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 27, 2015

"We haven't seen a kopeck since December"

— Russian engineer Anton I. Tyurishev, on his Siberian employer's four months of unpaid wages (Bloomberg, April 21, 2015)

The week in review...


Large banks: Less reserved For the second time this year, the People's Bank of China (PBoC) cut the reserve requirement – the percentage of deposits it requires banks to hold in reserve against loans outstanding. This time the cut was aggressive – one full percentage point, to 18.5%, the biggest single cut since 2008. One estimate of the capital freed to lend: 1.2 tn yuan ($200 bn). A possible objective: help reduce the speed of the current slowdown via increased lending. A second: seek to head off a liquidity crunch in the financial system, a possible side effect of a debt-for-bond replacement program designed to help local governments reduce their own interest payments. All this has provided additional support for an already booming equity market; the Shanghai Composite Index is up 36.5% year to date.¹

Defaults in the stars? Two bond issuers defaulted on payments last week – a real estate developer (Kaisa Group Holdings) missed a payment on its US dollar debt, and state-owned enterprise (SOE) power transformer company (Baoding Tianwei Group) skipped an 85.5 mn yuan ($13.8 mn) payment due on April 21. Despite the novelty, reaction was confined to the lower-rated segment of China's bond market.


US Oil and jobs: The stakes, by state Texas, Oklahoma and Pennsylvania lost the most jobs of any states in March, according to a Labor Department monthly survey. Texas lost 25,400, its first decline since September 2010 and the biggest since August 2009; Oklahoma lost 12,900 and Pennsylvania 12,700. But the unemployment rates for those three states varied: 4.2%, 3.9% and 5.3% respectively – suggesting the economic benefit from the oil industry may still be strongly felt.

Brazil: The devil they know State-owned oil giant Petrobras released its long-delayed audited financial statements for 4Q2014, revealing a R$6.2 bn ($2.1 bn) estimated loss from corruption, and taking a R$44.6 bn ($15.0 bn) overall impairment charge as a result of the scandal. The six-month delay in releasing audited figures kicked off a series of nationwide protests, targeting the newly-elected government of President Dilma Rousseff. Brazilian companies were left hoping that by quantifying the size of the losses could make it possible to regain access to the bond markets to raise capital.


Greece: Shaking the piggy bank Among the measures taken by the Tsipras government to forestall a default: a decree that all local governments move their cash currently held in commercial banks to the Bank of Greece. It's estimated the measure could raise up to €2 bn ($2.16 bn). Separately, the Bank of International Settlements (BIS) reported that as of the end of 2014, Germany had the most cross-border exposure to Greek lenders – $13.3 bn of the $46.8 bn total in cross-border lending.

¹ As of April 23, 2015

Signs of the times:

UK Borrowing Falls, So Do Retail Sales, as Election Approaches – Bloomberg

Germany Raises Growth Forecast for 2015 on Consumer Spending – Bloomberg

At Last, Eurozone Gets Growth in Gear – Wall Street Journal

Spain adds 500,000 jobs as recovery spreads – Financial Times

Sales of Existing US Homes Rise to Highest Since 2013 – Bloomberg

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 26



UK: London Marathon
Kazakhstan: presidential election


Apr 27

Services PMI

Mexico: unemployment

Germany: retail sales

Japan: retail sales
China: industrial production

Apr 28

FOMC meeting begins; home prices in 20 cities; consumer confidence

Brazil: unemployment

France: consumer confidence


Apr 29

GDP; FOMC rate decision (no press conference); Japan Prime Minister Shinzo Abe addresses Congress; pending home sales

Brazil: rate decision

Germany: CPI
Italy: business confidence


Apr 30

Personal spending; unemployment claims; employment cost index

Mexico: interest rate decision

Eurozone: CPI, unemployment
UK: consumer confidence
Ukraine: GDP

Japan: industrial production, monetary policy decision
Taiwan: GDP

May 1

Manufacturing PMI; construction spending; consumer sentiment


UK: mortgage approvals, manufacturing PMI

China: manufacturing, non-manufacturing PMIs
Japan: inflation, jobless and wage data
S. Korea: CPI, exports

May 2

Kentucky Derby





A kopeck is a monetary unit of Russia and some other countries of the former Soviet Union, equal to one hundredth of a ruble. On April 24, 2015, one Russian ruble was worth $0.0195.

The People's Bank of China (PBC or PBOC) is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China.

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. Please note: an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.

The Bank for International Settlements (BIS) is an international organization fostering the cooperation of central banks and international monetary policy makers.

The Consumer Price Index (CPI) measures the average change in consumer prices over time in a fixed market basket of goods and services.

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.

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 Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve System responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

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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