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By HaleStewart January 4, 2015 8:37 am
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International Economic Preview For the Week of January 5-9

     For the first full week of January, the following economic releases will have a disproportionate impact on the markets.

Tuesday

EU Markit Composite index: the flash estimate released in mid-December had a reading of 51.7.  But both Germany and France were weak, increasing concern about the path forward for the region.  However, periphery countries showed slight upticks in activity.

US ISM: this is the US equivalent of the Markit numbers.  This number has been incredibly strong for the last half of 2014:

"The NMI® registered 59.3 percent in November, 2.2 percentage points higher than the October reading of 57.1 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 64.4 percent, which is 4.4 percentage points higher than the October reading of 60 percent, reflecting growth for the 64th consecutive month at a faster rate.

Wednesday

EU Unemployment and Inflation: no two numbers better represent the EU’s basic problem than their very high unemployment rate and near deflationary price situation.  There is no reason to think the employment situation has improved from its current 11.5% level, and with oil prices dropping, further deflation is most likely to occur.

Canada Exports: Canada is a raw material exporting country and with the sharp drop in oil prices don’t be surprised to see Canadian exports drop as well.  Regardless of oil’s impact, this economic metric has been a concern for the Canadian central bank over the last year, as shown in this graph:

Thursday

EU Retail Sales: the EU consumer has actually been spending a bit over the last year, but not at a pace strong enough to meaningfully contribute to GDP growth.  The big question for this number is a potential downside move as EU consumers signal they are finally pulling in their spending out of concern about the macro environment.

UK Interest Rate Decision: don’t expect a rate increase.  However, the UK is one of the world economics closest to raising interest rates, so keep alert for any signals as to when that might happen,

China CPI: China’s growth rate has slowed to about 7%, leading to overall lower internal price pressure.  Like EU retail sales, be wary of a potential downside surprise that would indicate the internal slowdown is actually faster than thought.

Friday:

US Employment: the last employment number showed a solid number of jobs added, with the final figure being over 300,000.  And, 2014 ended with near year-long growth.  Internal numbers from the US continue to point to solid economic advances, strongly implying we’ll see more of the same.

Canadian Employment: the last employment report from Canada was a bit disappointing, with a slight uptick in unemployment from 6.5% to 6.6% and an (obvious) decrease in overall employment.  With Canada relying more on oil and gas exploration for its jobs, keep an eye out for weakening in this sector.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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