The World Overall One Financial | Andrei Wogen| finance.wogen@gmail.com|For the Week of: 07/12

(The opinions and analysis below are solely those of the author, Andrei Wogen. They do not in anyway represent the views or beliefs or opinions of the second or third parties which are used to distribute this report)

Last Week in ReviewUSD Looking through the highlights of the most recent FOMC minutes, released last week, it would seem that the Fed is still a ways from raising rates. While there was some discussion of the matter of raising rates, it was widely seen as a good idea to hold off raising rates during the Jun meeting. However, it also seemed that September and even this year in general is in question. The Fed gave a numbers of reasons for caution on the outlook for the US with China and Greece being a couple of major concerns during the June meeting. This is a bit surprising to me that the Fed is that focused on the global economy and global events rather than on the US economic situation (which is doing okay) but thats what is going on. In terms of the US economy, there was optimism on the jobs sector in particular but there was concern that rate hikes coming too early would hinder growth too much. On the whole then the tone of the FOMC minutes were quite dovish but seem to echo what we heard from Yellen during her press conference after last months meeting and so once again, I think rate rises are STILL a ways off from happening.

AUD The RBA left rates on hold last week as expected as they continue to want to see how their two rate cuts theyve done this year play out. As for the Australian economy, the Bank expects that growth will continue to perform below its longer term trend while inflation is expected to stay consistent with its target. The bank also repeated that the AUD has further to fall but they also noticed that the Aussie has fallen a good deal versus the USD. Which it has. Like the FOMC, there were also conners voiced about China and Greece with Chinas volatile markets and Greeces issues but also remarked that longer-term borrowing rates for most sovereigns and credit-worthy borrowers remain remarkably low. On the whole then the RBA continues to stay pat on rates and they seem fine with this too for the time being. However I am personally still expecting at least one more rate cut this year as the continued weakening of China and the commodity sector will continue to put pressure on the Australian economy. Also too with high levels of consumer debt mixed with very high real estate prices mixed with downward pressure on business activity all these things and more I expect will create quite a bit of trouble for the Australian economy, hence why more rate cuts I am expecting will be on done. And soon. As for data last week, employment data painted a good picture as the number of newly employed (both part time and full time) rose more than expected. But then home loan data showed a pretty decent fall in new loans for both investors and consumers. Some indications then of a rather shaky real estate market in Australia may be starting to take form. If these numbers of new loans for real estate

continue to fall that I expect will be a good indication of weaker real estate conditions and activity and this I expect then will have a pretty negative effect on the overall Australian economy.

EUR Not a whole lot of data of importance was released last week from the Euro Zone counties. Germany posted yet another big trade surplus, though imports were a bit on the weak side and their industrial production numbers showed some mixed results. So the story once again turned to Greece which is talked about below.

What to Watch this WeekGreece It would seem (though I have said this already beforeprobably more than once) that we have come to the cross roads for Greece. Members of the Euro Zone, finance ministers and other politicians representing each of the Euro Zone countries, are meeting (at the time of writing thisSunday afternoon US EST time) to decide Greeces fate. By the end of last week, Greece had presented a new set of proposals in order to get over 53B euros of money in a new bailout package to keep the country from exiting the Euro Zone and enter very big economic trouble. However the tone in the meetings to decide Greeces fate was testy. To say the least. It was quite divided with about half of Euro Zone countries with the opinion that Greece is not to be trusted and any new reform commitments Greece has made they wont follow through with them. Then, on the other side of the table are those that want to give Greece another chance in order to help keep the Euro Zone intact. The latter group includes Spain and France and the former group includes the countries of Finland and (you guessed it) Germany. So the real question is, as it always has been, how committed are the Euro Zone countries and leaders to keeping the Euro Zone intact? To answer this question another question must be offered and answered: how trust-worthy is Greece to following through with their most recent commitments to reform and cutting their debt? The second question and its answer will be key in answering the first question. Problem is, I think it is still too close to call at this point which side will win. Then, to add into the mix, a report was leaked that Germany at least (and maybe other countries) are considering a time out for Greece form the Euro Zone where they will have the opportunity to re-group and fix things before re-joining the Euro Zone again. The time frame for this time out is about 5 years. However this is just speculation really at this point and so no telling for sure if this is really being considered or not. But still, the way I see it is still too close to call on what the final outcome will be and then, how the markets will respond.

