FT : Global stocks hover near 12-month highs

Global stocks hover near 12-month highs

Monday 08:30 BST. Global stocks are near 12-month highs as risk appetite is underpinned by optimism on the US economy and a belief that central banks are minded to maintain ultra-loose monetary policy.
Government bond yields are mildly mixed, major forex pairings are muted and oil is firmer.

After Japan led the Asia-Pacific region higher, the pan-European Stoxx 600 is up 0.3 per cent as banks rally and energy stocks are lifted by Brent crude’s 0.8 per cent advance to $44.61 a barrel.
The FTSE All-World index is adding 0.4 per cent to 275.55, flirting with its best level since mid-August last year.
Bullish sentiment is supported by the sight of US index futures showing the S&P 500 will hold near its record close of 2,183.
The Wall Street barometer claimed this virgin territory after Friday’s non-farm payrolls data showed the US economy added a better-than-expected 255,000 jobs in July, soothing nerves about the economic outlook.
While the data also boosted the prospects for the Federal Reserve lifting interest rates by year-end, few investors expect the Fed to rush to act.
Analysts at DBS said the “unequivocally strong” jobs report “more than keeps” a rate rise on the table as soon as September — though the Fed will not necessarily take action next month, DBS added, given it was only June when policymakers were warning about global risks.
“But officials toned down their assessment of global risks in July and several are publicly anxious to get back on the normalisation track. Two monster payrolls reports and accelerating core inflation and wage growth will give their arguments a lot of weight,” DBS pointed out.
Analysts at Bank of America Merrill Lynch were a little more cautious, but said the strong jobs numbers would give the Fed “sufficient reason” to raise rates this year if other economic data, such as gross domestic product, hold up.
“We think the Fed will wait until December given that there are still global uncertainties on the horizon, as well as the US election at home,” BAML said.
Fixed income markets place just a 26 per cent probability that the Fed will raise official borrowing costs by 25 basis points at its September meeting. Before the jobs data that figure was 18 per cent and so the dollar and US government bond yields, which move inversely to prices, have climbed in recent days.
The 10-year Treasury yield, which hit a record low of 1.32 per cent just a month ago, is a fraction of a basis point lower on the day at 1.58 per cent. Yields on UK, German and Japanese peers are notably more meagre, as central banks remain in monetary easing mode.
The 10-year gilt yield is off 1bp at 0.66 per cent after the Bank of England last week expanded its asset purchase programme and cut borrowing costs to a record low of 0.25 per cent in order to counteract a Brexit-induced economic slowdown.
Equivalent maturity Bunds are adding 1bp to minus 0.05 per cent after data on Monday showed German factories picked up steam in June, and Japanese paper firmed by 4bp to minus 0.05 per cent amid stronger investor risk appetite.
The yen tends to weaken when traders feel more upbeat and so the Japanese unit is down 0.3 per cent to ¥102.15 per greenback, its retreat contributing to a 2.4 per cent rebound for the exporter-sensitive Nikkei 225 stock average.
Hong Kong’s Hang Seng rose 1.5 per cent and the Shanghai Composite added 0.9 per cent to reclaim the 3,000 level as investors brushed off soft trade data from Beijing.
China’s exports contracted in July in dollar-denominated terms, down 4.4 per cent year-on-year, and with imports falling a sharp 12.5 per cent. Economists’ consensus forecasts were for declines of 3.5 per cent and 7 per cent, respectively.
“Signs of stronger manufacturing activity among many of China’s key trading partners have so far failed to lift export growth. At the same time, the renewed fall in global commodity prices is dragging down import growth,” said Julian Evans-Pritchard at Capital Economics.
Gold, which fell nearly $26 on Friday as the US jobs data pushed up the buck and bond yields, is down another $2 to $1,333 an ounce.

