Welcome to 2012

By Marty Cej
The Chase

The week ahead provides a glimpse at the themes that may dominate the new year. Investors will wade through a flood of economic data including Asian export numbers, global manufacturing reports and U.S. unemployment data at the end of the week, all of which will help determine the spillover from the European debt crisis. The heavy political calendar for this year kicks off with the Iowa caucus, which will help thousands of American reporters narrow their focus onto two or three frontrunners in the race to name a Republican challenger to President Obama. Europe and the race for the White House will likely dominate broad price action in 2012.
Today, we'll narrow our own focus on how political, economic and corporate events are likely to drive price action in the stock, bond, currency and commodity markets this year. As we near the open of North American stock markets, U.S. index futures are pointing to modest gains and most European stock markets are trading higher on the back of higher-than-expected manufacturing data out of China, India and Australia. A surprising improvement in German unemployment also helped boost demand for risk assets this morning. A report on U.S. manufacturing due out at 10:00 am Eastern is also expected to show expansion. In fact, a reading of 53.4 on the ISM index – the average expectation among economists surveyed by Bloomberg, would be the fastest expansion in six months. At 2:00 pm, we'll peruse the minutes of the last FOMC meeting along with Republican candidate Ron Paul who is looking for an excuse to abolish the Fed. We'll look for insight, Paul will be looking to incite.
Commodities are kicking off the year on stronger footing after the manufacturing data as well. Crude oil, natural gas, copper, gold and silver are all higher in the early going. Natural gas could be the one to watch this week after tumbling below $3 last week. The CFTC reports that last week's downward slide may have flushed a lot of traders out of their bearish positions. Natural gas plunged more than 30 percent last year, which could lead some producers to rein in their output. Plus, the weather has turned wintery in North America, at least in my office where the atmosphere is particularly Dickensian. Also, keep an eye on gold, which appears poised for a technical breakout after showing considerable stability amid thin trading last week.
In corporate news, we're following Canadian Pacific Railway after the company's Chairman, John Cleghorn, wrote a polite, if firm, letter to hedge fund manager and CP shareholder Bill Ackman, explaining that leaks to the media are counterproductive in his efforts to force change at CP. The letter is in response to reports last week that Pershing Square Capital was agitating for Hunter Harrison to take over as the new CEO of CP. Cleghorn says no invitation has been extended to Harrison and that perhaps Ackman might want to talk face to face about what he wants changed at CP rather than going to the press. The gloves haven't been dropped but the players are jawing.
The National Post reports this morning that Research In Motion is preparing to unveil a boardroom shakeup that would see Mike Lazaridis and Jim Balsillie give up their co-chairmen roles in favour of board member Barb Stymiest. Citing unnamed sources for the story, the Post did not give a timeline. Calls are out to the company.