Russia–NATO, U.S. budget, oil balances, U.S. retail sales, and IP

Genevieve Signoret

Macro Views

Next four weeks

Events in red are those most likely to shake markets.

All week

• Middle East: Russia versus USA and Turkey (NATO) in Syria, Obama policy. Watch for signs of confrontation between Russia and the USA. Russia has intervened in Syria in support of Bashar al-Assad, whom the USA wants oust. Russia has bombed non-ISIS CIA-trained rebels and invaded the air space of NATO member Turkey. The Obama administration is rumored to be reconsidering its fuzzy Syria policy.
• USA: U.S. struggle for replacement house speaker and looming deadline for raising the debt limit. U.S. House Speaker John Boehner wants to quit that post but can’t till a different Republican leader has emerged to take over. Meanwhile, the deadlines for raising the debt limit for the U.S. Treasury (early November) are approaching fast.

Monday 12 October

• Global: OPEC oil market report (Sep). (See the Tuesday 13 entry: “IEA oil market report”.)
• Euro Area: Eurogroup meeting.
• India: Consumer prices (Sep), industrial production (Sep). Even a small month-on-month increase would bring year-on-year growth to over 5%. This would market the third month of acceleration since the June pace of just 2.5%.
• Mexico: Industrial production (Aug),employment (Q3). Industrial output breaks down into manufacturing, construction, and mining. Analysts expect some industrial output year-on-year acceleration from its anemic July pace of 0.7%, especially in construction.

Tuesday 13

• Global: IEA oil market report (Sep). Analysts are all over the map in their crude oil forecasts. Recently, Genevieve read in a 30-minute span one expert forecast that Brent would accelerate to $75/barrel next year, another say it would crash to below $20/barrel, and a third say it had stabilized. The IEA does not publish a price forecast but rather backward looking estimates and forward-looking projections of supply, demand, and stocks. Its numbers tend to sway markets more than do those of OPEC, whose monthly report generally comes out the same week and this month comes out the day before.
• China: Foreign trade (Sep). Analysts expect China’s merchandise trade to have contracted last month on a year-on-year basis for the third month in a row. We don’t expect this bad news to cause market any surprise.
• Japan: Money supply (Sep).
• Korea: Unemployment rate (Sep).
• UK: Consumer prices (Sep). Annual inflation is forecast to dip to 0.1% from nil and core inflation should accelerate slightly to 1.1%. The gap is explained chiefly by oil prices, as is the case in most developed economies, where gasoline prices tend to float freely. We now think that the UK will raise interest rates later than the Fed (it used to be the other way around).

Wednesday 14

• USA: Retail sales (Sep). With gasoline prices down 4.6% over the month, this nominal indicator (the value, not the volume, of retail sales) can look weaker than it really is. Analysts project that healthy auto and auto part volumes will offset the drop in gasoline prices for a net change from August close to nil. Anything worse would be bullish for long-term U.S. Treasury securities and confirm our Fed call for March 2016.
• China: Consumer prices (Sep).
• Korea: Money supply (Sep).
• Euro Area: Consumer prices (Sep, flash), industrial production (Sep).
• UK: Unemployment rate (Sep).

Thursday 15

• Korea: Monetary policy decision. Consensus: No change in the base rate from the current 1.50%.
• Japan: Industrial production (Aug, final).
• Euro Area: European Union summit.
• USA: Consumer prices (Sep). Consensus: -0.1% y/y. Gasoline prices have plunged in the past year. Air fares have dropped recently. Healthcare prices are falling. If you’re asking yourself why the Fed is even considering a rate hike this year, read Genevieve’s brief explanation here and more detailed one here. 

Friday 16

• Euro Area: Trade balance (Sep).
• USA: Industrial production (Sep). TransEconomics: Contraction. Manufacturing is contracting world-wide.Mining activity down as oil and gas drilling drop in response to falling global prices. Utilities may be up, as temperatures varied widely in September. 

Monday 19

• China: Industrial production (Sep), GDP (Q3).

Wednesday 21

• Mexico: Retail sales (Sep).

Thursday 22

• Korea: GDP (Q3, first estimate).
• Euro Area: ECB monthly report, monetary policy decision.
• USA: House prices (Sep).

Friday 23

• Spain: Unemployment rate (Sep).

Tuesday 27

• Euro Area: Money supply (Sep).
• UK: GDP (Q3, first estimate).
• USA: Consumer confidence (Nov), house prices (Aug), Markit composite PMI (Oct, flash).

Wednesday 28

• Japan: Industrial production (Sep, flash).
• USA: Fed interest rate decision.

Thurday 29

• Korea: Industrial production (Oct, flash)
• Japan: Unemployment rate (Oct), monetary policy decision.
• Germany: Unemployment rate (Sep).
• USA: GDP (Q3, first estimate).
• Mexico: Monetary policy decision.

Friday 30

• Turkey: Foreign trade (Sep).
• Euro Area: Unemployment rate (Sep).
• Spain: GDP (Q3, first estimate).
• USA: Personal income (Sep).

Monday November 2

• Global: Markit manufacturing PMI (Oct).
• Korea: Trade balance (Oct), consumer prices (Oct).

Tuesday 3

• Brazil: Markit manufacturing PMI (Oct), trade balance (Oct).

Wednesday 4

• Japan: Monetary policy meeting minutes (Oct 5, 6).
• Euro Area: Markit services PMI (Oct).
• UK: Markit services PMI (Oct).
• USA: Trade balance (Oct).

Thursday 5

• Russia: Markit services PMI (Oct).
• Germany: Industrial production (Sep).
• UK: Monetary policy decision.
• Brazil: Markit services PMI (Oct).

Friday 6

• Euro Area: Industrial production (Sep).
• UK: Industrial production (Sep).
• USA: Unemployment rate (Oct), nonfarm payrolls (Oct), Fed’s Bullard Speak (2015, 2016).