WSJ : PCP Capital Partners Looks to Invest $2 Billion in Greek Bank Loans

PCP Capital Partners Looks to Invest $2 Billion in Greek Bank Loans

Amanda Staveley’s investment vehicle sees an opportunity to buy Greek banks’ nonperforming loans, says a person familiar with the matter

PCP Capital Partners LLP is looking to spend around $2 billion snapping up nonperforming loans from Greek banks, according to a person familiar with the matter.

PCP, run by Amanda Staveley, a financier known for her close ties to Gulf investors, is aiming to lead a recapitalization of Pancretan Cooperative Bank, this person said. The small Greek lender could then be used as a vehicle to buy assets that other local banks want to shed over the next 12 months or so. PCP’s push into Greece is being backed by sovereign investors, this person added. Pancreten couldn't be reached for comment.

Cleaning up the roughly €110 billion ($122 billion) of soured loans festering on Greek bank balance sheets is becoming a priority for the government as it tries to get credit flowing through the economy again. As part of its latest bailout package the Greek parliament had to vote through laws making it easier to restructure loans or reclaim assets.

Foreign investors are being encouraged to help out. Earlier this year U.S. private equity group KKR & Co. signed an agreement with Greece’s Alpha Bank and Eurobank to manage up to €1.2 billion of their problem loans. The country’s largest lender, Piraeus, is planning to strike a similar deal with KKR. National Bank of Greece SA, is expected to follow suit, according to analysts.

Ms. Staveley, who is best known for orchestrating a £3.5 billion ($4.57 billion) investment from Abu Dhabi to prop-up Barclays PLC at the height of the financial crisis, has already put in place a management team in Greece, according to a person familiar with the matter. PCP is will work with a local group to collect or restructure debts. The fund will also look at acquiring Greek businesses.


How private equity groups fare will be a key test of the structural reforms the Greek government has put in place. Greek banks have dragged their feet selling loans to private equity groups at steep discounts, arguing they just need time to restructure them. The European Central Bank is now turning the screws, keeping detailed data on how much progress each bank makes in getting rid of bad loans and setting explicit targets, executives at several banks say.

In July the top management of Greece’s bank rescue fund—the Hellenic Financial Stability Fund—was forced out for not pressuring banks to get rid of bad loans fast enough.

Still some complain the legal system in Greece is too sclerotic. Pushing through bankruptcies remains slow, hampering the cleanup of bank balance sheets. If even the private-equity firms fail to grind out returns this could buy the banks some respite from regulators, one senior executive at a major bank says.

WSJ : Hilsenrath’s Take: Fed In No Hurry Unless Payroll Headline is Robust

Hilsenrath’s Take: Fed In No Hurry Unless Payroll Headline is Robust

After registering weak growth in output in the second quarter, the economy will need to produce some positive economic surprises to get the Fed to move quickly toward a rate rise. A robust payroll headline would help.

The magic number in Friday’s jobs report is 200,000. If the Labor Department reports that employers expanded payrolls by 200,000 or more in July then that will likely keep alive the possibility of a Federal Reserve interest rate increase at its September policy meeting. Something much below that threshold will likely keep the Fed on a wait-and-see path, inclined to raise rates this year but in no hurry to signal an imminent move barring some other positive economic surprises.

A number above 200,000 would beat the three-month average growth rate of 147,000 and suggest the economy is growing fast enough to continue reducing slack in labor markets. A number much below that level would confirm payroll growth has slowed in 2016 and the Fed can be patient before moving to another increase in rates.

Analysts surveyed by The Wall Street Journal projected the Labor Department will report payrolls grew 179,000 in July, just a little shy of the threshold and near the six-month average growth rate of 172,000. A consensus number would keep the Fed looking toward raising rates but feeling not-so hurried about doing so.

That view was articulated by New York Fed President William Dudley in a speech earlier in the week. He said it is premature to rule out a rate increase this year and warned the market against complacency. “Even 150,000 job gains per month would be consistent with gradually using up any remaining slack present in the U.S. labor market,” he said, adding the Fed needs to be patient because of downside risks to the economy.

