Naj Srinivas
The Global View

The Week Ahead: Sept. 9-15, 2012

By, 09/07/2012

Sunday, 9/9:

  • China releases August CPI, PPI, industrial production and retail sales data.

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 Finance Minister Yannis Stournaras meets with the troika officials to cement Greek budget cuts ahead of an October 8 euro-area financial ministers’ (EcoFin) meeting.

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.


Monday, 9/10:

  • July US consumer credit growth reported.

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.


Tuesday, 9/11:

  • July US trade data released.

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.


Wednesday, 9/12:

  • The Netherlands holds general parliamentary elections.

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.

  • The German constitutional court rules on the EU’s European Stability Mechanism (ESM) treaty.

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 European Commission releases its full proposal for a centralized European banking regulator.

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.


Thursday, 9/13:

  • The FOMC concludes a two-day meeting and releases its Fed Funds Rate decision. Fed Chairman Ben Bernanke gives a press conference following the FOMC announcement.

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.


Friday, 9/14:

  • Greece to propose budget cuts to receive bailout funds at meeting of eurozone finance ministers (Eurogroup).

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.

  • University of Michigan consumer sentiment survey released.

Sentiment surveys are frequently lagging indicators (at best, coincident) that presage little about the future economy or market direction.


Saturday, 9/15:

  • No significant economic news or scheduled geopolitical events.



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


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