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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June 16, 2014

"We are not up the proverbial creek without a paddle"

— - Mark Carney, Governor of the Bank of England (BoE), on potential policy moves to slow the UK's booming real estate market (Financial Times, June 12, 2014)

The week in review...

AMERICAS

US : The surge to merge Whether driven by the fear of rising rates or the signs of a gathering recovery, global deal volume in 2Q2014 is $992 bn -- including proposed, pending and completed deals (Source: Bloomberg). That would make the quarter the biggest for mergers and acquisitions (M&A) since 3Q2007, the best year ever for deals. But some M&A records have yet to be broken: there were three $1 trillion plus quarters in 2007, for a total of $4.8 trillion.

Mexico: Rapid response The central bank cut its benchmark interest rate by 0.5 percent, shortly after also cutting its 2014 growth forecast from 3.9% to 2.7% -- and in the light of its belief that the global economy is slowing -- a view shared by the International Monetary Fund (IMF). Mexico said the cut wouldn't be repeated "in the foreseeable future."

EUROPE

UK: The price of success Fueled by a serious housing shortage, government incentives and easy credit, the residential real estate boom shows scant sign of abating. But signs are emerging that an end could be approaching. The BoE's newly granted power to regulate the size of mortgages and a clearly-signaled early end to its accommodative interest rate stance may be the writing on the wall. Property loan defaults are up 13% to £24.5 bn ($41 bn) in 2013, according to one survey.

Eurozone: ABS to the rescue? Asset-backed securities (ABS), blamed by some for playing a key role in the 2008 financial crisis, is getting new respect in the 28-country European Union (EU), as a way to shore up the region's banks -- according to Yves Merch, a member of the European Central Bank (ECB) executive board. If acceptable as collateral, newly issued ABS could be issued and sold to the ECB, adding to bank reserves on hand. But there would have to be more of it to make a difference; issuance was a mere €181 bn ($245 bn) in 2013, vs. €711 bn in 2008. Quality standards would need to be coordinated across the region -- and raised -- to make this plan viable, according to Merch.

ASIA

Japan: Growth GDP grew an annualized 6.7% in 1Q2014, much better than expected, possibly boosted by accelerated purchases and investment ahead of April's tax increase. Business investment rose 7.6% Q/q, and consumer spending rose 2.2%.

SIGNS OF THE TIMES:

Fears About Iraq Push Up Oil Prices – New York Times

First India-China Meeting Since Modi Win Focuses on Economy – Bloomberg

Indonesia Prolongs Halt in Rate Increases as Expansion Slows –Bloomberg

France vows to abide by budget deficit target despite EU concerns – GlobalPost

Consumer Credit in US Climbed More Than Forecast in April –Bloomberg

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, European Central Bank, GlobalPost, Nikkei News, Bank of England, International Financial Review

...THE WEEK AHEAD:

GLOBAL ECONOMIC CALENDAR: June 15 – 21

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
Jun 15

 

Brazil: World Cup (all week)

 

 

Mon
Jun 16

Industrial production, capital flows

 

Eurozone: CPI
UK: housing prices
Russia: rate decision, GDP
Turkey: unemployment
Nigeria: CPI

 

Tue
Jun 17

Housing starts, CPI

 

European Union (EU): car registrations
Germany: investor confidence
UK: CPI, housing prices, China Premier Li Keqiang meets Prime Minister David Cameron
Spain: labor costs
Swiss: producer, consumer prices
Italy: trade balance

Australia: Central bank meeting minutes

Wed
Jun 18

FOMC decisions on rates, bond purchases

Brazil: inflation

UK: central bank meeting minutes
Swiss: business confidence
Ukraine, Russia: industrial production
South Africa: CPI, retail sales, current account balance

China: property prices
Japan: trade data
Thailand: rate decision

Thu
Jun 19

Unemployment, leading indicators

Colombia: GDP

Swiss: central bank policy decisions (currency, rates)
UK: retail sales
Netherlands: unemployment
Georgia: GDP
Russia: gold, foreign currency reserves
Norway: rate decision

New Zealand: GDP
Philippines: rate decision

Fri
Jun 20

 

Mexico: retail sales, central bank minutes
Colombia: rate decision

Eurozone: consumer confidence
UK: public finances
Italy: industrial orders
Greece: current account
Netherlands: house prices, consumer confidence
Central/East Europe: investor confidence

Taiwan: export orders

Sat
June 21

 

 

 

 


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.

An Asset-Backed Security (ABS) is a financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. For investors, asset-backed securities are an alternative to investing in corporate debt.

Consumer and Producer Price Indexes(CPI,PPI) measure the average change in consumer and producer prices over time in a fixed market basket of goods and services.

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


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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
(19%)
India, as Narendra Modi's new government enacts changes
(33%)
China, as Xi Jinping's reforms promote a stronger financial sector
(15%)
South Korea, as President Park Geun-hye's plan to boost growth bears fruit
(33%)



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%)