Of course, Fed policy can’t be boiled down to just one number in one economic report. Fed officials look at a wide range of economic data. The unemployment rate is estimated to have moved down to 4.8% in July, another sign of reduced labor market slack that gives the Fed an incentive to act. Fed Chairwoman Janet Yellen also looks closely at wages, labor-force participation and broader measures of joblessness. Moreover, the Fed will have another jobs report in September to peruse and a range of other economic data to assess before its September 20-21 meeting.


After registering weak growth in output in the second quarter, the economy will need to produce some positive economic surprises to get the Fed to move quickly toward a rate rise. A robust payroll headline would help.

>>> Airbus : SFO opens criminal investigation into allegations of fraud, bribery

SFO opens criminal investigation into allegations of fraud, bribery and corruption (update) 
Airbus Group SE refers to its previous disclosures relating to cooperation with the UK Serious Fraud Office (SFO) and the European Export Credit Agencies.

Airbus Group has been informed by the SFO that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group relating to irregularities concerning third party consultants. Airbus Group continues to cooperate with the SFO.

(CS) US Major Pharmaceuticals Dwg BMY to N, Upgrade MRK to OP

Game Changing CM-026 Miss Leads Us to Downgrade BMY to N, Upgrade MRK to OP

* Bottom Line: We were stunned by BMY's announcement that the
CheckMate-026 (CM-026) Study for Opdivo in 1st line non-small cell lung
cancer (NSCLC) missed its primary endpoint. We had high expectations for
the study not just meeting its primary endpoint but potentially other
important secondary endpoints. The results dramatically impact the way we
see the immuno-oncology (I-O) market evolving, especially for the 2016-
2018 timeframe, with lingering impacts likely to be felt beyond then. We are
downgrading BMY shares to Neutral on the back of these data and
lowering our target price to $63. We are upgrading MRK shares to
Outperform and raising our target price to $73.

* Surprising miss leads to significant shift in near-term expectations.
The results open up the immune-oncology (I-O) opportunity for MRK's
Keytruda to be the dominant first mover into the 1L NSCLC setting, at least
in the 25-30% of patients whose tumors have >50% expression of PD-L1.
We assume there will also be some spillover effect into later lines of
therapy as we assume physicians will likely start to prefer Keytruda in
2L/3L for 1-50% expressers (after chemotherapy) if that is what they are
using in high expressers in 1L. BMY is looking into the data from CM-026
for patients with PD-L1>50% and, if positive, this may keep Opdivo on a
level playing field to Keytruda in terms of consensus guidelines, although
we would expect physicians to still prefer Keytruda in this indication given
cleaner data, an FDA approved indication and less frequent dosing. We
assume PD-1s will not be used in patients with <50% PD-L1 expression for
the time being and that remains open for the taking as further combination
studies read out in the future.

* Longer-term impact less clear, but we expect it will take time to see
upside for BMY. Over time we do expect combination approaches to
become more important, potentially minimizing the impact of today's
monotherapy data. We are most excited by the Opdivo+Yervoy
combination that had promising data at ASCO and where we should get
pivotal data in early 2018 (if not earlier). This could help BMY reestablish
itself in the lung cancer market, but MRK will likely already be a dominant
player by then and there could be further competition from Roche and AZN
as well. AZN's is also pursuing the PD-L1/CTLA-4 combination and positive
data in the MYSTIC Study would raise further questions about BMY's
position in lung cancer. BMY is pursuing numerous other combination
approaches, but the data behind those is more limited at this point and it is
more difficult for us to give the company the benefit of doubt at this point
until we see more.

