Holdings, NIB Holdings, Carsales.com.au and Toll Holdings, Flight Centre, Blackmores, Tatts Group, AGL Energy, Platinum Capital, Karoon Gas Aust, Royal Wolf Holdings, Ardent Leisure, GWA, UGL, Consolidated Media Holdings, Crown, Boom Logistics and Suncorp Group.

The Commonwealth Heads of Government meeting starts in Perth later in the week.

In the U.S., the first estimate of September quarter GDP is due out on Thursday night, our time.

Optimistically, analysts and economists are seeing the figure in the range of 2.1 per cent to 3.0 per cent (Credit Suisse) with consensus at 2.3 per cent (all annual rates of growth).

Solid gains in consumption and trade (with the surge in car sales and production the main driver) will generate the higher growth rate .

This will be much better than the 1.3 per cent growth recorded in the June quarter but will still pretty subdued and well below the rate that would see the country's jobs crisis brought under some control.

Consumer confidence surveys (two, Tuesday and Friday) home prices (due Tuesday), underlying durable goods orders (Wednesday), new home sales (Thursday) and pending home sales (Friday), round out a busy week in the U.S.

President Barack Obama will make speeches on jobs and the economy later Monday and Tuesday.

The U.S. quarterly reporting season continues with reports due this week from 182 S&P 500 companies and (including eight Dow companies).

Reuters reported on the weekend that Of the 133 S&P 500 companies that have reported earnings to date, 68 per cent have come in above expectations, above the long-term average, according to Thomson Reuters data.

"The data shows S&P 500 earnings are expected to have risen 14.7 per cent in the third quarter from a year ago, compared with an Oct. 3 estimate for 13.1 per cent growth.

"Projections for the fourth quarter are for growth of 12.5 per cent - down from an Oct. 3 estimate of 15 per cent - and forecasts for the first quarter of 2012 are for growth of 7.6 per cent -- down from an Oct. 3 estimate of 10.2 per cent," Reuters said.

Reporting groups this week include Procter & Gamble Co. and Exxon Mobil Corp, Boeing, Ford Motor, Peabody Energy (which is closing in on Macarthur Coal in Australia), Amazon, Barrick Gold Corp, Electronic Arts Inc, Moody's Advanced Micro Devices Inc, Delta, UPS and Caterpillar Inc.

In Europe, beside Wednesday's eurozone summit (Part 2) we will get European manufacturing conditions indicators tonight (economists say they are likely to have remained around levels consistent with recession).

United Kingdom's second quarter current account balance data is due, as is manufacturing industry trends later in the week.

We will get a flood of corporate results in Europe, but none will be as important as the updates from banking giants, Deutsche and UBS.

UBS warned that it will make a modest' profit for the quarter, but that will come from accounting adjustments and investors will want to know the latest on the huge $2.3 billion fraud by a trader in its London office two months ago.

Deutsche Bank's earnings will be examined for signs of stress in the U.S. and Europe, and the size of its write-downs on Greek and other sovereign debts.

It has already revealed cuts in sovereign debt values and warned profits won't be as good as previously estimated.

Commentary from both banks on their outlook and the agreements the eurozone leaders are trying to reach in Brussels, will also be of considerable interest.

European bank now look as though they will have to wear write-offs of 60 per cent or more on their holdings of Greek debt, not the 21 per cent agreed to in July.

Write-downs of Portuguese, Spanish, Italian and Belgium sovereign debt may also have to be soon recognised as well.

Oil giants, BP (Tuesday night, our time) and Shell (Thursday night) will lead a long list of non-financial European companies reporting quarterly earnings this week.

Drugs giant, GlaxoSmithKline PLC reports as well, as do car giants, Daimler and Volkswagen..

In Asia Japanese data for employment, industrial production, household spending and core inflation (all due Friday) is expected to remain soft.

The Japanese government last week changed its outlook on the economy and now concedes that signs of softness are appearing in the rebound from the March 11 quake and tsunami.

The robustness of the recovery will be assessed again today with the release of September trade data for Japan.

That will also be for the first six months of the current Japanese financial year (which ends on March 31, 2012).

The Bank of Japan meets today and tomorrow and will issue its updated forecasts for the economy later in the week.

The central bank last week also changed its view of the economy and is becoming worried about the impact of the European financial crisis and the slowdown in China and the U.S.

That impact will be watched for in Monday's trade data.

In China HSBC's Chinese manufacturing PMI is due out later today and is expected to remain just below 50, which indicates a continuing contraction, but annual growth in the range of 8 per cent to 9 per cent.

Asian companies reporting include LG Electronics, and chipmakers, Samsung Electronics Co, Hynix Semiconductor Inc Elpida Memory Inc.

A number of major Chinese banks are due to report their quarterly earnings this week, which will also be watched closely for signs of any emerging bad debt problems.

Copyright Australasian Investment Review.
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