The Week Ahead

graphAsian shares are mixed on Monday, the dollar is up against the euro, and U.S. stock futures are pointing to a flat opening.

China’s National Bureau of Statistics reported on Monday that China’s GDP fell to 6.9 percent in the 3rd quarter of 2015, lower than 7.0 percent during the first 2 quarters of 2015 and lower than China’s 7 percent GDP goal for 2015.

U.S. Fed Chair Yellen cited China’s slowing economic growth as a reason of concern during her last press conference on September 17th which comes as Beijing undergoes the process of rebalancing China’s slowing economy.

“Now we’ve long expected, as most analysts have, to see some slowing in Chinese growth over time as they rebalance their economy. And they have planned that and I think there are no surprises there, ” Yellen told reporters on September 17th.

Yellen said that developments in the financial markets in August reflected those Chinese concerns- there was downside risk to Chinese economic performance and “perhaps some concerns about the deftness with which policymakers were addressing those concern” Yellen admitted.

Yellen admitted that the Federal Reserve is concerned about the spill over risks from China and other emerging markets.

“The Fed should not be responding the ups and downs of the markets, and it is certainly not our policy to do so. But when there are significant financial developments it’s incumbent on us to ask ourselves what is causing them,” Yellen told reporters.

Fed members wrote about how these global concerns could impact near term inflation expectations during their latest policy statement on September 17th.

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” according to the Fed statement.

“Nonetheless, the Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate” according to the Fed statement.

Fed Committee members won’t be meeting again until their next policy meeting on October 27-28th.

The Week Ahead

U.S. economic data will be light this week with housing data expected to dominate headlines along with the ECB’s monetary policy decision on Thursday that will shed some light on the prospect of the ECB adding some future stimulus measures if needed to help ward off the threat of deflation within the 19 member euro area which had -0.1 percent inflation in September.

Third quarter earnings reports will continue to drive the market this week, including some new reports from big tech names such as Amazon, Microsoft, Alphabet (Google), and IBM.

On Monday Canada will hold their 42nd general election, known as the federal election, to elect members to the House of Commons of Canada.

U.S. Economic Data :

Monday- NAHB Housing Market Index (Oct.)

Tuesday- Building Permits, Housing Starts (October)

Wednesday- MBA Housing Market Index (10/17), Crude Inventories

Thursday- Initial and Continuing Claims, Existing Home Sales (Sept.), Leading Indicators (Sept.), FHFA Housing Price Index (August), Natural Gas Inventories (10/17).

-Johnathan Schweitzer




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