\n\tBy Greg Peel<\/p>\n
\n\tThe November US jobs report, released on Friday night, proved a mixed blessing. After a very strong private sector report on the Wednesday Wall Street was hoping that the consensus non-farm payrolls number of 125,000 jobs added might prove understated. On that basis, while 120,000 jobs added was one of the better results of late it was somewhat of a disappointment.<\/p>\n
\n\tThat is, however, notwithstanding the actual unemployment rate. It fell to 8.6% when economists had expected a steady result at 9.0%, and the 0.4 percentage point change was the biggest in a long time. The rate is the lowest in two and a half years. This seemed like very good news, and a Wall Street anxious for more excuses to buy sent the Dow up 126 points. But 120,000 jobs is strictly not enough to reduce unemployment, meaning the reason for the drop was a drop in the participation rate.<\/p>\n
\n\tThe US unemployment number (and the Australian number) registers only those looking for work and thus receiving benefits, and not those who have given up. In November, 315,000 Americans gave up. This is not promising after the participation number had grown by one million over the previous three months as Americans decided it might be time to have another go at finding a job. At last count, the total number of Americans not working was around 16%.<\/p>\n
\n\tBut who cares about things like data, earnings and fundamentals? It's all about Europe.<\/p>\n
\n\tNext Friday sees yet another EU summit, and the world is hoping for signs that resolution is moving closer. So no doubt this week will feature all sorts of commentary in lead up from those involved, providing us with another headline-driven week of trading.<\/p>\n
\n\tOn Friday, Merkel was entreating Europe to move quickly to alter the EU treaty to bring about closer fiscal union. Sarkozy<\/span> echoed the call. But let us not forget that altering the EU treaty means the involvement of the non-eurozone<\/span> EU members, and the UK prime minister has already voiced his resistance.<\/p>\n \n\tWith Merkel still dead against the idea of a common eurobond<\/span>, which implies a pooling of the eurozone's<\/span> debts to be serviced by those who can pay (ie<\/span> Germany), her finance minister suggested on Saturday a plan to shift individual member debts into individual redemption funds to be paid off over 20 years by the tax income of that member. Merkel suggested the idea sounded “interesting”. Austria disagrees.<\/p>\n \n\tMerkel and Sarkozy<\/span> are meeting tonight for further chats, and tomorrow should see the IMF endorse Greece's next tranche<\/span> of bail-out funds. Thereafter, the banter will flow through to Friday.<\/p>\n \n\tWhether it was a realisation<\/span> that the US jobs result wasn't that good after all, or whether traders simply wanted to take profits after a very strong week rather than go home exposed to whatever happens next, Wall Street soon lost interest on Friday night and stocks faded away to a flat close. All three major indices were unable to register a closing price move worth more than one point, leaving the S&P sitting at 1244.<\/p>\n \n\tCurrency traders appeared also to be squaring up, with the US dollar index rising by 0.4% to 78.63. The Aussie was off a tad to US$1.0213 and gold was barely changed at US$1745.70\/oz.<\/p>\n \n\tBase metals were mostly underwhelming<\/span> with the exception of nickel. Nickel has been a bit left behind in the latest “risk on” surge but news on Friday of a drop in inventories was enough to trigger technical buying and nickel jumped 5%. Brent crude rose US90c<\/span> to US$109.94\/bbl<\/span> and West Texas gained US93c<\/span> to US$101.13\/bbl<\/span>.<\/p>\n \n\tThe SPI<\/span> Overnight fell 7 points.<\/p>\n \n\tFollowing on from the global round of manufacturing PMIs<\/span> last week will be the November service sector PMIs<\/span>, with all of Australia, China, the eurozone<\/span>, UK and US reporting over the next 24 hours.<\/p>\n \n\tFor the US it then becomes a quieter data week featuring factory orders tonight, wholesale trade on Thursday and the trade balance on Friday, along with fortnightly consumer sentiment. There'll be industrial production numbers and trade balance data from Europe and the UK this week, as well as another revision of the eurozone<\/span> September GDP on Tuesday. This will lead us up to rate decision from both the ECB<\/span> and Bank of England on Thursday. The ECB<\/span> is expected to cut.<\/p>\n \n\tWill the RBA<\/span> cut on Tuesday? A cut is now a lot more likely given the announcement of coordinated currency swap measures by the major central banks last week. The move was a response to the deteriorating situation in Europe, and the RBA<\/span> has signalled<\/span> that Europe will also dominate Australian policy at this stage. It's a big week for economic data in Australia given the release of the September GDP result on Wednesday, of which the RBA<\/span> will no doubt have been afforded a preview.<\/p>\n \n\tAfter a difficult third quarter from a sentiment point of view, economists are expecting a result of 1.0% growth (qoq<\/span>) down from 1.2% in June.<\/p>\n \n\tBefore we get to the GDP, there will be more quarterly data to absorb. Today it's company profits and inventories, and tomorrow it's net exports and the current account. Today also sees ANZ<\/span> job ads and the TD Securities monthly inflation gauge<\/span> (along with the services PMI), tomorrow sees ABARES<\/span> quarterly crop forecast, and Wednesday brings the construction PMI.<\/p>\n \n\tIf that's not enough, the unemployment numbers are out on Thursday and following on from Tuesday's rate decision, the RBA<\/span> governor will make a speech.<\/p>\n \n\tThen to wrap the week ahead of the EU summit we'll have the monthly data dump from China, featuring inflation, industrial production and retail sales data.<\/p>\n \n\tNovember's flood of corporate AGMs<\/span> turns into a mere trickle in December.<\/p>\n \n\tRudi will appear on Sky Business on Thursday at noon unless Sky again finds something more interesting to broadcast. <\/p>\n