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By HaleStewart November 23, 2014 8:36 am
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International Economic Preview For the Week Of November 24-28

     The following economic news releases will have a disproportionate impact on the markets next week.


Japanese Meeting Minutes and Speech: The Japanese economy is facing an incredibly difficult situation.  After about two years of attempted stimulus to move the economy out of its two-decade long deflationary experience, the economy appears to be faltering.  Prime Minister Abe has called snap elections in order to obtain a new mandate for change.  In this environment, the possibility of a major policy announcement increases, making any BOJ speech an important event.


German GDP: as the largest economy in the EU region, Germany has an obviously disproportionate impact on economic news.  When its size is combined with the weak condition of the EU economy, this release takes on an even more pronounced impact.  According to the latest report, German GDP increased slightly:

In the third quarter of 2014, the gross domestic product (GDP) rose 0.1% on the second quarter of 2014 after adjustment for price, seasonal and calendar variations. According to the most recent calculations, the GDP had slightly decreased (–0.1%) in the second quarter of 2014 after the German economy had started the year with much momentum (+0.8% in the first quarter of 2014). 

US GDP: this is the second reading of 3Q GDP, which, according to the first report, grew 3.5%.  This was the second quarter in a row of solid growth, which made up for the weak 1Q number.  The key to this number is the size, magnitude and number of potential revisions.


UK GDP: as with the US number, this is the second reading, so pay attention to revisions.  Here are the key points from the first release:

•Change in gross domestic product (GDP) is the main indicator of economic growth. GDP increased by 0.7% in Q3 2014 compared with growth of 0.9% in Q2 2014.

•Output increased in all four main industrial groupings within the economy in Q3 2014. In order of their contribution, output increased by 0.7% in services, 0.5% in production, 0.8% in construction and 0.3% in agriculture.

•GDP was 3.0% higher in Q3 2014 compared with the same quarter a year ago.

•In Q3 2014 GDP was estimated to have been 3.4% higher than the pre-economic downturn peak of Q1 2008. From the peak in Q1 2008 to the trough in Q2 2009, the economy shrank by 6.0%.

US New Orders for Durable Goods: this number has been all over the map in the last three readings, largely as a result of the large aircraft order three months ago.  This created a large spike in new orders, which then showed a large collapse the following month.  However, the overall pace of new orders has been in a range for the last year:


Japanese CPI: central to the Abenomics program is a return to some level of inflation.  Unfortunately, the pace of inflationary increases has decreased over the last few months, leading to concern among analysts.

Japanese industrial production: IP is a very good coincident indicator.  Unfortunately, the pace of YOY change for this metric has been decreasing since the first of the year, printing contractionary readings several times over the last few months:


EU Inflation and unemployment: no two metrics better explain the current EU economic dilemma than their low and slowing inflation rate and high unemployment.  The last inflation reading showed a .1% increase.  But the overall level was still .4%.  And unemployment remains over 11%.  While no one is expecting marked improvement in either number, a move in the right direction by both would obviously be helpful.

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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