USD This weeks main data will be CPI data on Friday and Retail sales data on Tuesday along with other important data including industrial production numbers and building permits and housing starts data. As for CPI then, while Core continues to stay pretty steady (currently at 1.7% year-over-year) headline and PCE (the Feds favorite gauge of inflation) continue to be quite weak. I am not expecting a big lift either in inflation data this month both for headline and core. Headline especially will likely be affected by ranging and then lower oil prices as oil prices stayed pretty steady but weak throughout the month of June. Within the past week or so though they have taken a tumble and so something to take note of for the reading of this months CPI data due out next month sometime. As for core inflation, this is where

the market will be watching the most. A fall in this will push back expectations on a Fed rate hike yet again while a rise will (probably) increase expectations though probably not by much. The market is still expecting a rate hike either in September or December with December becoming the more likely candidate and recent data has not really change these expectations to the optimistic side of things (earlier rate hikes expected) especially with weak wage data last week. As for retail sales then there is risk in my opinion for a better reading on this data form last Mays reading. Recent consumer spending data (released a week or so ago) showed some improvement in the spending activity of the US consumer. We shall see if this translates into better retail sales data or not. As for the other data mentioned above for the week, the industrial production numbers and housing data will continue to give indications of how the US economy is doing.

EUR Aside from Greece, the two main things to watch for this week out of the Euro Zone is CPI data for the month of June and (more crucially) the ECBs policy meeting and press conference. As for CPI this continues to remain weak in the Euro Zone and so a big uptick in it will be welcome but is probably still a ways off from happening.Also this week, German CPI will be released a couple of days before the Euro Zone number and will be watched for any indications of how the overall Euro Zone CPI number will be. So then, lets move on to the main event this week (not including Greece) the ECB meeting. As for their rates and QE I expect that they will be left on hold as CPI and growth continues to remain weak and so continues to need support (at least in the Banks view). So attention will turn to the press conference to follow the meeting. Questions from reporters about Greece and what the ECB plans to do to support the country I am sure will be front and center. Also, what the ECB plans to do, if they decide to tell, in the event of a turning for the worse (again) with Greece.

CNY Aside from Chinas equity markets continuing their wild ride the world will be watching as second quarter GDP is scheduled to be released on Tuesday evening (US EST time). Growth continues to weaken on the whole in China the question is has it slowed more than the markets and Chinas authorities have expected it will and as fast as expected. Any weaker reading in the GDP number will be a negative for not only China but also for countries like Australia a big player in the world. Any weakness in Chinas growth will definitely have and I think is having a negative impact on world growth. Vise versa for an increase in Chinese economic growth. If the number for GDP does come in lower though, that would help to increase expectations for more easing form the PBoC in terms of rate cuts and more liquidity injections. These expectations therefore could likely help to lift Chinese equity markets which would be a welcome sign after the past couple of weeks of just straight drops particularly in the Shanghai index. Other data of interest will be retail sales data and industrial production numbers as well as trade balance data which is used by some to indicate what overall GDP data could likely be. Both exports and imports continue to fall which is a concern of the Chinese authorities hence why calls for more easing continue. So a big weak then for China and the world will be watching especially in light of the recent developments in Chinas equity markets and just the overall weakness that continues to be seen in Chinas economy.

NZD Second quarter CPI data will be in focus for New Zealand this week. Calls for rate cuts continue as the New Zealand economy

continues to weaken on the back of lower commodity prices in particular as well as knock-on effects of weaker China economic activity. A weaker reading therefore would increase calls for a rate cut by the RBNZ and help to weaken the Kiwi further which, ironically is what the RBNZ wants anyway as the global currency war to see who can weaken their currency the fastest and most continues. The other data of interest will be business PMI data which will give us indications on how business conditions continue to be in New Zealand especially in light of the weaker New Zealand economic activity. Probably will be lower and business conditions in New Zealand are already close to contraction territory as it is.

