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A Look At Global Economic Events In The Upcoming Week

Tyler Durden's picture




 

Week in Review

After much anticipation of last week’s events, the Fed, the global macro data, and the US voting public delivered a set of results that were broadly market friendly. The Fed embarked on a second round of quantitative easing that, in terms of size, speed and conditionality, is about in line with our expectations. The Republicans seized the House and eroded the Democratic hold on the Senate a bit, also as expected. The US and global industrial data showed some pockets of unexpected strength and GLI momentum has now turned decidedly positive. The week ended with stronger-than-expected payrolls, especially taking into account upward revisions to August and September. Though the household survey had a weaker tone – the unemployment rate held constant only because labor force participation dropped – on balance the labor market data were quite encouraging.

In G10 FX, NZD and AUD were the best performers against USD, as better-than-expected labor market data in New Zealand and a surprise hike by the RBA gave both currencies an extra lift, above and beyond that from QE2. EUR/$ ended the week only slightly higher, as the cross gave back almost all its QE2 gains on Friday as sovereign fears on the periphery once again became a focus point. Equities unambiguously embraced QE2, with the SPX ending the week 3.6% higher. The VIX ended the week down three points at 18.3.

Week Ahead

China data

This week brings the China trade balance for October, where a widening in the trade surplus is expected. Given the G-20 summit this week and the discussion over indicative target ranges for current account surplus countries, this number will be widely watched. We also get the usual activity and inflation indicators. We expect IP growth to pick up against a year ago, at a slightly stronger pace than consensus, and are looking for inflation to rise also above consensus. Overall, we are looking for confirmation that activity remains strong, while inflation continues to push upward. With inflation dynamics a reason for the recent rate hike, there will be particular focus on this point.

G-20 Summit

Following the G-20 ministerial meeting, which started a discussion over indicative targets for current account surplus and deficit countries, the key thing to look for is whether the G-20 summit further formalizes this discussion, by setting actual ranges for current account positions and by discussing steps to be taken in the event that such ranges are breached. We think any meaningful progress in this direction is unlikely.

Monday 8th

Turkey IP (Sep) We forecast that IP grew 11.0% yoy in September, a touch below consensus of 11.2% yoy, and unchanged from the August reading.

German IP (Sep) We forecast growth of 0.2% mom, below consensus of 0.4% mom, and down from 1.7% mom in August.

Tuesday 9th

Brazil IPCA inflation (Oct) We forecast 0.68% mom inflation in October, essentially in line with consensus of 0.67% mom, and up from 0.45% mom in September.

Mexico INPC inflation (Oct) We forecast 0.56% mom for headline inflation, close to consensus of 0.59% mom, and up from 0.52% mom in September. We think core will come in at 0.25% mom, in line with consensus, following 0.38% mom in September.

Wednesday 10th

China trade balance (Oct) Consensus is looking for export growth to slow to 23.0% yoy, down from 25.1% yoy in September, while it is looking for imports to rise to 28.1% yoy, up from 24.1% yoy. Consensus is looking for a trade balance of $25.5 bn, up from $16.9 bn in September.

China CPI and IP (Oct) CPI inflation is likely to edge up to 4.1% yoy in October from 3.6% yoy in September. Consensus is looking for a slightly smaller rise to 4.0% yoy. We think the pick up in inflation is not just about base effects, but a genuine pick up in inflation.We think IP growth will rise to 13.7% yoy, above consensus of 13.5% yoy and up from 13.3% yoy in September.

Bank of England inflation report

United States trade balance (Sep) Consensus is looking for a trade deficit of -$45 bn, a slight narrowing from -$46.3 bn in August. We think the trade deficit will be -$44 bn, slightly narrower than consensus.

United States initial claims (Nov 6) Consensus is looking for initial claims of 450k, down slightly from last week’s reading of 457k.

Turkey central bank meeting We expect the CBRT to keep the policy rate on hold at 7.0%, in line with consensus.
Australia employment report (Oct) Consensus expects the unemployment rate to drift down to 5.0% from 5.1% in September.

