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Daily Agenda: The Week Ahead, November 24 – 28, 2014

On Thursday OPEC member nations convene to talk oil pricing strategy as U.S. bond and equity markets close for Thanksgiving.

In the lead-up to the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna on Thursday, analysts remain fiercely divided over what will come out of the confab. Poor member states such as Venezuela are suffering from lower oil prices, while Middle East member nations, largely buffered by huge coffers, are focusing on competing with North American producers. For investors and analysts alike, this brings up the big commodities question of whether oil prices can fall further. Although Goldman Sachs analysts argued last week that WTI prices could slide to $60 per barrel without a production cut, not all analysts have as bearish a view. In a research report last week, Brian Reynolds, chief market strategist at Rosenblatt Securities in New York, noted that consensus analysts’ forecasts remain higher than forward prices indicated by futures markets. “Unless oil prices surge soon, there looks to be even more disappointment coming in this sector, which has been a favorite to the macro bears,” he wrote. Independent analyst Vincent Fernando, for his part, sees a balance at play that may provide a floor for prices — regardless of any OPEC action. “If OPEC cuts and oil prices rally, U.S. shale production will be further incentivized and we have more supply growth ahead,” he writes. “If OPEC doesn’t cut and oil continues to fall, the incremental production for U.S. shale will create floor support for oil prices.” Fernando goes on to note that this balance cuts both ways, yes oil prices may have a floor; but they may also have a ceiling for the very same reasons.

Monday, November 24: In an all-around light day for Asia data points, Japanese markets are closed for Labor Thanksgiving. In Europe, German IFO sentiment indexes for November will be released with expectations among economists for a moderate improvement for the expectations and business climate benchmarks. In the U.S. Markit is publishing November purchasing managers’ index composite flash readings for November.

Tuesday, November 25:Bank of Japan governor Haruhiko Kuroda is scheduled to speak in Tokyo on monetary policy, a handy tie-in to the central bank’s release of minutes from its most recent monetary policy meeting. Separately Ministry of Finance Corporate Service Price index levels for October will provide more insight into the Bank of Japan’s attempts to fan inflation. The U.S. Department of Commerce is delivering its revised estimate of U.S. third-quarter gross domestic product; with forecasts suggesting little surprises or a slight slowdown. Other major releases scheduled for Tuesday in the U.S. include third-quarter personal consumption expenditure (PCE) data and September Case-Shiller home values. Quarterly earnings from Hewlett-Packard on Tuesday will be more closely examined for specific business line data following the Silicon Valley–based corporation’s October 6 announcement that it is splitting into two separate companies,

Wednesday, November 26: U.K. revised third-quarter GDP and total business investment will be a focus for European market narratives on Wednesday as investors look for any shift that could sway the Bank of England away from its present dovish leanings. In the U.S., two days before the Black Friday shopping day, October PCE and weekly initial jobless claims will provide insight into the confidence and likely spending habits of the U.S. consumer. Many economists have noted in recent months that despite promising employment metrics, a lack of wage growth and low participation rates suggest total job market recovery has not yet occurred. Deere & Co.’s quarterly earnings announcement may be of note for Berkshire Hathaway shareholders after the Warren Buffett-controlled behemoth announced that as of its last filing it had sold its entire position in the heavy equipment manufacturer.

Thursday, November 27: In Germany, November unemployment levels will be announced, as will GfK November consumer confidence indexes and consumer price index data. Expectations are for no major shift in either the slow pace of activity or soft price growth at the cash register. Also on deck are European Central Bank data on M3 measures and private sector lending for October, with forecasts for another unwelcome year-over-year contraction in extended credit. U.S. markets are closed for the Thanksgiving holiday.

Friday, November 28: Japan is back in the spotlight on Friday with October consumer inflation, as well as closely followed Tokyo-specific November levels. In Europe, aggregate euro zone October unemployment and November consumer price inflation levels will be announced, putting ECB policy under the microscope.

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