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Confucius once said, “God forbid you to live in an era of change. But if that happened, then God grant you take advantage of new unlimited possibilities!” So far, 2021 was rich in events but things don’t plan to calm down.
Last week, the Arab-Israeli and Armenian-Azerbaijani conflicts resumed, but the markets are reacting more or less calmly and the reason for this is the hope for an early resolution of the situation. Even though, the presence of defense companies in the investment portfolio is not a bad idea. The world is too unstable… The USA, meanwhile, decided to exclude the Chinese smartphone manufacturer Xiaomi from the blacklist, which limited American investments in the company.
On the macroeconomic front, we note rising inflation, lower claims for unemployment benefits in the US, faster economic growth in Europe and China, and lower consumer activity in May due to higher inflation expectations. In the end, we would like to add that strong inflation combined with weak production, jobs, and spending is bad. When an economy faces higher inflation, higher unemployment, and slower economic growth, it is in a period of stagflation.
Monday
The week will begin with the publication of the Japanese PPI Producer Price Index, Russia’s GDP, the China House Price Index, data on China’s industrial production, and retail sales. In the US, the NY Empire State Manufacturing Index for May will be published. By the way, we remind you that hurricane season begins in the USA and hedge funds with more than 100 million US dollars of shares will reveal their investment positions.
Tuesday
On Tuesday, we get data on US housing construction, preliminary 1Q eurozone GDP, UK jobless claims, Japanese tertiary industry and GDP index, and Italy’s trade balance.
In the case of Japan, forecasts indicate a decline in economic activity due to the aggravation of the situation around the coronavirus. At the same time, the yen is currently not responding to economic data. Instead, the Nikkei move has more to do with global bond yields.
Wednesday
Wednesday will be the main macroeconomic day of the week due to the publication of the FOMC meeting minutes, the ECB financial stability review, CPI for Canada, the eurozone, and the UK, industrial production data for Japan and Russia.
Regarding the minutes of the last FOMC meeting, the markets are likely to find them outdated, but it will be interesting to see how often inflation was mentioned.
Thursday
On Thursday, we get data on the Tankan Index in Japan, Japan’s trade balance, unemployment in the US, PPI in Germany, and the Philadelphia Fed Manufacturing Index. In addition, there will be several speakers from European central banks on Thursday. ECB President Lagarde, Governing Council Member Holzmann, and IMF Managing Director Georgieva speak at the conference “Gender, Money, and Finance” organized by the National Bank of Austria.
Key rates for loans for 1 and 5 years in China will be announced on Thursday. It would be a big surprise if they were raised and this would likely trigger an immediate sell-off in Asian stocks and currencies.
Friday
At the end of the week, data on the CPI of Japan, retail sales in Canada, sales in the US secondary housing market, and PMI in the manufacturing sector will be released. The latest data will give us an idea of how inflationary pressures developed in May and whether the labor market bounced back.
Eurozone finance ministers and central bankers will meet informally on Friday. This will be followed by a meeting on Saturday of a large group of EU finance ministers and central bankers.
