Effects Of A Eurozone Slowdown

The Weekly Bottom Line HIGHLIGHTS OF THE WEEK United States - U.S. job creation may have weakened in the last few months, but the grounds for sustaining stronger employment growth are more fertile now than have been since the economic recovery began. Europe's labor market, by contrast, is likely to deteriorate further before it gets better. - Europe's (nonfinancial) corporate sector is highly leveraged. As balance sheet adjustments are made, Europe risks further decreases in investment, higher layoffs, and lower economic growth. These effects are compounded by deleveraging in the public sector. - U.S. corporations, by contrast, are more profitable and liquid than they have ever been. At some point some of these funds will be unleashed towards new investment, creating a positive ...

(Reuters) - Quarterly reports from some of Europe's top banks showed the scars of the euro zone crisis on Thursday, with big losses on Spanish property, and fragile markets casting a shadow over the rest of the year despite an early investment banking rebound. Spanish bank Santander said first quarter net profit dropped 24 percent after it took a 3.1 billion euro ($4.1 billion) provision to cover rising loan defaults, as the effects of Spain's property market crash were compounded by economic recession and joblessness afflicting nearly one in four workers. Although results from Barclays and Deutsche Bank showed investment banking income bounced back strongly after a torrid end to last year, the sickly euro zone economy continues to dog the industry. Barclays beat analysts' forecasts ...

U.S. Review Look Past the Monthly Volatility and See the Trend This week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy that is growing at a modest pace. The milder-than-usual winter likely brought some activity forward and below-consensus readings are due in part to payback. Housing starts, existing home sales and industrial production all posted disappointing readings in March that are likely not indicative of the underlying trend. Headline retail sales, however, came in more than double the consensus estimate in March, ending the first quarter on a positive note. Early Spring Brings Payback Period The full week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy ...

Weekly Economic and Financial Commentary U.S. Review A Rough Start To April Another week of softer U.S. economic data weighed on market sentiment this week. More hints of slower economic growth are appearing in the data, consistent with our forecast that U.S. GDP growth slows to a 2.8 percent annualized pace in the first quarter and continues slowing to a sub 2 percent annualized pace in the second. Initial jobless claims jumped by 13,000 in the first week of April. February imports plunged 2.7 percent, small business confidence fell in March for the first time in seven months and core inflation is on the rise. A Rough Start to April United States economic data releases so far this month have not been kind to the bulls on Wall Street. The poor March payroll report rattled some ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD The Australian dollar struggled through the overnight session, weighed down by lingering concern over how severe the slowdown in China could become. A McCrann article in the Australian press added to the selling pressure, claiming that a cut to the RBA’s cash rate at next Tuesday’s meeting is actually more likely than not. This is not the view of our Australia economists who instead expect the RBA to remain on hold at 4.25% for the rest of this year. The rates market too is skeptical of the claim, but has seen fit to price in 10bp of easing just in case. The official China PMI for March due out on Sunday is also looming large, especially given the weakness of the private-sector flash PMI released last week. We are certainly alert to the ...

Weekly Economic and Financial Commentary U.S. Review Housing Indicators Pulled Back, but Don't Be Alarmed This week, the economic calendar was chock-full of housing market data. While housing indicators painted somewhat of a mixed picture, with nearly all housing market indicators unexpectedly declining on the month, we continue to see real improvement. That said, much of the pullback was due to the mild winter, which likely exacerbated the seasonal adjustment process. Housing starts unexpectedly fell 1.1 percent to a 698,000-unit pace in February. January starts, however, were upwardly revised to a 706,000-unit pace, the highest level since October 2008. Housing Indicators Pulled back, but Don't Be Alarmed This week the economic calendar was chock-full of housing market data. ...

The Week Ahead Highlights Searching for the next crisis? What's driving the dollar? Europe: what happened to the LTRO? Searching for the next crisis A couple of weeks ago the market was able to shrug off the prospect of a Greek default and a sharply rising oil price. Even weak Chinese economic data didn't de-rail risky assets. However, that optimism didn't last long and last week investors removed the rose-tinted spectacles and started to worry once more about the outlook for the global economy. Last month China's growth rate was downgraded to 7.5% per year from 8%. Since China has a history of out-performing expectations this downgrade had little market impact. However, a fifth straight decline for the HSBC/ Markit manufacturing PMI survey reading and the markets are ...

Fundamental Analysis EUR "It helps prevent a repetition of the sovereign debt crisis" - Herman Van Rompuy, President of the European Council All but two of the European Union leaders Friday signed a treaty to adopt strict new rules on national deficits and debts. Only Britain and the Czech Republic did not sign the agreement. USD "There’s a lot of room to go in the stock market" - John Carey, a Boston-based money manager at Pioneer Investments The Standard & Poor's 500 lost 0.32%, or 4.46 points, to 1,369.63. The Dow Jones Industrial Average slid 0.02%, by 2.73 points, to 12,977.57. The Nasdaq Composite Index dipped by 0.43%, or 12.78 points, to 2,976.19. GBP "The improved performance of the construction sector adds to other positive data released on the UK economy" - Sarah Bingham, ...

Weekly Economic and Financial Commentary : 04/03/2012 U.S. Review A Better Tone to the Data but Growth Remains Sluggish The economic data clearly have a better feel to them but there is no evidence of a sudden break out to the upside. Fourth quarter real GDP was revised up to a 3.0 percent annual rate and inflation was also revised slightly higher. Personal income came in slightly below expectations but upward revisions to previously published data put the saving rate at 4.6 percent in January, well above the earlier reported level of 4.0 percent. Manufacturing data were mixed, with orders down but purchasing managers' surveys remaining strong. Lots of Good News but Still Only Modest Growth We received a full complement of economic reports this week, providing new intel ...