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

September 15, 2014

"The prospect of having to [move warehouses out of Scotland] fills my heart with genuine sadness."

— Kevin Hague, former Islay resident and CEO of Scottish e-commerce company M8 Group, on the possible impact of independence.  (Bloomberg, September 11 2014)

The week in review...

AMERICAS

Brazil: Downgrade + politics = good news? Moody's lowered the outlook for Brazil's sovereign debt to negative (its investment-grade rating is intact so far) on diminished growth prospects and deteriorating investor sentiment. But the equity market appears to be more optimistic: the Ibovespa index is up 13.3% year to date as of Sept 11, and up 29.7% since its low of Mar 14. One possible reason: growing discontent about President Dilma Roussef, whose labor and economic policies have not always resonated with the business community.

US: Healthy optimism One reason for economists' forecasts for a strong 3Q: spending on health-care services rose 3% in 2Q vs. 1Q, and 3.7% year-on-year. 2Q GDP rose at a 4.2% annualized rate, even with declining health care spending.

Chile: Domestic improvements  Chile's Congress is considering steps intended to ease the load on the country's half-million household domestic workers – such as  doubling required monthly time off, to 8 days from four, and bringing the maximum weekly hours worked down from 72 to 45 – the same figure as other workers. Even if these changes are enacted, labor laws in Brazil, Argentina and Peru currently offer domestic workers better terms.

EUROPE

Ireland: Settling up The €22.5 bn ($29.1 bn) in IMF loans Ireland carries as a legacy of its bailout carry a rate near 5%, and are due by 2023. With €20 bn cash on hand and Irish 10-year sovereign debt trading at about 1.70%, Ireland might be able to save as much as €375 mn a year in interest payments if it refinanced at today's much better rates, according to Finance Minister Michael Noonan.

OIL

Kurdistan: Bad timing As if regional affairs weren't complex enough, the demand for and the price of crude oil, the Kurdish region's most valuable asset, are in retreat. The International Energy Agency (IEA) called the recent decline in global demand growth "nothing short of remarkable", even before taking into account the surge in US production. Key reasons: weaker growth in Europe and China. The IEA reported that Saudi Arabia cut its August supply by 330k barrels per day "in response to lower requests by customers". The price for Brent crude tumbled nearly 15% between its June peak of $115.06 and its 9/11 price of $97.90 – which doesn't augur well for future earnings of whomever ends up controlling the Kurdish region's oilfields.

Signs of the times:

German economy so strong that Berlin won't need to borrow in 2015 – euronews

Bank of England Gov. Mark Carney Signals Spring Rate Rise – Wall Street Journal

China's inflation at 4-month low – Xinhua

Rajan Channels Fischer with India Central Bank Overhaul – Bloomberg

US Budget Deficit for 11 Months Shrinks 22% as Economy Grows – Bloomberg

Sources: Bloomberg, Wall Street Journal, Financial Times, Xinhua English, Japan Times, EUObserver, Quartz, Irish Examiner

...And the week ahead:

GLOBAL ECONOMIC CALENDAR: Sep 14 – 20

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
Sep 14

 

 

Sweden: general election
Germany: elections in Brandenburg and Thuringia

China: foreign direct investment; President Xi begins visit to Maldives, Sri Lanka, India

Mon
Sep 15

Industrial production

 

Eurozone: trade balance
UK: house prices

 

Tue
Sep 16

Producer prices; capital flows

 

Germany: investor confidence
UK: inflation

Australia: agricultural exports

Wed
Sep 17

FOMC rate and bond buying decision
Consumer prices

 

Eurozone: inflation
UK: jobless claims

 

Thu
Sep 18

Housing starts, jobless claims, building permits

 

Scotland: referendum on independence
Switzerland: monetary policy decision
UK: retail sales, factory orders
Ukraine: industrial output

Japan: merchandise trade, flow of funds
China: housing prices
Hong Kong: unemployment

Fri
Sep 19

Leading indicators

 

Spain: Catalonia parliament decision on holding a Nov 9 referendum on independence
Eurozone: current account balance

 

Sat
Sep 20

 

 

 

New Zealand: general election


Definitions:

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

The Ibovespa Stock Index is a total return index weighted by trading volume and comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. Please note that an investor cannot invest directly in an index.

The Federal Open Market Committee (FOMC) is the policy-making body of the Federal Reserve (Fed), the US central bank, 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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Poll

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








Poll

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

Japan, as Shinzo Abe's policy initiatives take hold
(18%)
India, as Narendra Modi's new government enacts changes
(37%)
China, as Xi Jinping's reforms promote a stronger financial sector
(22%)
South Korea, as President Park Geun-hye's plan to boost growth bears fruit
(23%)



Previous month Poll

Go for growth: Where will a global recovery be strongest this year?

Europe, as countries emerge from bailouts
(43%)
US, as consumers regain optimism
(40%)
Japan, as stimulus programs begin to bear fruit
(7%)
China, as reform and pro-growth policies continue
(10%)