* Opportunity for Roche and AZN. The disruption of BMY’s current I-O
dominance clearly offers an opportunity for Roche and AZN if their
combination trials show efficacy. We see some enhanced risk for AZN’s
MYSTIC trial with lower chances of a positive all comers PFS readout,
pushing more reliance onto OS which could delay a significant de-risking of
the pipeline out to 2018. In contrast we feel expectations for Roche’s
IMpower 150 Tecentiq/Avastin/chemo combination study in 1L NSCLC, due
in 1H2017, are low, suggesting limited downside on any delay. Roche
remains our preferred EU name in I-O. I-O assets account for 9% of our
NPV for AZN and 8% Roche, with the potential to add another 15% and
13% respectively on full pipeline success with Roche trading on a discount
to NPV and AZN at a premium.

>>> What to look at today - 8th of August 2016

Asian equity markets are higher across the board, tracking large gains in the US on Friday after much better than expected non-farm payrolls. US indices hit record high as investors flocked to stocks from bonds, sending yields higher and lifting the probability of a Fed rate hike before the end of the year to 43% from 32%. USD/JPY was again a popular immediate proxy for renewed Fed tightening expectations as it rose over 100pips above ¥102, and that weakness in the Yen is helping Nikkei225 outperform the other markets in Asia. China FX reserves released over the weekend saw a decline to $3.20T from $3.21T - the smallest drop in 19 months. China trade data released late in the session were mixed as USD and CNY terms of trade topped consensus and reached 6-month highs, but largely because of bigger than expected decline in imports. In Japan, cabinet net Suga expressed concern over incursions by Chinese vessels into Japan's territorial waters around the contested Senkaku islands for 3 straight days. PM Abe also spoke, promising to compile the extra budget as soon as possible.

Nikkei +2.34% Hang Seng +1.23% CSI +0.51% Shanghai +0.44%

Eur$ 1.1096 CNH 6.6691 CNY 6.6595 JPY 102.09 GBP 1.3082 CHF 0.98 RUB $65.6648 WTI$41.97 (+0.41%)

S&P +0.08% EuroStoxx +0.44% Dax +0.58% SMI 0.08%

Macro :
- OPEC Nations Said to Not Be Planning Revival of Freeze Talks
- Italy’s Highest Court to Back Constitutional Vote: Repubblica
- Padoan Says Italian Banks Don’t Need Public Backstop: Sole
- Italian Bank Deposits Up 3.4% in June vs Year Ago: ABI
- Germany May Lose 2,000 Co-Op Bank Branches: Rheinische Post
- U.S. June Consumer Credit Rose $12.3b; Est. Up $16b
- Shareholder Lobby Says DAX Companies’ Guidance Worsened: Welt

