PrintThere is nothing particularly new today—mostly commentary of a follow-up nature on trends already in place. The common focuses are China and Europe.
For China, the New York Times (NYT) has an article on the front page of the business section about the premier’s call to spur the economy. Given the recent policy actions that China has already taken, this seems to be confirmation that weakness is continuing. China has taken a big hit from weakening demand in both Europe and the U.S. The situation may be getting worse for them, with a front-page article in the Financial Times (FT) about a pending China/EU trade dispute. As I discussed in an earlier blog post, protectionism is on the rise, and this is one of the latest manifestations. Rounding out coverage, the Wall Street Journal (WSJ) had an article on page A6 about China’s growth challenge. China is becoming a larger issue, as the “certainty” of a soft landing seems to be getting much less certain.
For Europe, the WSJ leads with a front-page article on the development of the proposed eurozone banking supervisor, which seems to be moving along. The NYT put an article on cuts in Spanish spending on page A4, with the WSJ coming in on page A6 with an article on how cautious France is becoming on European integration. Significant changes all, showing that the crisis is forcing countries and the EU itself to change their basic approach. Eastern Europe is also looking more iffy, as the FT runs an article on page 4 about how both Romania and Hungary are exhibiting antidemocratic trends, as economic stresses build. Finally, the FT has a piece on page 3 about how Norway may end up (temporarily) shutting down its oil industry due to a strike by unions. Norway is the one major producer that I did not expect a supply shock from.
In the U.S., the fiscal cliff fight has started, with Obama proposing a one-year partial extension of the Bush tax cuts, as discussed on the NYT front page. This will be an ongoing battle. The WSJ front page ran with expected earnings declines for the U.S. equity indices, suggesting that they would be a new jolt for investors.
Overall, nothing particularly urgent or new. The big things to keep an eye on are earnings for U.S. equity markets, which should play out in the near term, and China, which should play out in the medium term. The fiscal cliff fight is important, but it will not play out in the near term. The road continues rocky.
Have a great day!
