WEEKAHEAD-View from Americas for week ending July 9
NEW YORK, July 1 |
NEW YORK, July 1 (Reuters) - Following is the view from editors in the Americas on events in the week ahead:
* Weak US job growth seen on Friday,90,000 June vs 54,000 May
* NYSE Euronext shareholders vote Thursday on Deutsche merger
* Lagarde takes helm at IMF on Tuesday, DSK fights charges
* Chavez to miss Venezuela's 200th anniversary over health
* Media titans gather at Sun Valley, Idaho
* Holiday in United States, markets closed, on Monday July 4
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EYES ON U.S. JOBS, THE FEW THAT THERE ARE
A batch of reports on the U.S. labor market are expected to show weakness persisted through the second quarter. The ADP report on private sector payrolls is seen posting a modest 60,000 new jobs in June after a dismal 38,000 in May. For the government's employment report on Friday, economists forecast nonfarm payrolls grew by a slim 80,000 last month after a rise of just 54,000 in May and the unemployment rate to hold at 9.1 percent. Economists say more than 150,000 additions to payrolls are generally needed per month to lower the jobless rate. A separate report on Wednesday will show whether the massive services sector softened after bouncing higher in May.
U.S. DEBT CEILING
The U.S. Senate has canceled its July 4 week off so it can continue working on a deal on raise the United States' debt ceiling. White House economic officials will meet with legislators on Capitol Hill. President Barack Obama and Vice President Joe Biden have been invited but it is not clear if they will attend. The U.S. Treasury is sticking with its Aug. 2 deadline for Congress to approve new borrowing limit. The White House wants a deal agreed by July 22 so that legislation can pass before the deadline. It warns failure to raise the $14.3 trillion debt ceiling risks triggering a default and severely undermining an already-fragile economy and financial system.
WALL STREET RALLY IN QUESTION
Wall Street will struggle to extend its five-day rally and probably will tread water ahead of the U.S. jobs report. With no sign of a robust jobs recovery, some investors may decide to take profits before the jobs report complicates the equation. This would give Treasuries some respite from their week-long sell-off. The euro's fortunes will be linked to the ECB's meeting on Thursday. Another interest rate rise is virtually baked in leaving signals on future monetary tightening as the major question. U.S. markets are closed Monday for the July 4 Independence Day holiday.
NYSE-DEUTSCHE BOERSE VOTE
NYSE Euronext shareholders will decide on Thursday whether to back Deutsche Boerse's takeover, allowing them to grab a 40 percent stake in what would be the world's largest exchange operator. The $9 billion deal needs majority support from Big Board investors, and it's likely to pass after Nasdaq and ICE dropped their counterbid last month. The combined company would trade and clear virtually every asset class and revamp ownership of markets in the United States and across Europe. It would also see the iconic New York Stock Exchange fall into the hands of a yet-to-be-named Dutch holding company, 60 percent owned by shareholders of the German bourse.
CHANGE OF GUARD AT IMF
Christine Lagarde takes the helm of the International Monetary Fund on Tuesday, in time to approve the next loan tranche for Greece, needed to avert its debt default. Her attention will almost immediately have to turn to discussions on a second IMF-EU bailout to keep Greece going until 2014. The former French finance minister holds a news conference on Wednesday. She is likely to avoid putting her stamp on any major decisions until she has settled into her new job. Her experience as finance minister should allow for an easy transition on several issues the IMF faces, including the monitoring of economies so large they could destabilize the world, such as the United States and China. In her first month on the job, she has the No. 2 position to fill, a job traditionally held by an American.
Her predecessor, Dominique Strauss-Kahn, is pushing for an end to all the charges against him in the case of his alleged sexual assault against a hotel maid in New York. Strauss-Kahn was released from house arrest on Friday after prosecutors said the woman who has accused him of trying to rape her had lied to a grand jury. Prosecutors will continue to investigate the case but Strauss-Kahn's lawyers believe the case has swung in his favor and they want all the charges dropped.
U.S. RETAIL SALES
Leading U.S. store chains from Costco Wholesale and Target to Macy's and TJX report June sales on Thursday. While June is a relatively quiet month, the results will give investors a sense of shopper behavior heading into into the back-to-school season and how stores are managing inventory as they begin the second half of the year.
MEDIA IN THE SUNSHINE
Allen & Co's media conference gets under way in Sun Valley, Idaho, attracting such titans as Rupert Murdoch, Eric Schmidt, Bob Iger, John Malone and Barry Diller. While the powerful spend their free time at the resort fly-fishing and white water rafting, they're never far from dealmaking. Two years ago, this was the place that Comcast first got serious about discussions to buy NBC Universal. This time around, executives are likely to be talking about the downfall of MySpace, the possible sale of Hulu, the future of Yahoo CEO Carol Bartz and - perhaps with a bit of envy - the social media craze.
TOO BIG TO FAIL
The Federal Deposit Insurance Corp board considers new rules on Wednesday for liquidating huge financial firms. The meeting will be the last for Chairman Sheila Bair, who is stepping down on July 8 at the end of her five-year term. Also on the agenda is "living wills," which are intended to provide a roadmap for how large financial firms can be broken up if they fail. The goal is to unwind big firms without disrupting markets.
President Hugo Chavez's admission that he had cancer surgery in Cuba has shaken Venezuelan politics, and the focus now turns to details of his medical condition, its treatment, the prognosis and the opposition's response. Chavez is still in Cuba and will miss July 5 celebrations marking the 200th anniversary of Venezuela's independence from Spain -- a party that he had been desperate to lead. Chavez says he is on the path to full recovery, but it is not clear if doctors caught the cancer or whether he will need chemotherapy. A long absence from Venezuela and any indications that Chavez might face a long battle with cancer could embolden opposition leaders, who are already looking to challenge the left-wing populist in next year's presidential election. Venezuelan debt prices are likely to rise further if Chavez's dominance of Venezuelan politics appears to be waning, although there are also concerns of even greater volatility in the OPEC member country.
BRAZILIAN, MEXICAN INFLATION
Brazil and Mexico release consumer price data for June on Thursday. According to a Brazil central bank survey, inflation in Latin America's largest economy is forecast to slow to a monthly 0.05 percent from 0.47 percent in May. That would be a further sign that price pressures are ebbing after the government cut spending and the central bank raised its benchmark interest rate to 12.25 percent. A Mexican central bank survey saw headline inflation in Latin America's second-largest economy rising 0.22 percent after falling 0.74 percent in May. Peru's central bank announces its benchmark interest rate on Thursday, and Mexico's central bank follows a day later. Both are expected to keep rates on hold.
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