Slowing industrial production and retail sales data are likely to garner headlines lamenting an economic “hard landing” in China. But the ruling Communist Party continues to support new stimulus measures and take additional steps toward financial market liberalization ahead of its anticipated leadership transition mid-October.
Greek Prime Minister Antonis Samaris and Stournaras are charged with convincing the troika their proposed budget cuts warrant the release of a €31.5 billion tranche of aid in October and a deadline extension for additional cuts. Given officials’ resolve to keep the euro intact thus far, it’s likely they continue finding ways to compromise.
The trend is often more important than a single data point. And on balance, credit trends recently reflect growth—a positive for the US economy moving forward.
Headlines likely focus on the “trade gap,” or the “trade deficit” but total trade is what matters most— a much better reflection of global economic strength.
Many folks see this election as a proxy referendum for the Netherlands’ relationship with the EU. Recall, the Netherlands has been ruled by a caretaker government since April when the coalition government broke up in protest of what were seen as Brussels-imposed spending cuts. But in our view, whatever the outcome, the impact for broader markets is isolated.
If the court rules to hear the case against the ESM, it likely only temporarily prevents its ratification. However, in the past, Germany’s top constitutional court has supported eurozone bailout mechanisms—suggesting the justices should want to back the ESM. Even if the court does decide to hear the case, the ESM doesn’t die immediately. EU officials likely go back to the drawing board to find a new solution that pacifies the court. Likewise, the EFSF remains in effect until mid-2013.
The outcome of this proposal likely meets increased rhetoric from German and British officials—both fiercely protect their banks’ regulatory oversight—so concrete steps to an EU-wide regulator likely aren’t in the immediate future.
Many folks have eagerly anticipated this meeting, expecting Fed Chairman Ben Bernanke to announce QE3. But in our view, there’s plenty of liquidity in the banking system today, so whether or not the Fed embarks on QE3 (or 4 or 5), it likely doesn’t do much.
As a result of poor progress in implementing necessary austerity measures, it’s likely Greece falls short of its targets. However, while eurozone officials prefer to hold countries to their bailout agreements, they’ll bend before they allow the euro to break.
Sentiment surveys are frequently lagging indicators (at best, coincident) that presage little about the future economy or market direction.
If you would like to contact the editors responsible for this article, please click here.
*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.