Markets Watching U.S. Earnings, ECB, Fed, German Constitutional Court (7/30/2012) - Updated

Interesting catalysts lie ahead for U.S. and European markets through the end of the year. The catalysts will mainly be initiated by governments and central banks, but some investors are watching U.S. equity earnings and valuations closely (John Hussman and Peter Tchir on Bloomberg TV - see below). Also, the U.S. jobs report is on Friday.

Simon Derrick, Chief Currency Strategist at BNY Mellon, held a Eurozone crisis call on BNY's website on July 20, which is currently available to the public. During the call, Derrick mentioned there will continue to be uncertainty over the Eurozone bailouts until September 12th, when the German Federal Constitutional Court votes on whether to release taxpayer money to fund 27% of the ESM (€500 billion). The permanent European bailout fund (links are to Spiegel).

Listen to Simon Derrick's full webcast at BNY Mellon. Here's a quotation from the PDF transcript:

"Finally, just on the topic of the bailout funds themselves, the discussions on exactly how the ESM will be recapitalised or how the ESM will be used will only begin in September, so we’re still a long way off. We know that the Bundestag did vote in favor of it yesterday. However, the German constitutional court doesn't rule whether that is legal or not until September 12th. So we’re going to continue to have uncertainty on that front for at least a month and a half from now."

The call was conducted a week before ECB President Draghi said the "ECB is ready to do whatever it takes to preserve the euro." There is an ECB meeting on Thursday that will cover Draghi's statement. Here are two articles from Reuters today:

(Reuters) "European Central Bank President Mario Draghi must back up his pledge to do what it takes to protect the euro when the bank's policymakers meet on Thursday or else face deep disappointment from investors hungry for - and expecting - immediate action."
(Reuters at Yahoo) "The European Central Bank is thinking the unthinkable to save the euro, including resuming its controversial bond-buying program and possibly even pursuing quantitative easing - in effect printing money. Bold action is probably at least five weeks away, insiders say."

The Federal Reserve's FOMC, which meets on July 31/August 1, will release their policy statement on Wednesday, August 1. Investors and traders will see if the Fed ramps up asset purchases again (quantitative easing). Here is Peter Tchir, founder of TF Market Advisors, on Bloomberg TV on July 27.

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