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

November 24, 2014

"Under no circumstance will Iran decrease its share of the global market, not even by one barrel."

— Oil Minister Bijan Namdar Zanganeh, on OPEC's Thursday Nov 27 meeting in Vienna (Bloomberg, Nov 20, 2014)

The week in review...

ASIA

China: Lowering the bar? As the People's Bank of China (PBoC) surprised by cutting the one-year lending rate by 0.4% to 5.6% – the first cut since July 2012 – talk of adjusting China's economic growth target from 7.5% to 7.0% is increasing. Some reasons: November's manufacturing output PMI fell to 49.5, the lowest level in 7 months, signaling outright contraction. Meanwhile, non-performing loans for Q3 rose by 72.5 bn yuan ($11.8 bn) to 766.9 bn yuan ($125.2 bn), accounting for 1.16% of lending, vs. 1.08% for Q2.

Japan: Rolling the dice Japan's dismally disappointing -0.4% quarterly GDP decline gave Prime Minister Abe the cover he needed to postpone next October's planned tax hike an additional 18 months. But he also called a general election for this coming December. Given the Bank of Japan's stated opposition to the delay of the tax, the election has been read as an attempt to marshal support against a powerful internal opponent.

UNITED STATES

Economy: Warm, but short of hot. Leading economic indicators for the month rose more than forecast, reflecting an improved outlook for the next three to six months. October consumer and producer inflation ex food and energy were slightly higher than expected, both at 1.8% year-on year. But manufacturing struggled, with industrial production declining -0.1% vs. September as motor vehicle producers cut back their output by 1.2%. While overall housing starts fell -2.8% in Oct, single-family starts rose over 4% for the second month in a row and homebuilder confidence strengthened in Nov to 58, the second highest level since 2005.

EUROPE

Eurozone: Treading water Factories and services are growing – barely – and not as well as expected. Preliminary PMI figures for manufacturing and services activity disappointed, at 50.4 and 51.3 respectively, with the composite figure at 51.4 (greater than 50 signifies expansion; less than 50, contraction). For Germany, which just dodged a recessionary GDP report, the composite figure disappointed as well, at 52.1 – and for manufacturing, the figure was a break-even 50.0. France turned in the worst figures, with PMIs showing outright contraction. These results put additional pressure on the European Commission's proposed €300 bn ($375 bn) investment plan, for which funding has not yet been found.

Signs of the times:

Brazil Logs Lowest October Jobless Rate Since 2002 – Latin American Herald Tribune

Greek Bailout Review Stalls as Troika Demands Final Steps – Bloomberg

Falling Oil Prices Test OPEC Unity – Wall Street Journal

European car market on the mend – Deutsche Welle

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, China Daily, Xinhua Online, Latin American Herald Tribune

...And the week ahead:

GLOBAL ECONOMIC CALENDAR: Nov 23–29, 2014

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
Nov 23

 

 

Davis Cup finals (tennis)

 

Mon
Nov 24

Consumer confidence, 3Q GDP (2nd estimate)

Mexico: unemployment

Germany: business climate

 

Tue
Nov 25

Consumer confidence, 3Q GDP (2nd estimate)

 

OECD: economic outlook
Germany: GDP

Japan: Bank of Japan meeting minutes
Singapore: GDP
Hong Kong: imports, exports, trade balance

Wed
Nov 26

Durable goods orders, new home sales

 

UK: GDP

 

Thu
Nov 27

Holiday

 

OPEC: Policy meeting and announcements
Germany: unemployment, consumer inflation
Spain: GDP, consumer inflation

China: industrial profits

Fri
Nov 28

"Black Friday" start of holiday shopping season

Argentina: industrial production

Eurozone: unemployment, consumer inflation
Italy: unemployment, inflation

Japan: jobless data, retail sales, industrial output

Sat
Nov 29

 

 

 

Taiwan: local elections


Definitions:

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.

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.

Troika refers to the three organizations involved in eurozone bailouts: The European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).

The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organization of 12 oil-exporting developing nations that coordinates and unifies the petroleum policies of its member countries.


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Previous Editions

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Poll

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








Poll

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

Strong US corporate earnings validate US economic expansion
(41%)
Strength in the US dollar convinces the Fed to keep short rates low longer
(0%)
European Central Bank bond buying rekindles growth in European Union countries
(59%)
Growth in China strong enough to leave room for financial system and structural reform
(0%)



Previous month Poll

Which Asian country will have the strongest growth in the coming year?

Japan, as Shinzo Abe's policy initiatives take hold
(17%)
India, as Narendra Modi's new government enacts changes
(45%)
China, as Xi Jinping's reforms promote a stronger financial sector
(17%)
South Korea, as President Park Geun-hye's plan to boost growth bears fruit
(21%)