The Week Ahead: Dec. 16-22, 2012

Japan holds snap parliamentary elections

Following passage of a consumption tax increase and a critical debt issuance deal, Prime Minister Yoshihiko Noda dissolved Parliament on November 15. With his approval rating at a paltry 20% and the Democratic Party of Japan’s (DPJ) not much better, new leadership is highly likely. Former Prime Minister Shinzo Abe’s Liberal Democratic Party and coalition partner New Komeito are likely to win more than 300 seats, up from the current 139. Meanwhile, the DPJ is likely to win less than 80, down from 230—meaning, Japan’s revolving political door continues. For more, see Elisabeth Dellinger’s 11/20/2012 commentary on Investor’s Business Daily, “Inside Japan’s Election.”

Italy and eurozone October merchandise trade

Signs of eurozone weakness broadly are likely to continue for some time. That said, it’s more important to focus on total trade than the trade gap.

US December Empire State manufacturing survey

Regional manufacturing surveys can be helpful in understanding how economic conditions are impacting local industries. However, they presage little about overall US or global economies.

UK November CPI and PPI

US Q3 current account deficit

Bank of Japan (BOJ) monetary policy announcement

Following the parliamentary election earlier in the week and October’s quantitative easing initiative to increase its Asset Purchase Program by 11 trillion yen (or 2.5% of GDP) to 66 trillion yen, expectations are for the BOJs incremental efforts to continue. In my view, these incremental efforts aren’t likely to provide a near-term positive impact or mask the material issues Japan faces today.

US November housing starts

Several housing market indicators have slowed recently, but overall, the trend still reflects broad-based improvement.

New Zealand Q3 GDP

South Korea presidential election

Restricted to a single five-year term by the South Korea constitution, the pro-business President Lee Myung-bank will be termed out February 2013. Among his potential successors are front-runner Park Geun-hye (Saenuri), Moon Jae-in (Democratic United Party) and Ahn Cheol-soo (Independent). Whoever is ultimately elected will face numerous challenges—including dealing with perennial threat North Korea, increasing overall competitiveness and reining in the power of the complex chaebols that dominate Korean business. For more, see our recent commentary on Equities.com, “Competition, Gangnam Style.”

German November PPI

Retail sales reports

Italy and Canada report October sales, and the United Kingdom releases November results.

US Q3 GDP (Final)

Make no mistake, despite its “final” moniker, GDP and other economic statistics are often revised years down the road.

US weekly jobless claims, Q3 corporate profits, November existing home sales, and leading economic index

US Philadelphia Fed survey

France business climate indicator

UK Q3 GDP (Final)

Q3 UK GDP was unrevised in November at +1.0% q/q. Although the figure is positive, expectations are for future results to be more dour as a recovery in output lost during the Queen’s Jubilee holiday in June and Olympic ticket sales contributed growth.

US November personal income and outlays

US Chicago Fed national activity index

The National Activity Index is unique in that it is one of the few regional Fed indexes that covers the entire country’s economy. However, it’s a composite of 85 other economic indicators released earlier in the month (many of which are backward looking), so it likely indicates little outside of what markets already know.

Canada November CPI

Canada October GDP

Instead of producing an advanced quarterly GDP figure and revising it the following two months, Canada releases monthly estimates of real GDP. However, because of the wide difference in the availability of data on a monthly basis, these figures often don’t correlate with quarterly data.

US University of Michigan December consumer sentiment

US Kansas City Fed manufacturing index