Keep an eye on :
- ABI BB : AB InBev Chief Supply Officer Kraemer Nets EU4.79m With Options
- ABI BB : SABMiller Assets Draw Interest From Canada’s PSP: Sunday Times
- AC FP : France Tourism Down on Concerns About Terrorism, JDD Reports
- AIR FP : Airbus Group Says U.K. Agency Has Opened Criminal Investigation
- AIRNBN IPO : Airbnb Files to Raise $850 Million at $30 Billion Valuation
- AF FP : Air France-KLM July Passenger Traffic Rises 0.5%
- AAPL US : Apple Said to Buy Machine Learning Company Turi: TechCrunch
- BES PL : Banco Espirito Santo Says Liquidation is Proceeding
- BMPS IM : Monte Paschi Chief Confident Capital Increase Plan Will Succeed
- BP IM : Banco Popolare 2Q Net Loss EU66.6m; Est. EU223.5m Loss
- BRK/B US : Berkshire Hathaway 2Q Oper. EPS $2,803, Est. $2,911
- BMY US : Bristol Makes for More Attractive Target After Plunge: Goldman
- CABK SM : CaixaBank Said to Agree to Voluntary Departures With Unions: EP
- DBK GY : Qatari Deutsche Bank Stakes Smaller Than Thought: Sueddeutsche
- DBK GY : German Banks Raising Fees Ahead of New Transparency Law: SZ
- EZJ LN : EasyJet Is Testing Use of Drones for Airplane Maintenance: Exec
- EDF FP : Chinese Nuclear Company on U.K. Preferred Bidder List: Guardian
- ENEL IM : Italy’s Enel Starts Final Restructuring Phase in Latin America
- ENI IM : Eni Said to Reach Deal With Exxon on Mozambique Stake Sale: Rtrs
- IHG LN : Anbang Said to Consider Bidding for IHG, Sunday Times Says
- LHA GY : Lufthansa Pilots Union Says Contract Talks to Resume Next Week
- LSE LN : Deutsche Boerse Keeps LSE Location Options Open: Handelsblatt
- NOVO DC : Novo Obesity Business to Match Insulin Unit in 20 Yrs: Borsen
- NYR BB : Nyrstar May Sell More Mines in 2H, Keep Some in 2017; Cash Drops
- OHL SM : OHL Weighs Selling Canalejas, Mayakoba Stakes: Europa Press
- PAH3 GY : Jaguar Land Rover Silverstone Bid Blocked by Porsche: Telegraph
- PLND LN : Activist Elliott raises the stakes in £600m Poundland takeover - Telegraph
- PNL NA : PostNL 2Q Cash Underlying Operating Profit Falls to EU47m
- STL NO : Statoil Sues U.S. County After Rejection of Refund Bid
- SNH GY : Steinhoff Said to Make $4B Bid for Mattress Firm Holding: FT
- SNH GY : Steinhoff Intl to Buy Mattress Firm for $64-Shr in Cash
- TSLA US : Tesla Says Gigafactory Costs $430.7m Through June 30: Filing
- VALE US : Vale Still Looking at Divestment Options, Including Core Assets
- FR FP : Valeo, Ichikoh to Develop Automotive Digital Mirror: Nikkei
- DG FP : Vinci Buys LAMSAC, PEX From Invepar; Enterprise Value EU1.5b

>>> Europe : Brokers Upgrades & Downgrades - 8th of August 2016

>>> Up
*DEUTZ RAISED TO BUY VS HOLD AT HSBC
*EDF RAISED TO REDUCE VS SELL AT ALPHAVALUE
*ERG RAISED TO OUTPERFORM AT MEDIOBANCA SPA
*GRENKE RAISED TO BUY VS HOLD AT BANKHAUS LAMPE
*IAMGOLD RAISED TO SECTOR PERFORM AT RBC CAPITAL
*KERRY GROUP RAISED TO BUY VS HOLD AT LIBERUM

>>> Down
*CREDIT SUISSE CUT TO ADD VS BUY AT ALPHAVALUE
*COGNIZANT TECHNOLOGY CUT TO NEUTRAL AT NOMURA
*FUGRO CUT TO REDUCE VS ADD AT ALPHAVALUE
*MEGGITT CUT TO HOLD VS BUY AT BERENBERG
*NOVO NORDISK CUT TO HOLD AT NORDEA
*OUTOTEC CUT TO UNDERWEIGHT AT JPMORGAN
*RBS CUT TO NEUTRAL VS OUTPERFORM AT MACQUARIE
*SOLOCAL CUT TO SELL VS BUY AT ALPHAVALUE
*UBI BANCA CUT TO NEUTRAL AT CREDIT SUISSE

>>> PT Change


>>> Initiation
*CREST NICHOLSON RATED NEW BUY AT UBS, PT 485P

>>> Call

>>> Asian Update

Asian Mid-session Market Update: China July FX reserves steady while trade surplus rises on soft imports

