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Europe Ahead: PMI Manufacturing & Services kickoff a busy European week
A hectic week is upon us dear reader and the sentiment remains fragile and trading choppy with fears over the slowing recovery and mounting fiscal imbalances, which will keep us all on the edge of our seats this week.
With the prevailing skepticism over the outlook for the global recovery and the ongoing hurdles restricting spending and expansion, Europe will provide topnotch figures highlighting the economic developments into the second quarter and how affected is growth by the global imbalances.
The euro area did start the year on a very strong foot with stronger than projected expansion in the first three months of the year. Nevertheless, the expansion in the area, driven by Germany and France, was still not sheltered of mounting neither debt woes nor the downbeat outlook on the ...
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Japanese inflation data the main focus this week in the Pacific amid the lack of fundamentals
Japan is waiting for more important economic data this week, after last week's GDP which showed that the Japanese economy contracted during the first quarter to officially enter a new recession.
The drop in exports and the sharp drop in public spending caused by the March 11 earthquake, were the most important reasons behind the Japanese growth contraction during the first quarter of this year.
This week we await inflation figures from Japan for the month of April, where the annualized Nationwide CPI excluding fresh food which is considered the BOJ's official measure for inflation, is expected to rise by 0.5% comparing with the previous drop by 0.1%.
While the annualized Nationwide CPI for April, is forecasted to increase by 0.2% after the previous flat reading.
The Bank of Japan ...
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Rising dollar threatens stocks' gains
(Reuters) - Signs of a Wall Street sell-off are all over the place, but U.S. stocks might well survive another week relatively unscathed if investors keep betting on sectors less vulnerable to an economic downturn.
Pressure for a correction in the stock market has been building up in the past few weeks as the euro and oil prices fell in tandem, knocking down shares of energy companies and dollar-sensitive multinationals.
Still, investors have averted a broad sell-off by diving into shares of companies that are less vulnerable to the economic cycle, including well-known defensive sectors such as utilities and household products, but also large-cap companies with steady earnings performance.
That strategy may hold the market afloat for a little longer. But with the end of the Federal ...
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US Dollar Posts Weekly Losses as Economy Looks Bad
The US dollar ended week lower against most major currencies as the US economic data was negative for the whole week. The minutes of the Federal Open Market Committee monetary meeting further weakened the dollar as they showed that the Federal Reserve isn’t planning to increase the interest rates.
The US house market was showing signs of weakness for sometime, but the bad reports about housing starts and building permits, as well as the data about existing home sales, were depressing nevertheless. Even worse were the reports from the Federal Reserve Bank of New York and the Federal Reserve Bank of Philadelphia about the manufacturing sector. The manufacturing was the source of optimism for the US economy for some time and unexpected slowdown of the sector was a very unpleasant surprise. ...
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Markets Consolidate Before the End of the World
The Week Ahead
Highlights
Markets consolidate before The End of the World
Greek problems get worse before they get better?
The euro hinges on Spain
Japan's economy still in a 'very severe' state
The Loonie may see weakness ahead
Key data and events to watch next week
Markets consolidate before The End of the World
This past week saw most major asset markets and currencies essentially consolidate around recent lows following the sell-off in the first half of May. Incoming data, however, continues to suggest increasing sluggishness in the major economies. In the US, housing data weakened further, both the Philadelphia and Empire manufacturing indexes declined, industrial production flattened, and the index of leading indicators dropped for the first time in 10 ...
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Gains of Franc on Greece’s Downgrade & US Problems
The Swiss franc gained after demand for safe assets was boosted by the downgrade of Greece’s credit rating by Fitch Ratings.
Fitch cut Greece’s rating to ’B+’ and put it on the negative watch. The rating agency explained this decision:
The ’B+’ rating incorporates Fitch’s expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a ’soft restructuring’ or ’re-profiling‘ that would trigger a ’credit event’ and default rating from Fitch.
The franc appreciated 0.4 percent against the US dollar. The currency also gained 1.2 percent versus the euro.
USD/CHF dropped from the opening rate of 0.8806 to the closing price of 0.8772, following the advance to 0.8854. EUR/CHF sank from 1.2601 to 1.2422. CHF/JPY ...
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The Weekly Bottom Line : 20/05/2011
The Weekly Bottom Line
HIGHLIGHTS OF THE WEEK
United States
Two and a half years on, the Fed is still waging war against an economic crisis it isn't sure is fully defeated.
A case for withdrawal of monetary stimulus can be made based on healthy job gains, strong industrial production, and surging exports.
But unemployment remains stubbornly high by historical standards, and the housing market is still in shambles.
With the economy giving off mixed signals, new fissures are opening up on the FOMC about how the next steps for monetary policy. While new stimulus is increasingly unlikely, the first meaningful tightening is likely not to occur until early next year.
Canada
The latest edition of TD Global Markets - released this week - featured tweaks to bond yield and ...
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Weekly Economic and Financial Commentary : 20/05/2011
Weekly Economic and Financial Commentary
U.S. Review
Manufacturing Cools While Housing Remains Frozen
The Empire and Philly Fed manufacturing surveys for May suggest that the manufacturing expansion lost a sizeable amount of momentum, while April manufacturing production contracted on auto production cuts related to the Japanese tsunami.
Meanwhile, housing remains in the deep freeze. April housing starts and permits came in far below consensus expectations. In May, the NAHB housing market index held at its 6-month average of 16, and April existing home sales fell back to 5.05 million.
How Healthy Is the Recovery?
Economic data released this week point to a recovery that is still trying to find its balance. In fact, there is growing reason to believe that some important sectors ...
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A Glimpse into the Future of the Sovereign Debt Crisis
The canary in the coal mine is choking…
Greek stocks tumbled to new 14-year lows this morning, as Greek bond yields rocketed to new all-time highs.
The panic in Athens is no surprise, as we explained in yesterday’s essay “Lessons to be Learned from the Greek Debt Crisis”. The Greeks are bankrupt.
The Greeks have been bankrupt for a while, of course, but investors were slow to believe it. Or rather, investors were quick to believe that last year’s €110 billion bailout from the European Union and the IMF would be sufficient to prevent the Greeks from defaulting.
But with each passing day, that bailout package is looking increasingly insufficient. You can’t make a silk purse out of a sow’s ear, as the saying goes. And the finances of the Greek government are emitting a distinctly ...
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