Over the week-end the G20 meeting was held in Australia led by a group of world finance ministers and central bank governors from 20 major economies who aimed to lift collective GDP by more than 2 percent or $2 trillion to help strengthen the global economy.
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years. This is over US$2 trillion more in real terms and will lead to significant additional jobs.” G20 members wrote.
“To achieve this we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies” G20 members stated.
G-20 members addressed the slowdown in monetary stimulus due to the Federal Reserve’s decision to taper their quantitative program in 2014 by $10 billion per month which took a toll on liquidity flows into emerging markets and added greater volatility to global markets in January.
“As markets react to various policy transitions and country circumstances, asset prices and exchange rates adjust. This might sometimes lead to excessive volatility that can be damaging to growth” G20 members wrote.
Later in the statement, G20 members pledged to communicate their monetary policy reductions actions to the public in hopes of managing spillovers to other regions of the world that remain vulnerable to monetary policy adjustments in the future.
“Some economies may need to rebuild fiscal buffers where policy space has eroded. We will consistently communicate our actions to each other and to the public, and continue to cooperate on managing spillovers to other countries, and to ensure the continued effectiveness of global safety nets.”
U.S. Federal Reserve
Since U.S. Federal Reserve committee members are not meeting again until March to discuss policy changes to the Fed’s quantitative easing program, investors are left hanging on the words of Federal Reserve Chairwoman Janet Yellen for clues about the economy and the Fed’s monetary policies.
Because of an earlier winter snow storm on February 13th that postponed Yellen’s testimony before Senate members, she will have a re-scheduled appearance on Thursday to discuss monetary policy.
During the month of February U.S. equities have been in rally mode with the S&P 500 coming close its record level as investors have largely overlooked a variety of weak U.S. economic data in the areas of employment, manufacturing, and housing while attributing much of the economic downturn to cold winter weather that slowed business activity.
The economic calendar for this week includes the S&P Case Schiller Home Price Index and Consumer Confidence Report on Tuesday, new homes sales on Wednesday.
Besides Yellen’s testimony on Thursday, durable goods orders and jobless claims will be released.
On Friday the GDP report for the final period of 2013 will be released along with pending home sales and consumer sentiment.
Today Euro-area inflation data from January (final reading) is expected to move markets once the euro-area consumer price index comes out this morning with many investors watching to see if the euro-area is headed towards a period of deflation and a possible interest rate cut from ECB President Mario Draghi.
On Friday euro-area consumer price index will be released for the month of February (initial reading).
Several U.S. retailers will report earnings this week including Home Depot, Lowe’s, Macy’s, JC Penney, Best Buy Co, Target, and Gap.
Last week, popular clothing retailer Gap joined a list of other U.S. companies such as Costco and Whole Foods by pledging to raise hourly pay for their employees above the $7.25 federal minimum rate.
Gap CEO Glenn Murphy announced that the San Francisco based clothing company will establish their minimum hourly rate at $9 in 2014 and $10 in 2015.