Economic events of the week

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Monday: In Japan, the Tankan Large Enterprises All Industries Index will be released. In France, preliminary figures for the Purchasing Managers’ Indices in the Manufacturing and Services sectors will be released. Later that day, similar Purchasing Managers’ data will be published for Germany and the Eurozone’s aggregate. In the U.S., Empire Manufacturing Survey will shed some light on how manufacturing executives in the state of New York see the future of the economy. Additionally, U.S. November Industrial Production data will be published, while analysts currently estimate these to revert to positive territory, following last month’s -0.1% decline.

Tuesday: Producer Prices will be published in the U.K., followed by Consumer Prices, both are expected to present moderate to negative figures. German Industry will later take the focus with the publishing of the ZEW surveys, both “expectations” and “current situation”. The Eurozone’s aggregate CPI will also see light, but these are not expected to draw the most market attention, as it follows a previous annual figure indicating only a 0.9% increase. U.S. Consumer Prices and Current Account balance are due to conclude the day.

Wednesday: The day will kick off with Japan releasing its trade balance figures, which may cause some volatility in the USD/JPY. Later the day, IFO surveys will be published in Germany: “Business Climate”, “Current Assessment” and “Expectations”. U.K. labor data will see light in the form of Jobless Claims Change and the ILO Unemployment rate. The U.S. will see some housing data in the form of MBA Mortgage Applications, as well as Housing Starts. Later that day, the Fed is due to release its FOMC rate decision, that will hopefully provide some forward guidance on the future of its monetary policy.

Thursday: The All Industry Activity Index will be released in Japan. This will be followed by some Retails Sales data in the U.K. and then the U.S. Initial Jobless Claims, in hope of recovering from last week’s negative figure. 

Friday: Eurozone Consumer Confidence Figures are due. 

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French socialist revolution faces hardships

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It has been a year and a half since François Hollande was elected president in France. Upon entering his position, Hollande made a rather brave set of economic reforms, as he favored the increase of income tax over the prior plan to increase Value Added Tax. However, the decreased incentive to conduct business in the country had its toll on the country's bottom line. Half a year later, Hollande was forced to increase VAT, while providing corporations with tax benefits.

Last week marked a new low for the French socialist revolution, as rating agency Standard & Poor's announced cutting France's sovereign credit rating to "AA". S&P's announcement criticized Hollande's Government for incompetence of reducing its spending and supporting economic growth. Specifically, S&P called France's "fiscal stability" constrained by too high tax levels on one hand, and inflated Government expenditure on the other hand, which S&P believes to be out of control.

Adding insult to injury, France's Industrial Production output was published on Friday, revealing only a -0.5% Month over Month decrease in September, in addition to a worsening trade deficit. Pierre Moscovici, the French finance minister, commented in a statement that he regrets what he referred to as S&P's “critical and inaccurate judgment", while adding that “Never has a government carried out so many reforms in such a short time and in such a difficult economic environment”. Moscovici concluded that in spite of the rating cut, France's rating remains high compared to other world nations. Markets apparently shared the same view with as Moscovici, as France’s sovereign bonds continue trading at roughly the same prices throughout the day. 

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