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Will Europe Disintegrate This Summer? Global Week Ahead

I think globally each week. Do you? Follow me on twitter @johnblank100

Monday is Europe Day on the continent. This fete will be celebrated across the European Union (EU). There’s a big question all Europe watchers must take seriously. Will the European integration dream disintegrate across the summer?

It is not outlandish to speculate.

In the Global Week Ahead, there are two related acts due on stage, in this EU integration-disintegration drama:

Monday kicks off with an extraordinary meeting of EU Finance ministers to discuss the macroeconomic adjustment program for Greece. Could Greece finally get some debt relief? That would be a helpful step. ‘The Sustainability of Greece’s Public Debt’ is the topic slated for discussion.  

Attention is likely to find its way to the U.K. this week, too. The Fed’s Evans speaks in London on Monday. U.K. Treasury Minister Osborne speaks to the parliament on Wednesday. A regular U.K. Monetary Policy Committee meeting to set the base rate hits on Thursday. There will be a press conference.

The Brexit poll (the British referendum to leave the European Union) is set for June 23rd, 45 days away. The latest polls give a 41% and 42% chance to leaving or staying, respectively. 13% are undecided. 4% won’t vote.  

U.K. Prime Minister Cameron recently defended his decision to call the EU referendum, telling the BBC: "You shouldn't try to hold an independent sovereign nation in an organization against its will." Then, Cameron went on to backtrack and say leaving the EU meant "the clock being turned back to an age of competing nationalism in Europe."

Whether this Brexit vote is a vote for or against Cameron’s U.K. leadership remains to be seen. Running a democratic country by referendum speaks to a weakening hold on Prime Ministerial power. He will seek to consolidate party support after this vote. U.K. Conservatives look to be about as unified as U.S. Republicans these days. That’s me being polite.

With my economist hat on, I think EU Finance Ministers want to get the Greek fiscal debt situation to calm down. They wish to move forward productively. This is partly a tactic to help U.K. voters see the EU in a favorable light. A political blowup with Greece, scant weeks before the U.K. referendum, would be very bad indeed for the EU integration camp.

The U.S. — once again — looks to be the most stable house in which to play your stock market cards.

Over the weekend, 3 U.S. Health Care mid-cap stocks moved a Zacks #1 Rank (Strong Buy). Each is also the holder of a long-term Zacks VGM score of A. That tells you the U.S. Health Care sector -- a perennial Very Attractive sector -- is looking good for a stock pick right now.

One is Air Methods Corp (AIRM). This is air transport for medical emergencies with a $1.4 billion market cap. The stock also has a Zacks VGM (Value, Growth, Momentum) score of A.

The second is AMN Healthcare Services (AHS). This is a travel healthcare staffing company with a $1.8 billion market cap. It recruits and places nurses, physicians and other healthcare professionals in travel or permanent assignments. The stock has a Zacks VGM score of A too.

The third and final is Halyard Health (HYH). This is a med tech company with a $1.4 billion market cap. It is focused on advancing health and healthcare by preventing infection, eliminating pain and speeding recovery. They sell surgical and infection prevention products for the operating room. It has a Zacks VGM score of A, too.

The Global/Macro Indicators That Matter This Week—

On Monday
, ANZ job addition in Australia were -0.8% m/m, down from a prior +0.1% m/m rate.

German factory orders (seasonally adjusted) were up +1.9% m/m, better than the -0.8% m/m prior.

Euro Area Finance Ministers hold an extraordinary meeting in Brussels.

Minneapolis Fed’s Kashkari speaks in Minneapolis and Chicago’s Evans speaks in London.

On Tuesday, German industrial production should be up +1.1% y/y, down from a prior +1.3% y/y rate, but still positive. French industrial production should be up +0.5%, down from +0.6% y/y prior.

Mexico’s nominal wages should be up +4.2% y/y, slightly lower than the prior +4.5%.

On Wednesday, Japan’s leading indicator should be 96.3, lower than the prior 96.8.

U.K. industrial production should be declining -0.4% y/y, in line with the prior -0.5% rate.

Brazil’s broad retail sales look to be down -7% y/y, with a fresh -0.8% m/m decline.

Finance Minister Osborne in the U.K. speaks before Parliament.

On Thursday, the French HICP inflation rate should be -0.1% y/y, a slight improvement from the -0.2% y/y rate prior.

Eurozone industrial production should be up +1.1% y/y, better than the prior +0.9% y/y rate.

The BoE Monetary Policy Committee meets and issues a rate decision. The Base Rate of 0.5% should hold.

Initial claims should be strong at 270K.

The Fed’s Mester, George and Rosengren speak.

On Friday, the BoJ’s Kuroda speaks in Tokyo.

The German HICP inflation rate should be down -0.5% m/m, after a -0.3% m/m decline. The y/y rate now looks to be -0.3% y/y. That’s deflation.

In contrast, the Spanish HICP looks to be +0.4% m/m, after a +0.4% m/m number. The y/y rate is -1.1% there. Also deflation.

Construction output in the U.K. should be off -2.7% y/y, after a +0.3% y//y number.

Eurozone GDP should be up +0.6% q/q on a second estimate. The y/y rate is +1.6%.

Brazil’s proxy GDP growth rate is -6% y/y.

The BoK (Bank of South Korea) should keep its base rate at 1.5%.

U.S. retail sales (ex-auto) should be up +0.5% m/m.

University of Michigan sentiment is 89.5, slightly better than a prior 89.
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