Focus this Monday on Geopolitics, Not Data

March 28, 2011

Chancellor Merkel of Germany suffered key state election defeats over the weekend.  Key issue was nuclear power.

The summit of EU leaders in Brussels failed to finalize an agreement on funding for the European Stability Mechanism.  Such hopes ended when Portugal’s government collapsed.

There appears to have been a partial reactor meltdown at Fukushima.  Tepco admits highest radiation levels yet were found in water.

U.S. President Obama to address nation at 19:30 EDT (23:30 GMT) regarding Libya.  NATO now commanding the operation.  Qaddafi forces suffer setback.

Canadian voters will be going to the polls on May 2, as Conservatives failed to get any opposition support for its proposed Federal budget.

The possibility of a U.S. Federal government shutdown has increased as Republicans lose patience with short-term deals extending budget ceiling deadline.

The dollar rose 0.5% against sterling and the kiwi, 0.4% relative to the yen, 0.2% against the euro and 0.1% against the yuan.  The greenback lost 0.1% against the Swiss franc and Australian dollar.

Stocks fell by 0.6% in Japan, 0.7% in Taiwan, 0.4% in Hong Kong, Thailand and Singapore, 0.2% in Australia and 0.% in China, but share prices are 0.7% higher in India.  In Europe, the German Dax is off 0.3%, the British Ftse is 0.1% firmer, and stocks in Paris are steady.

Ten-year sovereign bond yields rose three basis points in Japan and Britain and by two bps in Germany.

Oil and gold prices each fell 0.5% to $104.90 per barrel and $1421.20 per ounce.

In Baden-Wuerttemberg state elections, Chancellor Merkel’s Christian Democrats lost power for the first time since 1953.  The environmentalist Alliance90-Greens were the big winner there as well as in the other weekend election held in Rhineland Palatinate.  In B-W, the Greens and Social Democrats combined to win 71 seats versus 67 seats taken by the prior CDU/FDP coalition.  The Greens captured 15.4% of the popular vote in RP, up from a 4.6% share in the prior election and with the SDP now control 60 seats to the CDU’s total of 41.  The fate of these elections turned after Japan’s nuclear accident.  Chancellor Merkel now faces rebellious elements in her own party and may lose control of the upper house Bundesrat chamber of Federal parliament.

Consumer confidence in Finland fell to 17.7 in March from 20.0 in February.

Swedish real retail sales were unchanged on month and up by a smaller-than-expected 3.0% on year during February.  Sweden posted a SEK 12.0 billion trade surplus in February, up from SEK 7.7 billion in January and SEK 1.3 billion a year earlier.  Exports rose 4.9% on month and 21.8% on year.

According to British Land Registry data, house prices fell 0.8% on month and 1.7% on year in February after a 0.9% decline in the year to January.

Irish real retail sales were 0.7% lower than a year earlier in February.  The Greek trade deficit narrowed 34% on month to EUR 1.24 billion in January.

Euroland’s index of leading economic indicators rose 0.9% in February even though the coincident index was unchanged.

Taiwan’s index of leading economic indicators was unchanged in February despite a 1.3% rise of its coincident index.

China’s central bank published its quarterly monetary policy report, which again pointed to a cautious approach to the yuan that stresses stability.

Central bank interest rate decisions arrive today in Hungary and Israel.  Analysts are not looking for changes.

Scheduled U.S. data include personal income and spending, pending home sales and the Dallas Fed manufacturing index.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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