\n\tBy Greg Peel<\/p>\n
\n\tEuro-fear should ease further this week following the weekend meetings of the G20<\/span> finance ministers and IMF in Washington. The global eurozone<\/span> protection coffers have now grown larger.<\/p>\n \n\tThere has been a running battle going on for a couple of years now between Europe and the members of the International Monetary Fund with respect to the eurozone<\/span> crisis. From the first bail-out package for Greece established in late 2010 by the “troika” of the EU, ECB<\/span> and IMF, all three have bickered among themselves over levels of rescue and emergency fund contributions. EU non-eurozone<\/span> members such as Britain have shied away from major contributions, the EU in general has called for the IMF to inject more funds, IMF members have told Europe to put up its own money first (it's your fault), and the world has pleaded for monetary policy measures from the ECB<\/span>.<\/p>\n \n\tThe EU “firewall” has over time, and not without a lot of resistance from Germany and other wealthier eurozone<\/span> members, grown to E700bn<\/span>. It's shy of the E1<\/span> trillion the rest of the world wanted to see but once the ECB<\/span> under new president Mario Draghi<\/span> injected E1trillion<\/span> of LTRO<\/span> funds into the European banking system via 1% loans, the world backed off. It had nevertheless been new IMF head Christine Lagarde's<\/span> hope to add another US$500bn<\/span> into the pool from IMF contributions.<\/p>\n \n\tThe problem here, apart from the “it's your fault – you fix it” attitude understandably prevailing in the rest of the world, is that the most influential members of the IMF include the big European economies. So they were going to struggle to stump up twice. The member with the greatest influence is the US, and with debt and deficits threatening to bring US Congress to a standstill there was unlikely ever to be extra funds coming from that direction. And Japan had its own problems to deal with. That just left China and the other BRIC<\/span> members – the ones with all that surplus.<\/p>\n \n\tGiven the IMF was formed in the wake of World War II, today's “emerging markets” were not participants in its establishment and have since only been afforded minor proportionate voting rights. So naturally when China was approached by the IMF for help, Beijing offered the trade off of a greater say in proceedings. China then seemed all set to come to the rescue with some serious green until Greece looked like it was really going to default this time (late 2011) and China ran away.<\/p>\n \n\tLagarde<\/span> had managed to coax a combined US$200bn<\/span> out of the already stretched eurozone<\/span> nations for her fund, and Japan tipped in US$60bn<\/span> to help support its export customers. Support from anyone else was otherwise missing as nations feared their money would simply disappear into the eurozone<\/span> vacuum, never to be seen again. But with Spain and Italy now providing the latest cause for global nervousness, other members finally changed their tunes on the weekend.<\/p>\n \n\tSouth Korea, Saudi Arabia and Britain agreed to put in US$15bn<\/span> each, and finally Brazil-Russia-India-China and three South-East Asian countries managed net US$68bn<\/span> in an undisclosed split. With a handful of other contributions, Lagarde<\/span> now has US$430bn<\/span> in the tin. It's not quite the US$500bn<\/span> she wanted, but it'll do for now thank you. And the world can hopefully relax that little bit more.<\/p>\n \n\tAs Wall Street awaited the outcome of the weekend meetings, focus was again on earnings reports. Dow components Microsoft and General Electric both published solid results and at one point the Dow was up 118 points. The problem was that non-Dow component Apple was up to its tricks again, falling 2.5% in the session for no particular reason. While the Dow struggles to find any further traction over 13k<\/span>, Apple is finding US$600ps<\/span> a similar barrier.<\/p>\n \n\tThis influence, and no doubt some weekend squaring from traders, had the Dow drifting off to a close of up 65 points or 0.5%. The Apple-dominated Nasdaq<\/span> closed down 0.2%, and so the S&P split the difference with a 0.1% gain to 1378.<\/p>\n \n\tThe funny thing about the US earnings season is that it's so far proving to be the best in years. But that's not in terms of absolute dollars earned, rather in terms of earnings beating Wall Street expectations. Those expectations have been the lowest since 2009 in year-on-year growth terms, and suggestions they had been downgraded to too pessimistic a level over the course of the quarter now appear founded, albeit with some way yet to go in the season.<\/p>\n \n\tIt's all well and good but still there is little impetus for Wall Street to push meaningfully higher after such a substantial rally from late 2011, particularly when the latest US economic data are waning, Spanish bond yields look threatening and China hard landing fear never seems to go away.<\/p>\n \n\tEuropean data seem surprisingly resilient on the other hand, with Friday seeing Germany's IFO<\/span> survey surprise to the upside. Hence the euro found some strength ahead of the weekend meetings. The Bank of Japan declared it was committed to QE and all up the US dollar index fell 0.5% to 79.14. The Aussie gained 0.4% to US$1.0379 but gold was disinterested, heading into the weekend steady at US$1642.40\/oz.<\/p>\n \n\tBase metals saw a bit of a boost from the dollar and posted decent gains, with copper up 2%, while the oils were also positive with Brent up US93c<\/span> to US$118.76\/bbl<\/span> and West Texas up US$1.34 to US$103.61\/bbl<\/span>.<\/p>\n \n\tThe SPI<\/span> Overnight was up 7 points.<\/p>\n \n\tWhile the news from Washington over the weekend should provide for some relief in markets this week, the one dampener<\/span> is that of the French presidential elections. Sarkozy<\/span> is heading into the run off with his opponent 5% in front, and there is concern over what impact a change of administration in France might imply for the eurozone<\/span>.<\/p>\n \n\tThe focus will otherwise continue to be that of US earnings and data this week, with plenty of releases to assess.<\/p>\n \n\tIt all starts tomorrow night with the Case-Shiller<\/span> and FHFA<\/span> house price indices, new home sales, consumer confidence and the Richmond Fed index. Wednesday sees durable goods, and Thursday brings pending home sales and the Chicago national activity index. Then on Friday, the first estimate of US March quarter GDP is released.<\/p>\n \n\tThe consensus estimate is for 2.5% growth, although one is reminded that last year the US appeared to post sterling growth for all three calculations of the March quarter GDP, only to see the result revised down to almost nothing on the first release of the June number.<\/p>\n \n\tThe Fed will also hold a regular monetary policy meeting this week and release a statement on Wednesday. The statement will include the central bank's quarterly forecast updates, and we'll also be granted one of the year's four press conferences from Ben Bernanke. No doubt QE3<\/span> talk will be on the agenda, or at least the intended June expiry of Operation Twist.<\/p>\n \n\tIt's an important week for Australia because tomorrow sees the release of the March quarter CPI result which will determine whether the RBA's<\/span> planned May rate cut can go ahead or not. The PPI will be out today, and Friday sees new home sales, but in between we have the Anzac Day holiday on Wednesday for which all markets in Australia and New Zealand, and FNArena<\/span>, are closed.<\/p>\n \n\tHSBC's “flash” estimate of China's manufacturing PMI for April will be out today, while Friday sees Japan providing quite a “dump” of important economic data.<\/p>\n \n\tOn the local stock front the resource sector quarterly production reports will pour in this week, with quite a raft due today in particular. Tomorrow will see retail sales numbers from Wesfarmers<\/span>' ((WES)) various chains and Friday brings a full-year earnings result from Macquarie Group ((MQG<\/span>)).<\/p>\n \n\tRudi will appear on Sky Business on Thursday. <\/p>\n