Signs of compromise between Republicans and Democrats regarding a possible “fiscal cliff” solution led to price gains in the U.S. last Friday.
The Senate Democratic leader, Nancy Pelosi, said she felt confident that the agreement between the parties is within reach, and Chairman of the Republican Congress, John Boehner, said that the negotiations between representatives of the two parties were constructive.
Regarding the economic data we note that contrary to recent trend, data published last week was mostly negative, although some was influenced by the effects of Hurricane Sandy.
Industrial production fell in October by 0.4%, and New York’s and Philadelphia’s expectation surveys indicate further weakening of the industrial sector in the coming months.
Stability was recorded in the volume of retail sales (excluding auto) in October, where expectations were for a slight increase of 0.2% following an increase of 1.2% in September.
Japan is heading to another recession.
A quarterly contraction of 0.9%, 3.5% in annual terms, was recorded in Japanese GDP in the third quarter, while second quarter figures were revised slightly downward.
The last time there was such a sharp decline in Japanese GDP data was after the tsunami hit the country in early 2011.
The fear of another recession led the Japanese prime ministry leading candidate to call for implementation of more extensive quantitative easing programs, including unlimited money printing, in order to lead to the depreciation of the JPY and to remove the Japanese economy from a state of deflation.