GBP June inflation data will be in focus for the Pound Sterling and UK markets this week. Inflation remains at around zero pushing down expectations for a rate hike all the way to the second quarter of next year according to at least one estimate. Rising inflation therefore will continue to be a key component of when the BoE will raise rates, which as we saw last week, has yet to occur.

CAD The biggest risk event for this week will be the BoC meeting which will be held on Wednesday. Recent growth and inflation figures point to weaker then expected conditions for both and could mean that the BoCs rate cutting may not be over just yet. Since their surprise rate cut earlier this year the Bank has been pretty confident about the Canadian economy and its ability to withstand the drop in oil and energy related sector activity. However it is seeming to not be the case as of late. While I dont expect the BoC to cut rates this meeting (though weve been surprised by them before) I do expect that a more dovish tone will prevail. This dovish tone, if it shows itself, will therefore increase expectations for a rate cut by the BoC to come in the next few meetings. By the end of the year is what I am expecting especially if factors such as overall growth (GDP, etc.), inflation and oil prices continue to or start to weaken. As for inflation, CPI numbers for the month of June are due to be released on Friday. Core inflation numbers continue to sustain itself above the 2% mark which is an encouraging sign given the weakness in the energy sector. Shows that the overall economy, minus the oil industry, just might be doing alright enough for the BoC to not have to ease further. We shall see.

Longer-Term Sentiment IndicatorAsset Overall Sentiment Strength Rating

US Dollar Positive 2

Euro Negative -3

Pound Positive 1

Canada Dollar Negative -1

Australian Dollar Negative -3

Japanese Yen Negative -4

New Zealand Dollar Negative -2

Economic Calendar Region Event/Data Expected Date Time (EST)

Euro Zone Eurogroup Special Summit 07/11 24H

China Trade Balance (Jun) $55.7B 07/12 n/a

Japan Industrial Production m/m -2.1% 07/13 12:30am

China Foreign Direct Investment 07/13 n/a

Germany CPI y/y 0.3% 07/14 2am

Germany Harmonized CPI y/y 0.1% 07/14 2am

United Kingdom CPI y/y 0% 07/14 4:30am

United Kingdom Core CPI y/y 07/14 4:30am

Germany ZEW Economic Sentiment 30 07/14 5am

Euro Znoe ZEW Economic Sentiment 51.1 07/14 5am

Euro Zone Industrial Production y/y 1.9% 07/14 5am

United States Retail Sales ex. Autos m/m 0.6% 07/14 8:30am

China Q2 GDP q/q 07/14 10pm

China Q2 GDP y/y 07/14 10pm

Japan BoJ Monetary Policy Statement 07/14 n/a

Japan BoJ Press Conference 07/15 n/a

China Retail Sales 07/15 1:30am

China Industrial Production y/y 07/15 1:30am

United Kingdom Unemployment Rate 5.5% 07/15 4:30am

United Kingdom Avg. Earnings incl. Bonus 3.3% 07/15 4:30am

United Kingdom Avg. Earnings ex. Bonus 2.9% 07/15 4:30am

United Kingdom Claimant Count Change -8.8K 07/15 4:30am

United States Industrial Production m/m 0.2% 07/15 9:15am

United States Fed Yellens Speech 07/15 10am

Canada BoC Rate Statement 07/15 10am

Canada BoC Rate Decision 0.75% 07/15 10am

Canada BoC Press Conference 07/15 10am

New Zealand Q2 CPI y/y 0.4% 07/15 6:45pm

New Zealand Q2 CPI q/q 0.6% 07/15 6:45pm

Region Event/Data Expected Date Time (EST)

Australia Business Confdience 07/15 9:30pm

Euro Zone Core CPI y/y 0.8% 07/16 5am

Euro Zone CPI y/y 0.2% 07/16 5am

Euro Zone ECB Interest Rate Decision 0.05% 07/16 7:45am

Euro Zone ECB Press Conference 07/16 8:30am

United States Fed Chair Yellen Testify s 07/16 10am

United States NAHB Housing Market 07/16 10am

United States CPI y/y 07/17 7:30am

United States Core CPI y/y (ex. Food and Energy) 07/17 7:30am

Canada CPI y/y 07/17 7:30am

Canada Core CPI y/y 07/17 7:30am