***Economic Data***
- (CN) CHINA JULY FOREIGN RESERVES: $3.20T V $3.20TE; smallest decline in 19 months
- (CN) CHINA JULY TRADE BALANCE USD TERMS $52.3B (6-month high) V $47.3BE
- (JP) JAPAN JULY BANK LENDING (INC TRUSTS) Y/Y: 2.1% v 2.0% PRIOR; BANK LENDING (EX- TRUSTS) Y/Y: 2.1% V 2.0%E
- (JP) JAPAN JUNE CURRENT ACCOUNT BALANCE: ¥974.4B V ¥1.10TE; ADJUSTED CURRENT ACCOUNT: ¥1.65T V ¥1.60TE; TRADE BALANCE: ¥763.6B V ¥773BE
- (AU) AUSTRALIA JULY ANZ JOB ADVERTISEMENTS M/M: -0.8% V +0.4% PRIOR

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +2.0%, S&P/ASX +0.7%, Kospi +0.4%, Shanghai Composite +0.3%, Hang Seng +1.3%, Sep S&P500 flat at 2,177

***Commodities/Fixed Income***
- Dec gold -0.2% at $1,341/oz, Sep crude oil +0.3% at $41.91/brl, Sep copper +0.8% at $2.17/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 7.1 tonnes to 980.3 tonnes; highest since July 11th
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.6615 V 6.6406 PRIOR; weakest Yuan setting since July 27th
- (CN) PBOC to inject CNY125B in 7-day reverse repos

***Market Focal Points/FX***
- Asian equity markets are higher across the board, tracking large gains in the US on Friday after much better than expected non-farm payrolls. US indices hit record high as investors flocked to stocks from bonds, sending yields higher and lifting the probability of a Fed rate hike before the end of the year to 43% from 32%. USD/JPY was again a popular immediate proxy for renewed Fed tightening expectations as it rose over 100pips above ¥102, and that weakness in the Yen is helping Nikkei225 outperform the other markets in Asia. Among other USD majors, EUR/USD has closed about half of its post-NFP gap lower, trading some 50pips from the trough to $1.11. AUD/USD traded in a 20pip range above $0.76, while NZD/USD traded some 20pips on each side around 0.71 - both of those pairs were little changed after mixed China trade and reserves data.

- China FX reserves released over the weekend saw a decline to $3.20T from $3.21T - the smallest drop in 19 months. CICC researchers remarked that softer USD helps explain reduced volatility in reserves, which may begin to improve on expectations of currency stability. China trade data released late in the session were mixed as USD and CNY terms of trade topped consensus and reached 6-month highs, but largely because of bigger than expected decline in imports. Analysts seem to differ whether the imports drops are the function of internal demand or similar result of weaker exchange rate. Outside of the economic data, local press speculated China property investment growth could slow to below 5%, limiting the scope of any potential PBOC rate cut.

- In Japan, cabinet net Suga expressed concern over incursions by Chinese vessels into Japan's territorial waters around the contested Senkaku islands for 3 straight days. PM Abe also spoke, promising to compile the extra budget as soon as possible. In Japan-related press, BOJ was speculated to announce expanded asset purchases and/or remove its inflation target by over 60% of surveyed economists, and over 80% forecast deeper interest rates after the month-long deliberations at the central bank following the latest underwhelming round of easing via expanded ETFs.

- Down under, Australia ANZ job ads declined, and local economist acknowledged the "labour market has lost some momentum so far in 2016, with slower average growth in both employment and job ads seeing the unemployment rate stabilize around 5.75%." Ahead of this week's RBNZ decision, New Zealand PM Key called for banks to pass on all of the rate cuts if the central bank does in fact reduce OCR further as it is expected to do. NZD/USD traded with a heavier tone from the start of the session, as BNZ forecast 3 rate cuts by the RBNZ this year vs 2 moves expected previously.

- Among other notable Asia EM developments, South Korea saw a 1-notch upgrade in its sovereign rating by S&P to AA from AA-, as it cited "superior track record of steady economic growth" and greater policy flexibility along with expectations of contained tensions on the Korean peninsula. In Thailand, voters chose to to approve a "junta-based" constitution in a referendum this weekend, granting military more authority.

