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

July 28, 2014

"We need a revolution to take the middle class from being subsidy receivers to taxpayers"

– Indonesia's Dr. Mohamad Ikhsan, corporate board member and government advisor, on the challenge of adjusting the country's tax and subsidy system (Financial Times, July 24 2014)

The week in review...


US housing: more signs of strength Sales of previously-owned homes rose 2.6%, to a 5.04 million annual rate to an 8-month high in Jun. The median price of an existing home rose 4.3% year-over-year, to $223,300. That's good news for sellers, and probably one reason the number of existing properties on the market rose 6.5% to 2.3 mn, the most since Aug 2012. The median time that a home was on the market decreased in Jun to 44 days from 47 days, and 42% of homes sold in Jun were on the market for less than a month.

US consumer prices: No pressure With core CPI increasing only 0.1% in June, the prospect of runaway inflation appeared to fade further. For the 12 months ended June 30, core CPI rose 1.9%, after a 2% increase the prior 12 months.

Mexico: Ralentización May economic growth came in at 1.4% year over year, well below expectations. But car manufacturing was a bright spot, with the country producing 1.5 mn units in 2Q, up 7.4%.


UK growth: Pick of the litter In its summer update of world outlooks, the IMF upgraded its UK growth forecast more than for any other major economy, giving both bragging rights and political capital to the current UK government. The forecast is for 3.2% growth in 2014 and 2.7% the following year. Consumers seemed to agree; UK shoppers made 990 mn card transaction purchases, an annualized jump of 9.1%, with 70% of the £47.1 bn ($80.0 bn) made as debit transactions.

France: Summer doldrums Manufacturing PMI showed increasing contraction for July, coming in at 47.6 vs. June's 48.2. July's number was the lowest since Dec 2013 and the third straight reading below 50 (Note: figures above 50 signify growth; below 50, contraction). Services PMI did rise to 50.4 from 48.2 in June, showing growth for the first time in 3 months, even if limited. President François Hollande admitted it was "not impossible" the economy would weaken further over the rest of the year.


Trade deficit expands Falling export volume, down 1.7% from a year ago, was the unexpected reason for a growing trade gap, putting further downward pressure on growth. That's despite the 16% drop in the value of the yen vs. the US dollar since Prime Minister Shinzo Abe took office in December 2013. The biggest contributor to the shortfall: a 5.1% fall in electrical machinery exports. Exports to the US fell 2.2% year-on-year, including automobile shipments, which were down 6.8%.


Signs of the times:

Last-minute bailout saves China firm from default – Xinhua

China Manufacturing Gauge Rises to 18-Month High on Stimulus – Bloomberg

German tax revenue swells in June – Deutsche Welle

Greece cuts state wage bill by more than a third – Financial Times

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, Deutsche Welle, Xinhua

...And the week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Jul 27

Baseball Hall of Fame inductions


France: Tour de France finish in Paris
Mideast, elsewhere: Eid al-Fitr holiday

China: industrial profits

Jul 28

Pending home sales


Italy: business confidence


Jul 29

Home prices, consumer confidence


UK: mortgage approvals

Japan: unemployment

Jul 30

FOMC monetary policy statement
2Q GDP, July employment

Argentina: bondholder lawsuit settlement due

Spain: PM Rajoy meets Catalan President Mas
Eurozone: bank lending survey, confidence indicators
Germany: inflation
France: consumer confidence
Spain:  GDP, inflation

Japan: industrial output
S. Korea: industrial output

Jul 31

Puerto Rico bond payment due, unemployment, US job cuts, Chicago PMI

Argentina: industrial production

Eurozone: unemployment, CPI
Germany: unemployment
Italy:  inflation, producer prices
UK: consumer confidence

Japan: wages
Singapore: unemployment
Taiwan: GDP
Hong Kong: retail sales

Aug 1

Payroll, unemployment, jobs (July), manufacturing PMI, vehicle sales, consumer confidence


Eurozone: manufacturing PMI
UK: manufacturing PMI

China: July manufacturing PMI
Japan: PMI

Aug 2






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 (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.

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.

Consumer Price Index (CPI) measures the average change in consumer prices over time in a fixed market basket of goods and services.
Ralentización: Slowdown (Spanish)

The International Monetary Fund (IMF) is an international organization of various member countries, established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements.

Unless otherwise specified, all uses of the symbol "$" refer to US dollars.

