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Nov. 7, 2014
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WHAT TO WATCH: New York Fed President William Dudley speaks at a Paris
conference on central banking at 8:15 a.m. U.S. non-farm payrolls at 8:30 a.m. may
show a net gain of 235,000 in October, from 248,000 in September, keeping the labor
market on track for its best year since 1999. Fed policy maker Charles Evans speaks on
the economy at 9:15 a.m. Fed chair Janet Yellen speaks in Paris on economic policy at
10:15 a.m., as part of a panel discussion alongside ECB policy maker Benoit Coeure.
ECONOMICS: Month-to-month industrial production rebounded in Germany in
September and was stagnant in France.
GOVERNMENT: Ukraines east lurched back toward open war as the government in
Kiev and pro-Russian rebels accused each other of starting major offensives.
COMPANIES: Banks including Bank of America and Citigroup asked a U.S. judge to
throw out claims they cheated customers on interest-rate swaps and other transactions.
MARKETS: European stocks headed for a third weekly gain. The Bloomberg dollar
spot index headed for its biggest weekly gain in more than 16 months.
(All times local for New York.)
U.S. Unit Labor Costs Raise Stakes for Monthly Wage Data
Conor Sen
@conorsen
Preliminary estimates indicate the unit labor costs reading, on the margin, may cause the
FOMC to accelerate its adjustments to forward guidance and labor market assessments in
preparing for rate increases next year. In writing its December statement, the FOMC will be
more closely attuned to average hourly earnings in the next two job reports. ULC rose a
slower-than-forecast 0.3 percent in the third quarter, while productivity gained a
larger-than-expected 2 percent. This looks consistent with steadiness in the same-period
Employment Cost Index last week and weak growth in average hourly earnings over the
third quarter. Should average hourly earnings begin to pick up as last weeks ECI wage
component did, look for the policy debate lately about reassessing inflation and labor
conditions to begin parsing the relationship between inflation and wage versus non-wage
compensation. Run ECWB P 545AC74A04AC0144 to view this chart on Bloomberg.
Josh Wright, Bloomberg Economist
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Bloomberg Brief
Nov. 7, 2014
Economics
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Bloomberg Brief
Nov. 7, 2014
Economics
DATE
TIME
EVENT
SURVEY
PRIOR
U.S.
Nov. 10
10:00
U.S.
Nov. 11
7:30
95
95.3
U.S.
U.S.
Nov. 12
10:00
0.20%
0.70%
Nov. 13
14:00
-$111.7B
U.S.
Nov. 14
8:30
0.20%
-0.30%
U.S.
Nov. 14
8:30
-1.80%
-0.50%
U.S.
Nov. 14
9:55
87.5
86.9
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Bloomberg Brief
Nov. 7, 2014
Economics
Europe
The euro area and half of its 18
members will report preliminary GDP
figures for the third quarter. These include
the regions top four economies:
Germany, France, Italy and Spain. The
clear deterioration of confidence surveys
in Germany and France during that period
suggests that both economies which
make up half of the currency unions GDP
have hardly grown over that period.
That could weigh on euro-area GDP,
which already stagnated during the
second quarter, and add further doubts
on the regions recovery prospects.
The final reading for October of the
euro-area consumer price index is likely
to confirm a headline reading of 0.4
percent year over year. The figure
compares with the central banks de facto
target of 1.9 percent.
The BOE in its November inflation
report is likely to lower the near-term
inflation forecast, after CPI averaged 0.4
percentage point lower in the third quarter
compared with what the MPC had
predicted in August.
Asia
Chinese loan data are the week's main
draw. The People's Bank of China moved
to underpin flagging growth in October.
Interbank rates stayed low and mortgage
rates for second home buyers were cut.
Set against that is the usual fall in lending
in the final months of the year. With
market expectations shifting toward
enhanced stimulus, a low haul for new
loans might be a major disappointment.
Chinese industrial data are also due.
Pro-growth policies may have boosted
economic sentiment and helped the
recovery. Still, the PMI for October
suggested weakness in manufacturing.
DATE
TIME
EVENT
China
Nov. 9
20:30
CPI YoY
U.K.
Nov. 12
05:30
SURVEY
PRIOR
1.60%
1.60%
--
--
Japan
Nov. 12
23:30
2.70%
China
Nov. 13
00:30
8.00%
8.00%
Germany
Nov. 14
02:00
GDP SA QoQ
0.10%
-0.20%
Euro Area
Nov. 14
05:00
CPI YoY
0.40%
0.40%
Euro Area
Nov. 14
05:00
GDP SA QoQ
0.10%
0.00%
China
Nov. 10-15
TBD
887.5B
1050B
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Bloomberg Brief
Nov. 7, 2014
Economics
TODAY'S DATA
OVERNIGHT
Asia Pacific
Global funds bought a net 904.7 billion
yen ($7.8 billion) of Japanese stocks in
week ended Oct. 31, the biggest net
purchases since November 2013. Global
funds bought a net 639.6 billion yen of
Japanese bonds last week. Japanese
investors purchased a net 806.6 billion
yen of overseas debt last week, they
were net buyers of overseas stocks
acquiring a net 326.1 billion yen of these
securities.
