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

June 1, 2015

"The ECB will not be the one to unplug the respirator."

—A senior banker on the ECB's willingness to address Greece’s short-term imbalances as bailout negotiations continue (Reuters, May 27 2015)

The week in review...

United States

Business lending: A helping hand Commercial and industrial (C&I) loans rose 8.5% in 1Q2015 from the year-ago quarter, and accounted for about 21% of outstanding loan balances at US banks, the highest level in 13 years. Banks held $8.362 tn of loans on their balance sheets as of March 31, 2015, a 5.4% increase from the same date last year, according to the FDIC. The increase was largely due to C&I lending. Loans tied to real estate construction rose 15%, while home equity loans fell 3.6%, suggesting that homeowners are remaining prudent about managing household balance sheets.

Capital investment: On the rise? Core capital goods orders (i.e., non-defense capital goods orders excluding aircraft) rose 1.0% in April month-on-month (M/m), beating expectations – after an upwardly-revised 1.5% increase in March. Shipments of core capital goods also beat expectations, rising 0.8% for the month.

Startups: Reloaded New business creation had the biggest increase in 2015 over the past two decades, according to the Ewing Marion Kauffman Foundation.  Perhaps more significant, about 80% of those who started businesses reported being driven by opportunity rather than necessity, returning to the level seen before the most recent recession. By age group, the biggest gains have been among 55- to 64-year-olds, making up 26% of enterprises.


Breathing weekly During the negotiations between Greece and its creditors, the ECB has been making weekly reassessments of the amount of short-term liquidity needed to keep Greece's financial system running. On Wednesday May 27, the ECB kept that amount unchanged – the first time since February it hasn't been raised. One source within the ECB credited a slowdown in deposit outflows. But the emergency funding will likely remain sparse; one banker said the ECB "will not provide comfort to the Greek state to play with its money…".


China: Tariff cut To help boost domestic consumption, import duties on select imported consumer goods have been reduced by about half. Targeted items range from diapers to fur clothing, leather boots, woolen suits and sneakers. Among the stated goals: raising imports.  Since the tariffs don't affect value-added and consumption taxes, the effect might be limited, according to a government research center.

Japan: Top global lender For the 24th year in a row, Japan maintained its position as the world's largest creditor, with net external assets rising to a record ¥366.86 tn ($3.03 tn). Japan's net external assets were 1.7 times those held by second-place China (¥214.3 tn) and third-place Germany (¥154.7 tn). External debt grew 22.6% to ¥578.42 tn, up for a fifth straight year, helped by increased acquisitions by foreign investors of Japanese equities and other assets.

Japan: Retail sales disappoint April sales rose 0.4% from March's 1.8% decline, worse than forecast. But April's figures were 5% higher than the previous April, suggesting that the effect of last year's hike in consumption taxes might not have had a lasting impact.

Signs of the times:

Coke, PepsiCo supplier Zhongfu to default on bond – Shanghai Daily

China currency is ‘no longer undervalued’, says IMF – Financial Times

Oil Bulls Beware, Soaring Tanker Rates Show Supply Glut Persists – Bloomberg

German consumer confidence at 13 year high – RTÉ News

Rousseff Wins Austerity Breakthrough as Brazil Caps Pensions – Bloomberg

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, Shanghai Daily, Xinhua, MNI, RTÉ News

...The week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

May 31



Italy: regional elections


Jun 1

Consumer spending, manufacturing, construction spending


Germany: inflation

China: manufacturing and non-manufacturing PMI
Japan: capital spending

Jun 2

Factory orders

Brazil: industrial production

Eurozone: consumer prices
Germany: unemployment

Japan: monetary base

Jun 3

Private-sector employment, trade deficit, services growth, Fed’s Beige Book

Brazil: rate decision

Eurozone: PMI, unemployment
Europe: ECB rate decision and press conference
UK: services PMI


Jun 4

Jobless claims (weekly), productivity

Mexico: rate decision

UK: central bank rate decision


Jun 5

Monthly payrolls and unemployment rate, consumer credit


Greece: IMF payment deadline
Eurozone: GDP
Germany: factory orders
Russia: consumer prices


Jun 6

Belmont Stakes (horse racing)





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 Ewing Marion Kauffman Foundation, based in Kansas City, supports programs and research to help individuals attain economic independence by advancing educational achievement and entrepreneurial success.

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.

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. federal government that preserves public confidence in the banking system by insuring deposits.

The Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve System (the Fed), 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.

The Beige Book is a commonly used name for the Federal Reserve report, "Summary of Commentary on Current Economic Conditions by Federal Reserve District". It is published eight times each year, just before the Federal Open Market Committee (FOMC) meeting on interest rates, and is used to inform the members on changes in the economy since the last meeting.

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Previous Editions

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When will the Fed raise the Fed Funds target rate?


When will the Fed raise the Fed Funds target rate?

Not until 2016

Previous month Poll

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