FINANCIAL ANALYSIS
by Chris Weafer
"It isn't so much that hard times are coming; The change observed is mostly soft times going"
Groucho Marx
After a disastrous 3rd Qtr for equities, commodities and developing economy currencies, the 4th Qtr has started with a great deal more hope. The S&P 500 is up 11% from the start of the month and the MSCI World and EM indices are 7.5% and 6.3% higher respectively. The RTS and MICEX gained 10.5% and 6% respectively last week alone. There is considerable optimism that this rally can run much further as European leaders show greater determination to tackle the debt crisis and US economic indicators and corporate earnings, albeit slowing, have not fallen off a cliff.
In particular, there was an audible sigh of relief in global markets last week as EU leaders reacted quickly to Slovakia's rejection of the bail-out fund and aggressively maintained momentum towards a new deal to both prevent a Greek default and to provide a protection mechanism for the region's banks. The political divisiveness that the issue has provoked is clear from the fact that the EU leaders summit, originally scheduled for today, has been postponed until next Sunday to allow more time to construct a comprehensive deal.
This week investors will again remain very sensitive to newsflow from Europe, the US macro data and 3rd Qtr numbers from the big Wall Street banks. Over the next several weeks the key events will be;
- Chinese September macro report October 18
- EU Leaders summit on October 23rd
- US Fed FOMC meeting on November 1 & 2
- G20 Summit on November 3 & 4
To access the full report, click Download Russia Week Oct 17
Comments