Friday 12th

Malaysia central bank meeting We expect Bank Negara Malaysia to stay pat in the upcoming policy meeting. We believe they can afford to pause for longer, recognizing a slower second half external environment while inflation remains moderate.

Euro zone GDP (Q3) We forecast growth of 0.4% qoq (not annualized), slightly below consensus of 0.5% qoq and down from the very strong pace of 1.0% qoq

United States U. of Michigan consumer confidence (Nov) Consensus is looking for a reading of 69.0, up from 67.7 in October.

Hong Kong GDP (Q3) We expect GDP to grow 6.0% yoy after rising 6.5% yoy in 2Q2010. This is in line with the consensus. This implies a flat qoq sequential growth path. We currently forecast GDP growth of 6.0% and 5.0% in 2010 and 2011 respectively.

From Goldman's Tom Stolper

 

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Sun, 11/07/2010 - 21:53 | 707349 wreynol4
wreynol4's picture

what are the POMO dates this week?

Sun, 11/07/2010 - 22:19 | 707376 99er
99er's picture

Chart: ES

Sorry, Ben and Tim. Not an auspicious start to your G20.

http://99ercharts.blogspot.com/2010/11/es_07.html

http://www.zerohedge.com/forum/99er-charts

Enjoying dog stew in Seoul?

Sun, 11/07/2010 - 22:10 | 707379 wreynol4
wreynol4's picture

this is kind of a open ended question but do you think POMO operations going forward will be as effective as they have been the last year?  I have watched thed DOW go from 6500 to 11,500 the past 2 years, but it seems as though through dimenishing returns the likelyhood of this rediculous run the market has been on, especially the last 90 days can't keep up. To put it in perspective outside of the flash-crash there hasnt been a correction since O'bomba came into office.  Just trying to get perspective from what others think, all thoughts welcome.

Sun, 11/07/2010 - 22:18 | 707395 Xedus129
Xedus129's picture

I don't think the markets will ever "crash" but they are losing value daily if you price them in terms of gold.

Sun, 11/07/2010 - 22:19 | 707397 LongSoupLine
LongSoupLine's picture

Well, Monday the 8th is the last of the "old POMO" schedule.  On the 10th we get the new release and it looks to be over $27B...per week!  In perspective, the Fed did around $30B in POMO for the entire month of Sept.

The Christmas bonuses at the primary dealers will be fat this year boys.

 

Sun, 11/07/2010 - 22:16 | 707393 Xedus129
Xedus129's picture


The Group of 20 is beginning to look more like the G19 plus 1

 

LOL, CNBS headline


Sun, 11/07/2010 - 23:46 | 707547 wreynol4
wreynol4's picture

so what is the end game here, how on earth can the market just keep going up on no justification, not earnings, nothing etc.

 

What is a trader to do?

Mon, 11/08/2010 - 00:56 | 707616 qussl3
qussl3's picture

Trade what you see not what you think.

I've lost too much money trying to be a smartass.

I'll trade whatever I see now regardless of how ridiculous it feels intuitively and logically, but will attempt to hedge the perceived risk accordingly.

Mon, 11/08/2010 - 02:59 | 707676 MountainHawk
MountainHawk's picture

I'm totally with you on that one, thinking about reality made me miss this entire rally. Now I'm a bit paralyzed thinking I'm chasing a freight train which is going to loose its engine at any moment.

Mon, 11/08/2010 - 03:00 | 707677 MountainHawk
MountainHawk's picture

I'm totally with you on that one, thinking about reality made me miss this entire rally. Now I'm a bit paralyzed thinking I'm chasing a freight train which is going to loose its engine at any moment.

Mon, 11/08/2010 - 04:41 | 707701 bingaling
bingaling's picture

There is a surprise in there somewhere .G20 is where it will come from if I were to guess

Mon, 11/08/2010 - 10:27 | 707913 Grand Supercycle
Grand Supercycle's picture

My long term indicators continue to warn of USD strength and EURO weakness.

http://stockmarket618.wordpress.com

Do NOT follow this link or you will be banned from the site!