Turning from The 3 Es to Politics

Hello, you are watching the global edition of Russell Market Week in Review for the week ending August 9, 2013. I am Alexandra Davis coming to you from Russell Investment's global headquarters here in Seattle, Washington, and I am joined today by Mark Eibel. Welcome, Mark. Hello. Nice to see you. Let's start off in the U.S. We are filming on Thursday this week and stocks rebounded into positive territory today after the jobless claims data was released. It seems as though the markets continue to react strongly to what is essentially very short-term news. Is that something we should continue to expect? Yeah, I think so. I think, though, moving forward from here it becomes a little bit less about the three E's that we have been talking about. The jobless number did come out -- the jobless claims number came out today. It was a good number, but as we move forward from here, less earnings to report. We have had the big economic news with GDP -- we will talk about that in just a second. So we get probably back into a little bit more Fed speak. But it was a good number -- 333,000. So it is right in line with -- anything below 350,000 usually portends pretty well for jobs coming up. I think the number that was interesting this week that didn't get a lot of talk though is trade numbers came out. Now, we saw second quarter GDP last week -- that first estimate of 1.7% percent that we talked about. the trade numbers came in this week a little bit better than expected. And what's the source of that? We are exporting more energy and we are importing less. So those numbers came out good. So I think when we get our next number for second quarter GDP it might be up closer to 2%, maybe a little bit higher. So it got a little bit of talk this week. I bet it gets a lot of talk when second quarter's GDP comes out for the next numbers. So I think that might be the most important news to come out of the U.S. Other than that, yeah, a little bit less news than some of those other areas we have been talking about. Several Fed governors talked so the market kind of interpreted whether or not they were dovish or hawkish a little bit in their a little bit in their comments -- moved it around a little this week. So, overall, an OK week, but not nearly as much news as we were talking about last week. Yeah, exactly. And shifting gears for a minute, European markets rose marginally this week. Tentative improvements in Chinese economic data really managed to balance any concerns over a slow down in U.S. monetary stimulus. Talk about that. Right. Very slowly again. European markets, which we have seen over the last two months or so have been leading U.S. markets -- we saw that again this week. Some of it was those manufacturing numbers, as you talked about -- both coming out of China, as well as coming out of Europe. Good numbers out of Germany. Again, auto sales surprisingly a little bit better than July than the market had expected -- unemployment below 7%. So we need a strong Germany if Europe is going to lead its way out. So, again, the story building about people starting to look outside of U.S. markets a little bit, looking into international markets -- I think that played with Europe this week, as well. One other item in Europe that happened this week, a statement came out from governor Carney, was talking about Bank of England -- it wasn't exactly accepted grade, it was a forward guidance statement, which normally the markets love it, when it is forward guidance -- Right. When it is forward guidance, so it is something for them to put their hands around. But, talking about unemployment and inflation targets in 2016 and some dates in there -- I think if they had made that statement a year ago, before the U.K.'s economy looked like it was getting a little bit better, I think the market would have taken it a little bit better. Now, it is like, why wait this long? So it has been an interesting day there, but overall, you are right. Europe led a little bit over the U.S. this week, and very quietly, that trend continues to build. And now, I would like to shift Asia. So we have seen a rebound in the Chinese market that has really generated some optimism they could be in line for a turn around the second half of the year. Let's have you talk about what that means for the global economy. I think you are right. The trade data -- and every piece of data right now that is coming out of China is really getting looked at. The world is looking for signs that China is negotiating this soft landing that we have all been talking about. And the trade data that came out this week was pretty good, and I think it lent into that. So I do think that was a continuing story. That is a good story. Europe needs that for their exporters. As well as if the U.S. economy continues to get a little bit better, as we think it will, the U.S. combined with China would really help Europe work their way out of their situation. Other numbers that came out of Asia -- Japan had a tough day. The other night was down about 4%. Yen strengthened a little bit. So I still think that market is trying to figure out are we going to move from just the liquidity event and really start seeing it in earnings and in the broader economy? Jury is still out on that one, so I think that will be something that we will be talking about moving forward. We will keep our eye on it. And as we go into next week, what should investors be keeping their eye on? I think next week, really for the rest of August and probably into September it becomes a little bit less about the data and a little bit more political. Congress will be coming back, so we will be talking about debt ceilings. We are going to be talking about budget negotiations. I think further talk about who the next Fed chair is going to be is going to work its way into the dialogue -- even more than it has lately. And don't forget, we have got a big election in Germany with Merkel. So I think we have become a little bit more political. And in August and September, which don't tend to be great months for the markets anyways, that might be what sways the markets one way or another and a little bit less about the economy. But, as always, it will give us something to talk about. Exactly. Well, we will keep our eye on it. Well, thank you Mark for your insights today. Thank you. And thank you for watching Market Week in Review; we will see you next time.