“The four most expensive words in the English language, “This time it’s different”” — Sir John Templeton.

1. Germany Economy Heading for Contraction — the euro zone relies heavily on Germany, its largest economy, to generate growth. Germany’s composite PMI fell to 47.7 in October from 49.2 in September, which, says Markit, “raises the likelihood of an outright GDP contraction during the final quarter of the year.”
2. Obama Wins Second-Term – faces fresh challenge with ‘fiscal cliff’ — Barack Obama won re-election, but the U.S. president faces a fresh challenge confronting the “fiscal cliff,” a mix of tax increases and spending cuts due to extract some $600 billion from the economy barring a deal with Congress.
At stake are two separate issues – individual tax cuts due to expire at year’s end and tens of billions of dollars in across-the-board federal spending cuts due to kick in the day after New Year’s Day.
3. Greeks Government Approved Austerity Vote — thousands of Greeks held a second day of a general strike to protest the latest round of austerity, which the country’s parliament passed. The approval of the €13.5B of wage cuts and tax hikes by 2016 is vital for Greece to receive the latest €31B tranche of its bailout before it runs out of money.
4. President Election Cycle Update — below is the updated chart (courtesy of the Bespoke Inv’t Group) which highlights the similarities between this year and prior Presidential Election years numerous times.

5. China begins congress to change leadership — outgoing Chinese President Hu Jintao has set his successor, who’s expected to be Vice President Xi Jinping, a target of doubling per-capita income by 2020.
6. Japan Data Show Signs Of Distress — per WSJ, Japan swung to its first current account deficit since 1981 in September, with the gap coming in at an adjusted ¥142B ($1.8B). The shortfall is a sign Japan is nearing the point at which it won’t be able to finance its mammoth debt from domestic sources only.

The week ahead — Economic data from Econoday.com: