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
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19 May, 2014

"No country can keep the peace on its own"

– Prime Minister Shinzo Abe, on increasing Japan's role in regional affairs by changing the country's stance toward military action (Financial Times, May 15 2014)

The week in review...

EUROPE

ECB: Going negative? Vice President Vitor Constâncio added to the signaling that the ECB was growing increasingly comfortable with unconventional stimulus measures to forestall or reverse deflation. Among the moves mentioned by the ECB: a highly-unusual negative interest rate on reserve deposits.

France: Hands off Prime Minister Manuel Valls added to the list of "strategic" industries needing governmental approval before foreign takeovers. New entries: energy, water, transport, telecoms and health care; the original list included nuclear activities, encryption technologies and vaccines. In addition to complicating the high-profile takeover offers for Alstom, the moves were a play for French nationalist votes. The downside: alienating foreign investors, whose capital inflows are increasingly important to French President Hollande's efforts to grow the economy while reducing taxes.

ASIA

Japan: Help wanted Japan's traditional reluctance to import labor is colliding with the need for domestic assistance for the country's rapidly aging population,  in a country already short of workers. A sign of that shortage: One Tokyo agency charges 48,000 yen ($469) per month for three hours of cleaning per week, while live-in help in Hong Kong typically costs $517 for the entire month.

China: "Stay cool minded" That's President's Xi Jinping's recommended approach toward the slowdown in economic growth; the statement is being interpreted by some as a sign that government economic stimulus isn't in the cards in the near term.

China II: Hothouse The finance sector is in need of restraint rather than stimulus, according to some officials. Liu Shiyu of the People's Bank of China (PBoC) summed it up: "If everyone in society is trying to get into the financing business, we may have entered a phase where a fever has started to affect our ability to think...Some of the financial innovations nowadays are actually avoidance of regulation."

AMERICAS

US: Housing re-starts Home construction for Apr rose 13.2% to a 1.07 mm annualized rate to the highest level since Nov, driven mostly by a near 40% jump in multifamily unit starts. The figures beat all analyst forecasts.

Energy reform in Mexico: changing the constitution was the easy part.President Enrique Peña Nieto is facing resistance in Congress to ending Pemex's monopoly on energy. Among the issues: some believe electoral reform should precede energy reform. With next year likely to be dominated by elections, there's pressure to get the energy deal done before it becomes a political football.

 

Signs of the times:

American Shoppers Take Breather After Retail Sales Surge – Bloomberg

Germany's economy powers ahead as France and Italy fall behind – FT

China's New Credit Declines – Bloomberg

Modi-Led Bloc Wins Biggest India Mandate in Three Decades – Bloombergs

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, xinhuanet, New York Times, Latin American Herald Tribune, The Hindu

...And the week ahead:

GLOBAL ECONOMIC CALENDAR: May 18 – 24

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
May 18

 

 

UK: CPI

Japan: machine orders
China: property prices

Mon
May 19

Mortgage applications

Argentina: unemployment
Brazil: CPI
Venezuela: GDP

 

Thailand: GDP
Australia: leading indicators

Tue
May 20

 

 

Germany: producer prices
Poland: industrial output, producer prices
Russia: industrial production

Japan: industrial activity, leading index, machine tool orders, trade balance
Australia: consumer confidence

Wed
May 21

FOMC meeting minutes

Brazil: inflation

EU: consumer confidence

China: mfg PMI
Korea: unemployment
Japan: Mfg PMI
Malaysia:  PMI

Thu
May 22

Unemployment: new and continuous claims, existing home sales, leading economic indicators, PMI

Argentina: consumer prices
Brazil: unemployment
Mexico: unemployment

EU: PMIs for services, mfg
European Parliament elections (22-25 May)
France: mfg confidence
Russia: gold/foreign exchange reserves, unemployment

 

Fri
May 23

New home sales

Argentina: industrial production
Brazil: foreign investment
Mexico: GDP

Germany: business climate index, GDP
Italy: retail sales

Singapore: CPI

Sat
May 24

 

 

 

 


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.

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 Consumer Price Index (CPI) measures the average change in U.S. consumer prices over time in a fixed market basket of goods and services determined by the U.S. Bureau of Labor Statistics.


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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
(17%)
India, as Narendra Modi's new government enacts changes
(32%)
China, as Xi Jinping's reforms promote a stronger financial sector
(24%)
South Korea, as President Park Geun-hye's plan to boost growth bears fruit
(27%)



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%)