The Week Ahead: Oct. 7-13, 2012

August German trade balance and industrial production data

Germany, Europe’s largest and arguably strongest economy, has shown weakening economic data for some time now. However, sentiment has been depressed on Europe for so long, we doubt continuing weakness surprises many.

Inaugural meeting of ESM governors in Luxembourg

After much debate within eurozone member nations, the ESM will be fully operational with this inaugural meeting. Although the meeting is expected to be largely ceremonial, there’s some speculation Spain will use the opportunity to request a formal bailout from the fund.

Eurozone finance ministers meet in Luxembourg

Q3 earnings season kicks off

Earnings sentiment and expectations are quite tepid, with many expecting slow growth or slight contraction. Our historical research shows slowing earnings at this stage of a bull market are perfectly normal and to be expected. In the past, slowing earnings growth hasn’t stymied still strong equity returns. For more, see our article on iStockAnalyst.com, “Lessons From The 1990s About Slowing Earnings Growth.”

British industrial production

Japanese machine orders

This metric is widely watched as a leading indicator for Japan’s export based economy.

European Union Finance Ministers meet in Luxembourg

Mexican CPI

The IMF and World Bank convene in Tokyo for their annual meeting

In our view, these meetings are frequently overhyped by the media, but produce little, if any, actionable results.

US MBA purchase applications

Although purchase applications are often seen as an indicator of overall housing strength, the data only covers one week and can be extremely volatile. That said, on balance housing data has shown considerable strength recently.

French and Italian industrial production

Spanish Prime Minister Mariano Rajoy and French President Francois Hollande meet in Paris to discuss their countries austerity efforts

US Vice Presidential Debate in Danville, KY

Thursday’s debate, the only between the vice presidential candidates, will focus on foreign and domestic policy.

French and German CPI

US weekly jobless claims

US import and export prices

Several Dodd-Frank rules go into effect

The rules in question restrict some aspects of commodity speculation, credit default swaps and over the counter derivatives. Although the Commodity Trading Futures Commission is still hearing appeals from various parties, it’s likely the (already delayed) rules still go into effect. The initial intent of these rules was to reduce risk and increase transparency in these somewhat opaque markets. But, in our view, these rules (and others already introduced and still forthcoming as part of Dodd-Frank), like much well-intentioned but misguided legislation, are a pretty inefficient way of going about accomplishing that and likely introduce the risk of unintended consequences down the line. For more, see our 10/04/2012 column on Investors.com, “One Year On, Fisher Investments Reviews the Durbin Amendment.”

Italian CPI

EMU industrial production

US producer price index

Chinese trade balance

Mexican industrial production