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

February 17, 2014

"Italy cannot remain in a situation of uncertainty..."

— Matteo Renzi, leader of Italy’s Democratic Party, after forcing the resignation of Prime Minister Enrico Letta (Financial Times, Feb 13 2014)

The week in review...


Italy: Demolition zone Prime Minister Enrico Letta resigned in the wake of an internal struggle within his Democratic Party (PD). The party's most favored replacement for now is Matteo Renzi, the 39-year-old former mayor of Florence, nicknamed "Demolition Man" for his abrupt political style. So far, the fragile ruling coalition remains intact, along with the country's unpopular austerity program, adopted at the encouragement of the European Central Bank (ECB).  Spreads for Italy's 10-year sovereign bond remained near their post-crisis lows.

UK: Guiding light The Bank of England (BoE) hiked its most recent forecast for growth from 2.8% to 3.4% for the rest of 2014, and stepped away from its six-month-old policy of formal forward guidance tying future interest rates to improvements in employment. Seeking to quiet fears of higher borrowing costs, BoE Governor Mark Carney said "…the recovery is neither balanced or sustainable", and was still in need of low interest rates.

Germany: Not with a bang The constitutional court issued a key ruling on whether the ECB's high-profile "whatever it takes" Outright Monetary Transaction (OMT) program  of 2012 violates German law…and handed the matter off to the European Court of Justice.


Kazakhstan: Tough neighborhood In devaluing its tightly-controlled currency (the tenge) by about 20% in one step (to about 185 from 155.6 tenges per US dollar) on Wed Feb 11, the central bank attempted to slow the drain on its $23.5 bn foreign reserves caused by declining oil revenues and rising consumption-driven imports. Pressure on the tenge has increased as the Russian ruble dropped vs the tenge, reducing Russia's ability to import from its major trading partner – or to sell its oil. Central bank chairman Qairat Kelimbetov said one objective was to increase domestic consumption without driving inflation above its Jan reported 4.5% level – a tall order. The devaluation may make it even tougher for the country to service its high level of foreign debt.

China: Trust but verify As China's central bank signaled that it would tolerate more "volatile" rates in the interbank market to modernize its money markets, China's assets (invested in its wide variety of investment trusts) soared to $1.8 tn in 2013, a 46% jump. Though trade group China Trustee Association described systemic risks as "impossible", a 3 bn yuan ($494.8 bn) high-yield trust product had to be bailed out at the last minute.


US: Stormy weather Retail sales and factory production both disappointed in Jan, down 0.4% and 0.8% respectively, with a rough winter taking some of the blame. Job openings also disappointed, falling in Dec by 43k to 3.99 mn, but new Fed chair Janet Yellen's congressional testimony stressed policy continuity, apparently appeasing financial markets.

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, China Trust Association, Tengri News (Kazakhstan), tradingeconomics.com, Radio Liberty/Radio Free Europe, European Central Bank.

Signs of the times:

Strong China January Trade Data Sparks Cheers, Doubts – Reuters

Australia Readies More Than $100 Billion in Asset Sales – Wall Street Journal

Portugal Taps Bond Markets As It Moves Toward Bailout Exit –Wall Street Journal

Argentina Revises ‘Bogus’ Inflation Figures – Financial Times

British Business Optimism at 22-year High – Reuters

...And the week ahead:

GLOBAL ECONOMIC CALENDAR: February 16 – February 22



Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim





Japan: GDP, industrial production, capacity utilization
Singapore: foreign trade
New Zealand: retail sales



Colombia: industrial production

Russia: industrial production, government finance

South Korea: producer prices
Thailand: GDP


Homebuilder optimism, foreign securities purchases, e-commerce retail sales, NY Fed manufacturing survey

Canada: foreign securities purchases

Eurozone: current account
Germany: economic sentiment, current conditions
Italy: trade balance
Russia: producer prices
UK: consumer prices, retail prices, producer prices

Hong Kong: unemployment rate
Australia: wages, prices


Housing starts & permits, producer prices, weekly retail sales, mortgage applications, FOMC minutes

Canada: wholesale sales
Argentina: unemployment rate

Switzerland: economic expectations
UK: unemployment rate, claimant change, average earnings
South Africa: consumer prices

Japan: Trade balance, exports, imports
China: non-gov't manufacturing survey
India: money supply
New Zealand: producer prices


Initial jobless claims, consumer prices, leading indicators, Philly Fed survey, Fed balance sheet, money supply, Cleveland Fed median CPI

Brazil: unemployment rate

Eurozone: manufacturing & services sector surveys
Germany: producer prices, manufacturing & services sector surveys
France: consumer prices, manufacturing & services sector surveys
Italy: industrial sales & new orders
Russia: retail sales, unemployment
UK: retail sales, distributive trades survey, industrial trends orders

Singapore: GDP


Existing home sales

Canada: consumer prices, retail sales,
Mexico: GDP, economic activity
Brazil: current account, foreign direct investment
Argentina: industrial production, economic activity
Venezuela: GDP

UK: public sector net borrowing

Honk Kong: consumer prices





Taiwan: GDP


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Previous Editions

Click on a date to view that week's edition of weekly snapshot.


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


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

Europe, as countries emerge from bailouts
US, as consumers regain optimism
Japan, as stimulus programs begin to bear fruit
China, as reform and pro-growth policies continue

Previous month Poll

Expect the unexpected:
Which of these outcomes
do you think is the most likely
in the coming year?

US: economic surge spurs Fed to begin raising interest rates
Japan: return to recession despite Abe's continued aggressive stimulus policies
China: negotiate with neighbors over its territorial claims in the South China Sea
Europe: Italy forms a government that lasts the entire year
None of the above; business as usual worldwide