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

November 3, 2014

"The US is a big bright spot in the world"

— Economics professor and former New York Fed research director Stephen Ceccetti, on the backdrop for the Fed's decision to end its bond-buying program. (Bloomberg BusinessWeek, October 20, 2014)

The week in review...

AMERICAS

US: Estimated optimism GDP for 3Q rose an annualized 3.5% – according to the Commerce Department's first estimate for the period. The figure was better than expected, and after 2Q's 4.6% gain, capped the best six-month growth in over a decade. Contributing factors: rising oil production, which supports manufacturing growth despite a slowdown in demand from China; rising government expenditures, largely from a rebound in defense outlays; and a narrowing trade gap, from $460.4 bn to $409.9 bn, as imports of foreign oil and consumer goods fell.

US Fed: Lonesome dove While the Fed committed to continue its low interest rate policy for a "considerable time", the FOMC's post-meeting press release was newly optimistic about US economic growth – leading some observers to conclude that the FOMC had turned "hawkish", or more willing to consider hiking rates to limit potential future inflation.

Brazil: Beware what you wish for President Dilma Rousseff won re-election with 52% of the vote after a divisive campaign season, and now faces the twin challenges of rampant inflation and sluggish growth, in a political environment filled with charges of corruption and regional favoritism. A possible taste of things to come: the central bank's surprise decision to raise the overnight rate 25 bps to 11.25%, after having left the rate at 11.0% since April.

EUROPE

European banks: Dis-stressed The ECB and the European Banking Authority spent nearly a year assessing the health of 150 banks. The purpose: reassure investors that the banks are in good shape. The results: mostly positive, with 13 banks needing to come up with a total of €9.5 bn ($12 bn) in extra capital. Another 12 banks had already taken steps to shore up their balance sheets since the end of 2013, the cutoff date for the examination. The premise of the "stress test": Europe's economy falling 7% below forecasts and unemployment rising to 13%.

JAPAN

Growth: Just in time for the next blow? To boost the economy, the Bank of Japan (BoJ) expanded its record-breaking stimulus program to 80 tn yen ($724 bn). Industrial production rose 2.7% in Sept from Aug, beating the 2.2% median estimate – trimming the decline for the full quarter to 1.9%, following 2Q's 3.8% drop. Both the BoJ boost and the production pickup are considered supportive of the planned second annual hike in taxes this coming April. After the economic contraction caused by the first tax increase this past April, Prime Minister Shinzo Abe may find it difficult to follow through – especially given the country's now heightened need to cut its debt burden – the world's largest.

Signs of the times:

China Backs Growth in Housing Again as Slowdown Prompts U-Turn – Bloomberg

UK Housing Loses Momentum With Price Growth at 9-Month Low – Bloomberg

France, Italy Escape EU Reprimand on 2015 Budgets – Europe Online

Italians Protest Against PM Renzi's Contested Labor Reforms – Deutsche Welle

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, Deutsche Welle, Latin American Herald Tribune (Venezuela), Europe Online.

...And the week ahead:

GLOBAL ECONOMIC CALENDAR: Nov 2–8, 2014

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
Nov 2

New York City Marathon

 

 

 

Mon
Nov 3

Manufacturing growth

 

UK: mfg PMI

China: non-mfg PMI, mfg PMI
Hong Kong: retail sales

Tue
Nov 4

Factory orders, trade balance
Congressional mid-term elections, governors' elections for 36 of 50 states

Brazil: industrial production

European Commission: economic forecasts

S. Korea: consumer prices

Wed
Nov 5

Service industries growth
ADP employment

 

Eurozone, UK: services PMI
Portugal: unemployment

Japan: wage data, monetary base
China: composite and services PMI

Thu
Nov 6

Initial jobless claims, job cuts

 

ECB: rate decision
UK: rate decision, industrial production
Germany: factory orders
Russia: composite PMI

 

Fri
Nov 7

Monthly jobs report,
consumer credit,
Detroit bankruptcy decision

 

Germany, France: industrial production
Swiss: foreign currency reserves

Hong Kong: foreign exchange reserves

Sat
Nov 8

 

 

 

China: trade data


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 Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve System (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 European Union (EU) is an economic and political union established in 1993 after the ratification of the Maastricht Treaty by members of the European Community and since expanded to include numerous Central and Eastern European nations. Current membership includes 28 countries.

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.


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Previous Editions

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

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
(43%)
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
(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%)