Market Analysis

The Week Ahead: Feb. 24 - Mar. 3, 2013

Economic data releases next week swell on account of the short month. Regional US activity indexes, revised US Q4 GDP, China’s manufacturing PMI surveys and a eurozone inflation and unemployment statistics round out the week’s reports.

Sunday, 2/24:

Parliamentary elections in Italy

These elections will be important to Italy’s ongoing economic reform efforts. Early polling suggests the center-left coalition led by Pier Luigi Bersani should win a majority in both the upper and lower houses of Parliament. In the event of a strong showing by near-perpetually scandal-plagued former Prime Minister Silvio Berlusconi’s party, a hung parliament could increase some fears over the stability of the euro. However, fears of Italy leaving the eurozone are likely unfounded. For more, see Fisher Investments Research Analyst Scott Botterman’s recently published summary of Italy’s election mechanics and our 01/29/2013 cover story, “Previewing Italy’s Election.”

Second round of presidential elections in Cyprus

Right-wing Nicos Anastasiades and left-wing Stavros Malas face off in this round as none of the candidates in the first round obtained a 50% + one vote needed to win. Whoever’s ultimately elected will have to jump right into bailout talks with EU leaders. The country needs around €17 billion to help shore up its economy and recapitalize its banks, which have been crushed under the weight of Greek debt holdings.

Monday, 2/25:

US Chicago Fed national activity index

This index is a composite of 85 economic indicators released earlier in the month (many of which are backward looking), so it likely reveals little outside of what markets have already digested.

US Dallas Fed manufacturing survey

Tuesday, 2/26:

US December S&P Case-Shiller Home Price Index

We quibble with aspects of this widely watched housing index. Its calculation omits many parts of the market and its lag (the release covers data from two months before) means it has little bearing on the future. However, recent data show the US housing market continues to rebound nicely—a potential incremental tailwind to economic growth ahead.

US January new home sales, February consumer confidence and the Richmond Fed manufacturing index

Japan January retail sales

Wednesday, 2/27:

UK Q4 revised GDP

US January durable goods orders and pending home sales

Japan February manufacturing PMI and January industrial production

Thursday, 2/28:

France January consumer manufactured goods consumption and PPI

Germany February unemployment rate and preliminary CPI

Eurozone February HICP (Inflation)

US revised Q4 GDP

GDP data are nearly always revised as more data become available and underlying components become more clear. Expect this figure to change again potentially months or years from now.

US weekly jobless claims

Albeit slowly, overall employment trends continue to reflect improvement.

US February Chicago PMI

US Kansas City Fed manufacturing index

Japan February CPI, unemployment rate and Q1 Tankan business survey

China February manufacturing PMI

China’s manufacturing PMI figure will be closely watched for confirmation the world’s second largest economy is accelerating.

India releases its 2013-2014 budget

Finance Minister Palaniappan Chidambaram is expected to deliver the country’s annual budget. It’ll be an important one as the country holds elections early next year. Chidambaram and Prime Minister Manmohan Singh’s ruling Congress Party has seen its popularity wane recently; however, analysts still expect the budget to continue some of the sensible economic reforms India has undertaken recently.

Friday, 3/1:

The “sequester”—automatic budget cuts to mandatory and discretionary spending in the US is scheduled to go into effect

As we’ve detailed before, the sequester is similar to the debt ceiling and fiscal cliff—a political machination attached to an arbitrary deadline. Politicians can always push the sequester back again, legislate it away or change it in some other way. Moreover, the cuts to mandatory spending aren’t actually cuts at all, but cuts to spending growth. All told, total government spending is projected to rise $15 billion in 2013 should the sequester go through—hardly the economic doomsday many are billing it as.

Italy final January CPI

Germany January retail sales

France, Germany and eurozone January manufacturing PMI indexes

UK January CIPS/PMI Manufacturing Index

Eurozone flash February HICP (Inflation)

Italy and eurozone January unemployment rates

US January personal income and outlays

Canada Q4 GDP

US February ISM and PMI manufacturing indexes

Naj Srinivas is a Content Specialist at Fisher Investments, and is a regular contributor to MarketMinder. He has been with the firm since 2006.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.