Three Key Global Events

11/08/2013 12:01 am EST


Jim Jubak

Founder and Editor,

MoneyShow's Jim Jubak is waiting for key economic news from the US, Euro zone and China, which may provide valuable insight for these three markets in the weeks ahead.

What a week we've got ahead. We've got global growth stuff from the three big economies in the world; from the US, from China, from Europe, really going to set the tone for, well, at least the next week. Here's the way the week unfolds. In the United States, we've got, on November 7, we've got first read on third quarter US GDP. We find out how fast the US economy is growing, which sort of gives us a sense of how fast we were growing until we shot ourselves in the foot with the government shutdown and the debt ceiling battle. On the day after that, on November 8, we get jobs numbers, again, going to tell us where we were. It looks like both these things are going to point to a really pretty slow economy as a baseline, even before the subtraction that we're going to wind up doing in the quarter for those government events. That's the US.

On November 7, we also get, from the Europeans, we get the meeting of the European Central Bank. European Central Bank is not expected to do much of anything. Their benchmark interest rate is at 0.5%, which is a historic low. They're being urged to cut them even more, 'cause growth in Europe is really, really anemic and it's almost no inflation. Inflation's expected to come in at 0.7%, 0.8% as an annualized rate. There's worry. People are starting to talk. The press is starting to talk about, could Europe be headed toward a Japan-like deflation, but the ECB doesn't seem to be interested in moving this further, I mean I figure keep the rates the same, but that means that we're looking at very, very slow growth for the Eurozone going forward. The European Commission just cut its growth rates, so we're talking about less than 2% growth in 2014.

The last one is China, where we've got this wonderful thing called the third plenum, which starts on November 9 and goes through the 12th. This is an every five years meeting of the Central Committee of the Communist Party, where the leaders map out the next five years. The first plenum, which happens in the beginning of this 15 year cycle, is often devoted to deciding who the leaders are going to be. The second one is more their consolidation of power. The third one is really the one where they put forward big ideas. That's what we're going to get this time. The hopes are, or the fears are, depending on what part of the Chinese political spectrum you're on, that the leaders are going to announce policy changes involving state owned enterprises, trying to get them to be more efficient, another big corruption drive, changes to the land system so the farmers will be able to sell their land more easily and also recoup more money. I said anticorruption. I think that's going to be over and over. We're going to hammer at that. Changes to the household registration policy that hasn't let currently migrant workers register in the places where they work, keeps them registered back in their home villages, some kind of trade liberalization, some kind of financial system liberalization. All these things are on the table. The likelihood is that they won't actually produce anything that's very concrete. These meetings usually don't, but people are looking to see really how much momentum the central government is going to put behind these things, because whatever momentum comes from the center tends to wind up being dissipated in the provinces.

All these things are really about setting the trend for global growth for the next year or so, or more in case of China, and for an economy that really is looking for more growth for stock markets, where, in many cases, they're at historic highs as they are on the US. These are big deals, because with outgrowth, these asset values are really just being propped up by Central Bank cash and that's not a good long sustainable situation.

This is Jim Jubak for the Video Network.

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