Market Action

  • U.S. markets continued their move up this week as the jobs report released Friday and other data confirm consolidating economic growth. Earnings data from the third quarter has come in largely beating expectations, lifting stocks.
  • Europe continues to walk a murky path. Early this week the European Commission cut its growth outlook for 2014 and 2015 while later in the week German industrial output was reported to be weaker than expected. Draghi’s news conference on Thursday pledged more stimulus is ready if needed for the Euro area, dropping the Euro to new lows.
  • Remnants of Japan’s monetary bazooka launched last Friday supported the Nikkei throughout the week. The BoJ’s determination to ward off deflation pushed the Yen over 114 relative to the dollar, a seven-year low. Meanwhile, China confirmed last month’s reports of credit easing for key banks and pledged support for corporations in the credit markets.
  • Despite oil’s precipitous decline over the last several weeks U.S. oil companies have reported impressive earnings for the third quarter. Producers have also vowed to increase production going forward even in the current price environment. A report from the Wall St. Journal meanwhile suggested that OPEC would take action on cutting production if prices reached $70 per barrel. It was also revealed this week that further crude exports from the U.S. would be allowed.
  • The Basel Committee on Banking Supervision agreed to a new regulatory metric this week, the Net Stable Funding Ratio. Its aim is to minimize a bank’s reliance on funding operations with short-term funds, which have the propensity to freeze in stressful scenarios. The rule goes into effect in 2018.
  •  The ECB’s Single Supervisory Mechanism assumed responsibility for regulating Europe’s key banks this week. The body is responsible for unifying regulatory standards across the continent, starting with going through the capital needs as revealed by recent stress tests.

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