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

December 1, 2014

"I could buy a car if I liked. But I want to buy more land to expand production first."

— Nguyen Van Thanh, a pepper farmer in Vietnam's Dak Lak province, on the impact of foreign demand for his crop (Bloomberg, Nov 24, 2014)

The week in review...

AMERICAS

Economy: Not too shabby GDP figures for 3Q were revised upward to a 3.9% annualized rate –exceeding most forecasts and capping its strongest six months in the past decade. Reasons for the upward revision included consumer spending (70% of the overall economy) which rose at a 2.2% rate vs. the previously estimated 1.8%. Also encouraging: business investment in new equipment rose at a 10.7% annualized rate vs. the previous estimate of 7.2%. With the average cost of a gallon of gasoline at $2.81 as of Nov 24, the lowest level in four years, the expected increase in disposable income could be a tailwind for holiday retail sales.

Brazil: Clearing the way President Dilma Roussef chose economist Joaquim Levy as her new Finance minister as part of a post-election cabinet shake-up. Levy, Brazil's Treasurer under former President Lula da Silva, was called "Edward Scissorhands" for his history of budget-cutting. He's best known for helping reduce Brazil's public debt a decade ago, including completely repaying the International Monetary Fund. Levy's challenges will include taming above-target inflation, currently running at 6.42%, and helping Brazil retain its investment-grade rating.

EUROPE

France: Private-sector protectionist France's dominant 1200-store grocery chain agreed to replace many now-imported fruits and vegetables with home-grown versions. The move is in response to pressure from French farmers reeling from the trade embargo on Russia, which drove prices down and left harvests without buyers. The European Commission declined to comment in what it said were private operators' decisions on sourcing.

EU: Multiplier effect Hopes are high for EU president Jean-Claude Juncker's newly proposed €315 bn ($393 bn) European Fund for Strategic Investment, intended to jump-start the region's growth by investing in infrastructure. The current plan is to seed the fund with €21 bn ($26.2 bn) from the EU, in hopes of attracting private capital by providing guarantees to lenders, the nature of which has yet to be determined.

CHINA

Banks: Savers get a break The biggest surprise in China's sudden 0.5% interest rate cut: depositors' interest rates will be unchanged. The official explanation: making "...the banks pass on their profits to benefit enterprises and savers". The impact could be large: demand deposits accounted for about 36% of the nation's 49 tn yuan ($8 tn) of household savings at the end of October. With consumer inflation at 1.6% and one-year deposit rates reaching as high as 3.3%, China's savers will be net ahead of inflation – doing better than savers in many developed economies.

Signs of the times:

American Consumers Say They'll Drown Sorrows at Appliance Stores – Bloomberg

Abe says consumption tax to rise to 10% in 2017 regardless of economy – Mainichi

Czech Consumer Confidence Positive First Time in 7 Years – Bloomberg

German Business Sentiment Rises – Wall Street Journal

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


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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.

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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
(36%)
Strength in the US dollar convinces the Fed to keep short rates low longer
(4%)
European Central Bank bond buying rekindles growth in European Union countries
(56%)
Growth in China strong enough to leave room for financial system and structural reform
(4%)



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%)