***Equities***
US equities / ADRs:
- MFRM: Steinhof International Holdings NV to acquire company for $64/shr or $3.8B including debt
- QCOM: Israel's Checkpoint uncovers security flaws in company's Android smartphone chips - FT

Notable movers by sector:
- Consumer discretionary: Flight Centre FLT.AU +4.9% (access to interest-free financing)
- Financials: Shimao Property 813.HK +1.6% (July result); Agile Property Holdings 3383.HK +2.4% (July result); Bendigo and Adelaide Bank BEN.AU +4.2% (FY16 result); Shui On Land 272.HK -0.9% (profit warning); China Vanke Co 000002.CN +4.1% (Sunac Chairman denies speculation to hold shares)
- Industrials: Sany Heavy Equipment International Holdings 631.HK -0.8% (profit warning); Shimadzu Corp 7701.JP +5.2% (Q1 result); Guangzhou Automobile Group 2238.HK +0.6% (July result);
- Technology: Tech Pro Technology Development 3823.HK -5.0% (profit warning); Largan Precision Co. 3008.TW +5.6% (July result); Pioneer Corp 6773.JP +13.2% (Q1 result); Synnex Technology International Corp 2347.TW -0.3% (July result)
- Materials: St. Barbara SBM.AU -5.2%; Northern Star Resources NST.AU -6.3% (gold extends decline);Marubeni Corp 8002.JP +0.7% (Q1 result)
- Telecom: NTT (Nippon Telegraph & Telephone Corp) 9432.JP -1.4% (Q1 result)

WSJ : Global Economy Week Ahead: U.S. Productivity, Chinese Industrial Output,

Global Economy Week Ahead: U.S. Productivity, Chinese Industrial Output, German GDP

China’s July industrial production is forecast to expand at a steady rate on the back of government stimulus

This week, reports from three of the world’s top four economies should help shape market sentiment. In the U.S., retail sales and productivity numbers could serve as antidotes to skepticism about America’s economic health. Industrial output and producer prices in China should offer clues about the pace of the slowdown in the Asian powerhouse. And in Germany, gross domestic product is expected to reflect an economic slowdown.

MONDAY: Chinese trade figures will provide insight into whether the nation’s export engine shows signs of recovery despite weak global demand and rising production costs at home. Exports are expected to remain in negative territory but improve over June’s -4.8% year-over-year performance.

TUESDAY: China’s July producer price index (to be released Monday night EDT) should provide fresh insight into Beijing’s efforts to fix a key problem in its economy. The government has struggled to manage an overcapacity problem that is exporting deflationary pressures overseas and fomenting domestic financial turmoil. Economist expect the gauge of factory-gate prices fell in July by 1.9% from a year earlier, less than June’s 2.6% decline.

Data on U.S. nonfarm productivity growth may be a volatile indicator for the long-term health of the American economy, but concerns about the ability of the country to expand make this number important for investors now. Productivity growth shrunk in four of the past six quarters. But economists forecast that the Labor Department’s second-quarter data should show a 0.4% growth rate after a 0.6% contraction in the first quarter.

FRIDAY: China’s industrial production print for July, seen as a rough proxy for economic growth, is forecast to expand at a steady rate of about 6.2% on the back of government stimulus. But a weaker number could fuel expectations for a dimmer growth outlook in the world’s No. 2 economy for the rest of the year and disturb global markets.


The U.S. Commerce Department’s July retail sales data could bolster the case the economy is heartier than some fear. If the trend for strong growth in consumer buying continues, that could brighten the outlook for third-quarter GDP, especially after Friday’s healthy job numbers. Economists forecast 0.5% growth in July retail sales, nearly in line with June’s 0.6%.

Germany’s second-quarter GDP, meanwhile, is expected show a slowing economy, with growth down to 0.2% from 0.7% in the first quarter. That would be bad news for a region already dealing with the U.K.’s decision to exit the European Union, especially since Germany had been a lonely bright spot in a dismal eurozone economy.