What to Look for This Week

The Bernanke Files is reporting from beautiful Detroit, Michigan. Well, we're assuming its beautiful- we're actually stuck in the Detroit airport for a 3 hour delay.

Having some time on a Sunday evening, we thought it would be a good opportunity to take a look at the upcoming week. First, we take a look at where the Asian markets are at. Currently they (the Nikkei) are up 24.0 points. Few Americans are aware that the Asian markets open up in Japan in the morning (local time). This means they are open at about 3:00 pm MST. This early look gives us a preliminary look at what investors may have on their mind. Because the Asian markets are open, American markets open futures trading for most of their markets as well. For example, crude oil, corn, wheat, the Dow Jones Industrial Average and many other markets are open at night. These are called the "night markets."

After taking a brief look at the Asian and night markets, we take a look at the economic calender. The economic calender provides investors with the most important events occuring in the markets this week. Good economic calenders, such as the one provided by Bloomberg, also give users other helpful information such as what the concensus is and a brief description of what each event means.

This week, an important and interesting release occuring is the International Trade report. This gives us the earliest data on what America's net import/exports are. the concensus for this month is that the trade gap will be $25 billion. This is way down from last year because wer are importing a lot less goods because of the recession.

Keep in mind that the markets always beg the question: If a butterfly flaps its wings in China, what will occur in New York. The markets are closely intertwined. As you may notice, on Monday there are a lot T-Bill auctions. These results will tell us how much it cost for the government to borrow money. But, as The Bernanke Files has pointed out, the auctions and the International Trade report are linked. Remember, if Americans import more than they export, the cash that was used to buy the imports had to come from somewhere. Of course, one of the main places the funds come from is from T-Bond sales. This is why international trade and T-Bill sales are linked. Since foreign Americans need LESS money to make up the difference between imports and exports, foriegn exporting countries need to loan us LESS money to make up the difference. Therefore, demand for T-Bill will go DOWN and prices will drop AND THE INTEREST RATE WILL GO UP. These complex relationships between different sets of data make the markets very difficult to study.