Tradeline Financials - Global Economic Update - Week 35, 2014
All eyes are on Mario Draghi and the ECB later this afternoon as Asian markets soften and Europe opens optimistically.
Japan reported on a range of data this week and the majority pointed to an economy that was sagging but not completely in turmoil. Seeing Household spending continue to decrease after the Sales Tax rise and the jobless figures go up along with stagnation in Factory Output does seem rather negative however Factory Output managed to recover from the negative data in June and when consumer inflation is at 3.3% for the second month, things aren't really that bad. Many feel that the BoJ will look to implement a more forthright plan in the coming months, especially as an additional increase in the Sales Tax is proposed in 2015.
Later today key inflation data for the European Union will be announced and if it comes in as forecast we could expect Mario Draghi to make a stimulus announcement as soon as early next week. Last month's 0.4% inflation raised serious red flags in Europe and comments as early as last week implied that action would be taken to protect EU member from further deflation. With Germany reporting a better than expected inflation of 0.8%, the initial concerns about the EU as a whole may be placated however with Italy, Spain, Portugal and France in serious dire straits some form of QE is bound to be announced. A specific Asset Back Securities program and policies increasing lending will be the first stimulus according to commentators. The ECB will be relying on these measures to kick start the Eurozone economies.
US GDP has been revised up from 4.0% to 4,2% annualized according to sources. With the local indexes still breaking closing records there is an air of invincibility in the US. Geopolitical issues abound, the markets continue to bloom. Plenty of analysts are calling the top yet the market refuses to listen. With the Federal Reserve pretty much committed to exiting their current QE program and the focus turned to the disparity of wages and the employment markets the US is seeing exceptional times considering the state of the global economy.
If inflation is above the 0.3% many believe we will see there is every chance a correction in the markets will happen. If the ECB makes a strong, positive and affirming statement, assuring the markets, confidence may persist for the foreseeable future.
Major Indices as of 29th August 2014:
Hang Seng - 24,742.18 +0.00%
Dow Jones - 17,079.57 -0.25%
FTSE 100 - 6,825.92 +0.29%
DAX - 9,509.51 +0.50%
CAC - 4,387.44 +0.49%
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