The opinions and views expressed herein, as well as references to individual companies or securities, are not intended to be relied upon as a prediction or forecast of actual future events or performance, or a guarantee of future results, or recommendations to buy, hold or sell, or investment advice.

Past performance is not a guarantee of future results.

All investments involve risk, including possible loss of principal.

Fixed income securities are subject to interest rate and credit risk, which is a possibility that the issuer of a security will be unable to make interest payments and repay the principal on its debt. As interest rates rise, the price of fixed income securities falls.

International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.

This material is for information only and does not constitute an invitation to the public to invest in any funds, securities, strategies or other products. You should be aware that the investment opportunities described should normally be regarded as longer term investments and they may not be suitable for everyone. The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Past performance is no guide to future returns and may not be repeated. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Legg Mason nor any of its affiliates guarantees any rate of return or the return of capital invested.

Please note that an investor cannot invest directly in an index. Forward-looking statements are subject to uncertainties that could cause actual developments and results to differ materially from the expectations expressed. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed and is not a complete summary or statement of all available data. Individual securities mentioned are intended as examples of portfolio holdings and are not intended as buy or sell recommendations. Information and opinions expressed by either Legg Mason or its affiliates are current as at the date indicated, are subject to change without notice, and do not  take into account the particular investment objectives, financial situation or needs of individual investors.

The opinions and views expressed herein are not intended to be relied upon as a prediction or forecast of actual future events or performance, or a guarantee of future results, or investment advice. The information in this material is confidential and proprietary and may not be used other than by the intended user. Neither Legg Mason or its affiliates or any of their officer or employee of Legg Mason accepts any liability whatsoever for any loss arising from any use of this material or its contents. This material may not be reproduced, distributed or published without prior written permission from Legg Mason. Distribution of this material may be restricted in certain jurisdictions. Any persons coming into possession of this material should seek advice for details of, and observe such restrictions (if any).

This material may have been prepared by an advisor or entity affiliated with an entity mentioned below through common control and ownership by Legg Mason, Inc.

This material is only for distribution in those countries and to those recipients listed.

All investors in the UK, professional clients and eligible counterparties in EU and EEA countries ex UK and Qualified Investors in Switzerland:
Issued and approved by Legg Mason Investments (Europe) Limited, registered office 201 Bishopsgate, London EC2M 3AB. Registered in England and Wales, Company No. 1732037. Authorized and regulated by the Financial Conduct Authority. Client Services +44 (0)207 070 7444.

All Investors in Hong Kong and Singapore:
This material is provided by Legg Mason Asset Management Hong Kong Limited in Hong Kong and Legg Mason Asset Management Singapore Pte. Limited (Registration Number (UEN): 200007942R) in Singapore.

This material has not been reviewed by any regulatory authority in Hong Kong or Singapore.

Qualified domestic institutional investors in the People's Republic of China (PRC), Distributors and existing investors in Korea and Distributors in Taiwan:
This material is provided by Legg Mason Asset Management Hong Kong Limited to eligible recipients in the PRC and Korea and by Legg Mason Investments (Taiwan) Limited (Registration Number: (98) Jin Guan Tou Gu Xin Zi Di 001; Address: Suite E, 55F, Taipei 101 Tower, 7, Xin Yi Road, Section 5, Taipei 110, Taiwan, R.O.C.; Tel: (886) 2-8722 1666) in Taiwan. Legg Mason Investments (Taiwan) Limited operates and manages its business independently.

This material has not been reviewed by any regulatory authority in the PRC, Korea or Taiwan.

All Investors in the Americas:
This material is provided by Legg Mason Investor Services LLC, a U.S. registered Broker-Dealer, which may include Legg Mason International - Americas Offshore. Legg Mason Investor Services, LLC, Member FINRA/SIPC, and all entities mentioned are subsidiaries of Legg Mason, Inc.

All Investors in Canada:
This material is provided by Legg Mason Canada Inc. Address: 220 Bay Street, 4th Floor, Toronto, ON M5J 2W4. Legg Mason Canada Inc. is affiliated with the Legg Mason companies mentioned above through common control and ownership by Legg Mason, Inc.

All Investors in Australia:
This material is issued by Legg Mason Asset Management Australia Limited (ABN 76 004 835 839, AFSL 204827) ("Legg Mason"). The contents are proprietary and confidential and intended solely for the use of Legg Mason and the clients or prospective clients to whom it has been delivered. It is not to be reproduced or distributed to any other person except to the client's professional advisers.


Previous Editions

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


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