It's all about growth this week as we get the first release of Q3 GDP figures from the UK and US.
Both numbers are expected to rebound and, following two consecutive quarters of negative growth, the coalition will certainly breathe a sigh of relief if the number comes in anywhere near the forecast of 0.6%.
The 'triple dip' recession is expected to come to an end as the economy bounces back from the extra Jubilee bank holiday and gets a welcome boost from the Olympics. However, as we've seen in the recent past, there may be a risk of the figure coming in lower-than-expected.
In the past two quarters, the initial readings have been far below market estimates and this has been a recurring theme over the past few years. As a result, investors are likely to be prepared for the worst when the data is released on Thursday morning.
There are strong arguments for GDP to come in either above or below expectations.
In the above camp, there are lower unemployment figures, better-than-expected retail sales and the continued strength in the services sector.
Meanwhile, in the below camp, companies are simply not pushing the investment button. Instead, they are hoarding any spare cash, or returning it to investors, rather than spending more on trying to grow.
The ongoing uncertainty is causing firms to really batten down the hatches. Even though there have been some tentative signs of improvement in the Eurozone, it remains unclear whether the single currency is safe from a break up.
By Simon Denham - 22 October 2012
UK GDP Update - Part 2 - Good News
Update - 26 October 2012
Yesterday's UK GDP data was the first good news that this coalition has had for some time.
Despite the good news, however, the situation in the UK and Europe is still not much better than it was a year or even two years ago.
For the UK specifically, the debt mountain remains far too large. Even though the deficit has been reduced in the last couple of years, it remains one of the largest in Europe, only just behind the likes of Ireland, Spain, and Greece.
When you look at the OECD as a whole, outstanding public sector debt is unsustainably high at around 110% of GDP.
This simply has to be addressed with austerity but, at the same time, the debt needs to be reduced in a sustainable way.
As we are seeing in the European periphery, too much fiscal tightening is self-defeating. You need to balance austerity with meaningful growth measures.
The UK's GDP data is very welcome news but a big shadow of doubt remains over whether we'll see the economy continue to expand for the remainder of this year and into next.
Whilst the growth news may have supported UK spread betting
markets yesterday, some selling pressure is being applied to European indices this morning after US corporate earnings disappointed again last night.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Simon Denham, 26 October 2012