Week Ahead The week of 9/29

The recently signed EU-Canada FTA is likely to run into choppy waters in the coming weeks when it goes to ratification at the European Council. The sticking point being a clause for investor protection which could see companies drag sovergin governments to court and sue them. One expects that for the bill to survive this clause would have to be severely watered down or scrapped all together. On evidence the European law makers have grounds for concern as earlier this year hedge funds won the legal dispute against Argentina and seized control of one of its warships. (In any case laws that can allow a bunch of investors to seize warships seems like a terrible idea)

Much Ado about nothing. That's the reference to the UN summit. Where leaders from around the world are given a chance to unleash their angst on some other drowsy and equally angsty other leaders.

On economic indicators the US consumer spending shows signs of improvement. Though the thing everyone will be looking at is the employment figures expected at the end of the week. The US dollar likely to appreciate against the whole basket of currencies given persistent weak business confidence in Europe.

Interestingly the central bank of China initiated a massive stimulus last week (around $81 billion) in loands to the country's 5 biggest banks. The interest rates for these loands are...interesting in that no one knows what they are. In a sense the govt. seems to be printing money.

Brazllian elections around the corner and no its not good news. The race seems quite tight too tight for most to predict, but since I am a betting man here's what I think is likely (No direct majority which means a run off later in Oct. Rousseff to sneak the win there as her main opponent Ms. Silva seems to need quite a bit off support from the other contenders - Just don't bet the farm on this.)

In Europe frantic efforts to secure a gas deal between Russia and Ukraine look set to continue as the proposed deal of Ukraine paying Russia $3.1 billion by the end of the year and sourcing gas at $385/1000cubic meters, understandably has Ukrainian lawmakers unimpressed. Expect Russia to get what it wants here, it is holding all the cards.


Speculation:

Equity Markets to have a poor week, at least until the employment figures come through. (Likely to bounce around in a narrow window)
Bond Markets +ve
Commodities to retreat further
USD to strengthen further

-By Akshay

Week Ahead 9/15/2014

Fed meet. Interest rates, as is tradition, means a jittery market leading to announcements vis a vis interest rate rise. Cue in a dip in equity markets all around.

Europe takes yet another step forwards in its game of chicken with Russia. Expectation of asymmetric steps, my guess is closing airspace and perhaps clothing. (Short on airline stocks?)
Despite the slide of the ruble, think it's unlikely to persuade the central bank to raise rates.

Short Euro as well. If pushed too much Russia might just leave the spectre of a very cold winter as a bargaining chip. Which is to say this mini trade war will not last halfway through the winter, expecting Europe to withdraw the sanctions before Nov and Russia responding in kind.

A tense referendum at the end of the week to weigh on Europe. I've got 10$ on the No (I suspect the HMS treasury has a bit more on the line) (Pound to take a further beating at the start of the week? am betting for Scotland to stay, it will see a recovery.)

Scotland does poses most of britian's oil reserves, however that's a pithy compared to oil run econonmies like Norway. With the chancellor ruling out the possibility of a currency union and major banks shifting bases to London. Scotland would very likely be looking at a big recession.

If Scots(pro EU) do manage to breakaway, we could see England snap its ties with Brussels a couple of years down the line.

India surprisingly posts industry growth below expectations. Massive rains. (Will perhaps ease food inflation? Nudge to the reserve bank perhaps later. Also could be the cause of stalled construction and manuf.) Accompanied by the Fed's comments of the fin sector underestimating the impact of the pull back of QE. The bombay index along with EM could slide downwards at the start of the week.



-Posted by Akshay