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 9, 2014

"We think it's a significant package. Are we finished? The answer is no."

— Mario Draghi, President of the European Central Bank (ECB), regarding the decision to introduce negative interest rates and targeted refinancing into the euro system (European Central Bank, June 5 2014)

The week in review...


ECB: Below zero Increasingly desperate to revive Europe’s economy and forestall out-and-out deflation, the ECB announced it would impose negative interest rates starting June 11 – essentially charging rent to ECB depositors for the privilege of leaving money there unused. It also announced it would add €400 bn ($546.3 bn) in “targeted long term refinancing operations” (TLTRO) to the system starting in Sept, not repayable for four years. In addition, the ECB is readying its own version of the US Fed’s quantitative easing program, preparing to buy asset-backed bonds in the open market. Time will tell if these measures will work. But for now, the Bank has clearly decided it’s time to do whatever it takes to get started.

Eurozone economy: Slower and lower GDP grew 0.2% in 1Q2014 vs. the previous quarter (0.9% year-on-year) in the 18-country region, and CPI stayed low in May at 0.5% year-on-year, down from 0.7% in April. Household consumption rose a mere 0.1% quarter-on-quarter. Unemployment remained near its high, coming in at 11.7% for Apr.


US Jobs: Better, but not better enough The ADP employment survey showed net new jobs at 179k for May, smallest in four months, fewer than expected; first-time jobless claims were lowest in seven years, as measured by the four-week moving average. The median duration of unemployment fell sharply, to 14.6 weeks, and the manufacturing workweek rose to 41.1 hours from 40.9, which was encouraging. But unemployment was unchanged at 6.3% and the participation rate stayed at a low 62.8%.

US household wealth: Highest ever, but… Not adjusted for either inflation or population growth, the aggregate net worth of US households and nonprofit organizations rose about 2%, or about $1.5 trillion, between Jan and Mar 2014, to $81.8 trillion, the highest on record. The rise was driven by stocks and mutual funds ($361 bn) and residential real estate ($758 bn). Also not reflected in the figures: how that increase in wealth was distributed across income levels.


Japan: Corporations win one The taxation panel of the ruling Liberal Democratic Party (LDP) stated it will accept a corporate tax cut, in part to make up for impact of the increase in the national sales tax on economic growth. That is, if the revenue can be found elsewhere. So far, the gap is to be made up by expanding the tax base while lowering the tax rate.

India: Easier terms ahead? Central bank head Raghuram Rajan kept its benchmark rate at 8%, but also said an acceleration of disinflation would “provide headroom for an easing of the policy stance,” signaling a less hawkish stance than in previous statements.


Bond Yields Lowest Since Napoleon Are No Comfort to Europe Amid Deflation Fight – Bloomberg

Factory orders up for third straight month as manufacturing rebounds - Los Angeles Times – Wall Street Journal

Scots Stoke Pound Volatility in Vote Seeking an End of UK –Bloomberg

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, European Central Bank, Latin American Herald, Detroit Free Press, BBC, Japan News





Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Jun 8



Egypt: Abdel-Fattah el-Sisi sworn in as new president

China: trade data

Jun 9


Mexico: inflation

Turkey: industrial production
Czech: CPI

Japan: GDP, current account

Jun 10

JOLTS job openings, wholesale inventories


Greece: CPI
Italy: industrial output, GDP
UK: industrial production
France: business sentiment, industrial

China: new local-currency lending, CPI, PPI

Jun 11

Mortgage applications, budget statement, retail sales

Mexico: industrial production
Brazil: retail sales

UK: unemployment, housing
Hungary:  CPI
France: CPI

Korea: jobless rate, money supply
Japan: machine orders

Jun 12

Initial and continuing jobless claims, import prices, business inventories

Brazil: World Cup begins (Brazil-Croatia)

UK: housing
Hungary:  CPI
France: CPI

New Zealand, Indonesia:  rate decisions

Jun 13

Producer prices, consumer confidence

Argentina: inflation

France: non-farm payrolls

Japan: monetary policy
China: retail sales, industrial production

Jun 14






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.

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 ADP National Employment Report provides a monthly snapshot of U.S. nonfarm private sector employment based on actual transactional payroll data.

The Job Openings and Labor Turnover Survey (JOLTS) is conducted by the US Department of Labor, producing data on job openings, hires, and separations.

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Which Asian country will have the strongest growth in the coming year?


Which Asian country will have the strongest growth in the coming year?

Japan, as Shinzo Abe's policy initiatives take hold
India, as Narendra Modi's new government enacts changes
China, as Xi Jinping's reforms promote a stronger financial sector
South Korea, as President Park Geun-hye's plan to boost growth bears fruit

Previous month Poll

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