As Chinas economy continues to grow, it will eventually face the middle-income trap of
deceleration that the World Bank identifies for developing countries where annual per-capita
GDP has reached $10,000 to $12,000. For instance, Brazilian GDP per capita rose only
about 1 percent per year on average from 1980 to 2013. South Korea offers a more
favorable model. It is among a few economies that have joined the high-income group even
as per-capita GDP grew 5-6 percent over the same period. IMF research attributes Koreas
success to solid growth in productivity and capital stock. For a related analysis of China's
growth potential, runNSN NELEDJ6JTSEJ on the Bloomberg Professional Service.
Fielding Chen, Bloomberg Economist
TIME
COUNTRY
EVENT
6:30
Chile
6:30
Chile
Imports Total
8:30
U.S.
8:30
Canada
Unemployment Rate
6.90%
6.80%
8:30
U.S.
225K
236K
8:30
Canada
-5.0K
74.1K
8:30
U.S.
10K
4K
8:30
U.S.
Unemployment Rate
8:30
U.S.
Underemployment Rate
8:30
U.S.
8:30
8:30
Exports Total
SURVEY
PRIOR
$6,103.00
$5,469.00
235K
248K
5.90%
5.90%
11.80%
0.20%
0.00%
U.S.
2.10%
2.00%
U.S.
62.70%
9:00
Mexico
CPI MoM
0.55%
0.44%
9:00
Mexico
CPI YoY
4.30%
4.22%
CA
9:15
US
10:15
US
14:30
US
15:00
U.S.
Consumer Credit
$16.000B
$13.525B
Europe
Switzerland's October unemployment
rate was 3.1 percent, in line with
forecasts.
German industrial production
rebounded less than analysts forecast in
September, signaling that Europes
largest economy is struggling to recover.
Production, adjusted for seasonal
swings, rose 1.4 percent from August,
when it contracted a revised 3.1 percent,
the biggest decline since January 2009,
the Economy Ministry said. Economists
surveyed by Bloomberg News predicted a
2 percent increase in output. Production
declined 0.4 percent in the third quarter.
The headline figure for the business
sentiment indicator from the Banque de
France was 96 in October, in line with the
consensus forecast. Industrial
production in France fell by 0.3 percent
in September after also dropping 0.3
percent the previous month, on a
year-over-year seasonally-adjusted basis.
Spanish industrial production rose
3.6 percent in September from a revised
minus 2.3 percent in August on a
non-seasonally adjusted year-over-year
basis.
The U.K. goods trade deficit widened
to 9.82 billion pounds ($15.53 billion) in
September from 8.95 billion pounds in
August and by more than analysts
expected.
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Nov. 7, 2014
Bloomberg Brief
Economics
ECONOCHAT
WHAT TO READ
MARKET CALLS
Cleveland Fed economist Daniel Hartley examines the local multiplier effect of
tradable industries. He notes that "manufacturing employment has become a less useful
proxy for the tradable sector as manufacturing has fallen as a share of employment in
the U.S."
http://goo.gl/Zz5fqq
Writing for VoxEU, Stanford University's Yong-Suk Lee explores who is really affected
by the external sanctions on North Korea. His findings "indicate that when external
sanctions generate hardships in the domestic economy, the urban elites, whether by
disproportionately promoting economic activity or diverting electricity, shields from the
negative impact at a cost to the hinterland population. In short, sanctions that fail to
change the behavior of leaders increase regional inequality at a cost to the already
marginalized hinterlands."
http://goo.gl/m1bnbr
In a paper all New Yorkers have been waiting for, Princeton University's Henry Farber
looks at the labor supply of NYC cab drivers. "There are approximately 180 million trips
taken during approximately 8 million shifts each year in taxi cabs in NYC. About 62,000
drivers had at least one fare in a cab over the five-year period, with about 40,000 drivers
in any single year. About 25,000 drivers worked in all five years," he writes. "There may
be an important difference in the margin on which labor supply can be adjusted on day
shifts versus night shifts. Day shift drivers are more likely to be constrained at the end of
their shift when the cab must be turned over to a night shift driver."
http://goo.gl/PDsLw8
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Bloomberg Brief
Nov. 7, 2014
Economics
RunNSN NEMQPZ6JTSEC to see additional charts and data from this analysis on Bloomberg.
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Nov. 7, 2014
Bloomberg Brief
Economics
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Bloomberg Brief
Economics
MARKET INDICATORS
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Bloomberg Brief
Nov. 7, 2014
Economics
10
KEENE'S CORNER
Harm Bandholz, chief U.S.
economist at UniCredit,
spoke to Bloomberg's Tom
Keene, Michael McKee and
Brendan Greeley on the
long-awaited pick-up in
U.S. wages and Draghi's
policy plans.
Economics Editors
Ben Baris
bbaris1@bloomberg.net
William Johnsen
wjohnsen3@bloomberg.net