A quick review of the issues and events driving the markets this past week... and what's on tap for the week ahead.

Weekly Market Snapshot

April 20, 2015

"Job security and income improvements aren't castles in the air"

— China's Premier Li Keqiang, on the need to maintain the speed of economic growth to meet the needs of workers (Financial Times, April 13, 2015)

The week in review...


China: Growing, but slowing The official GDP figure for 1Q2015 was 7.0%, in line with stated expectations, but the slowest quarterly growth rate since 2009, the second lowest since 2001, and below 4Q2014's 7.3% rate. More signs of the slowdown: exports slid 15% and imports fell 12.7% in US dollar terms, vs. an expected rebound. Industrial production also reflected the slowdown: up 5.6% Y/y in March, also below expectations. The challenge: Rekindling overall growth while deflating a real-estate driven credit bubble.

Japan: Wholesale prices still soft For March, wholesale prices fell 2.1% Y/y, the fifth straight month of declines – suggesting that the country's massive QE program is having limited success so far. Including the effect of the 3 percentage-point consumption tax hike, wholesale prices rose 0.7%. But QE – as well as relative interest rates – is clearly affecting the country's balance sheet; Japan has surpassed China as the biggest official holder of US Treasuries, with $1.223 tn held, according to just-released US Treasury figures.


The Fed: June rate hike off the table? Dennis Lockhart, president of the Atlanta Fed, called the economic data for 1Q2015 "notably weak" in a Thursday speech, fueling doubt about the prospects for an early rate hike this year. One cause for concern: slowing year-on-year growth of retail sales. Compared to the end of 2014, retail sales for March (excluding gasoline stations), rose 4.4% year-on-year (Y/y), vs. December 2014's 6.7% Y/y rise. Month-on-month, purchases rose 0.9% in March vs February, the first gain in four months, but below expectations. Optimists had hoped lower gasoline prices would translate into stronger consumer spending.


Pump it up OPEC reported Saudi Arabia hiked crude production in March by 650k barrels per day (b/d), about 6.4%, to a total of10.29m b/d. The International Energy Agency (IEA) reported OPEC's overall production for the month was up by the most in four years. Some observers call the increase a bid for market share at the expense of higher-cost US producers, in anticipation of Iran's post-sanction re-entry into the global crude market.


QE boosting lending, but at a cost The ECB's bank-lending survey for 1Q2015 concluded that "...the asset-purchase program seems to be effective in supporting lending to the euro-area economy". The survey showed that 28% of the region's banks used additional liquidity to grant loans to companies, 17% used it for mortgages and 18% for consumer credit and other lending to households. But the challenge is to bank profits; a new 18% of euro-area banks said the program will have a negative impact on their profitability over the next six months.

Signs of the times:

Policy banks start major reform effort – China Daily

Vladimir Putin tells Russians worst of economic crisis is over – Financial Times

German investment gap threatens prosperity – Deutsche Welle

Surging Dollar Boosts Europe, Japan as U.S. Slows, IMF Says – Bloomberg

US companies unleash share buyback binge – Financial Times

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, China Daily, Xinhua, Deutsche Welle, Mainichi Japan

...And the week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Apr 19

World Bank/IMF meeting ends




Apr 20

Boston Marathon


ECB: Annual report to European Parliament
UK: housing prices

China: President Xi Jinping visits Pakistan

Apr 21



Germany: ZEW survey

Hong Kong: inflation

Apr 22

Sales of previously –owned homes, housing prices

Brazil: foreign direct investment

UK: Bank of England meeting minutes

Japan: trade data

Apr 23

Jobless claims, new home sales


UK: retail sales, public finances
Spain: unemployment
France: business confidence
Germany, eurozone: PMIs

China: private-sector PMIs
S. Korea: GDP
Hong Kong: unemployment

Apr 24

Durable goods orders

Brazil: total outstanding loans

Germany: business confidence


Apr 25






Quantitative easing (QE) refers to a monetary policy implemented by a central bank in which it increases the excess reserves of the banking system through the direct purchase of debt securities.

Gross Domestic Product ("GDP") is an economic statistic which measures the market value of all final goods and services produced within a country in a given period of time.

The Federal Reserve Board ("Fed") is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

Purchasing Managers Indexes (PMI) measure the manufacturing and services sectors in an economy, based on survey data collected from a representative panel of manufacturing and services firms. PMI greater than 50 indicated economic expansion; below 50, contraction.

The Centre for European Economic Research (ZEW) is a public-private institute associated with the University of Mannheim, Germany.

The European Central Bank (ECB) is responsible for the monetary system of the European Union (EU) and the euro currency.

The International Monetary Fund (IMF) is an international organization of various member countries, established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements.

The World Bank provides financial and technical assistance to developing countries around the world. Established in 1944, it is based in Washington, DC.

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Previous Editions

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Will the current wave of central bank easing jump-start the world's economies?


Will the current wave of central bank easing jump-start the world's economies?

No - The real issues are structural - real progress on labor reform and regulatory excess will have more impact
No - Deflation is already taking hold, making monetary policy changes ineffective
Yes - The US model shows that monetary easing can help economies heal in the medium term
Yes, but it will take even  longer than it did in the US, and the delay will have a negative political impact

Previous month Poll

What would be the best news for markets for the remainder of the year?

Strong US corporate earnings validate US economic expansion
Strength in the US dollar convinces the Fed to keep short rates low longer
European Central Bank bond buying rekindles growth in European Union countries
Growth in China strong enough to leave room for financial system and structural reform