I don’t understand why people are so enthusiastic on Germany. Their GDP print comes in at 2.2% and everyone cheers. One headline actually read “superman economy.” On the other hand, US economy, supposedly on a verge of depression, comes in at 2.4%.
It is obvious outside France and Germany things are only getting worse in the Eurozone. France’s economy is actually being supported by fairly robust domestic consumption while Germany powers on exports and manufacturing. France and Germany both likely to slow down as austerity kicks in (keep in mind gov’t plays much bigger role in economy there in Euroland compared to US).
Slowdown in economy is clear. Consumers remain weak while manufacturing slows - everywhere in the world even in China. Hard to feel bullish on anything but I still believe that US will outperform Europe going forward as the overshoot in sentiments normalize in the coming months.
Japan manufacturing mood is high on govt stimulus but strong yen is becoming a problem
• Japanese manufacturers' confidence rose to the highest in nearly three years in August due to government stimulus, but companies forecast for the first time in three years that their sentiment will deteriorate as the strong yen threatens exporters' earnings, a Reuters poll showed.
• he monthly poll, which has a 95 percent correlation with the Bank of Japan's tankan survey, showed on Friday that manufacturers' sentiment index rose 10 points from the previous month to plus 22, the highest since November 2007, when the index stood at 23.
• Sentiment improved as auto makers expected consumers to frontload purchases of cars before government subsidies expire in September.
• Japan policy makers fired off a volley of comments on Thursday to curb yen strength and central bank officials stepped up efforts to prevent the currency from harming a fragile economic recovery. However, in my view this is just window dressing. There is nothing policy makers can do to drive currency market in big economies.
• The manufacturers' sentiment index is expected to worsen to plus 15 over the three months to November, marking the first time in three years that the mood is expected to worsen, as a strong yen and uncertainty over the U.S. economic recovery weigh on corporate sentiment.
Spain GDP disappoints after Greece disappoints yesterday
• Spain’s GDP rose less than forecast, while a report yesterday showed the Greek economy shrank for a seventh quarter.
• Spanish bonds fell and the extra yield investors demand for holding Greek debt instead of German bunds rose to the most since May on concern flagging growth in nations on Europe’s periphery will crimp the region’s recovery.
German Q2 GDP “surges” – but only at 2.2% that’s weaker than US’s 2.4%
• German second- quarter gross domestic product rose 2.2 percent from the first quarter, the fastest pace since records for a reunified Germany began in 1991. Economists predicted the economy would expand 1.3 percent.
• The yield on the 10-year German bund rose one basis point to 2.44 percent as of 8:50 a.m. in London.
• Germany has had very strong export and manufacturing numbers so upside surprise in GDP doesnt surprise.
France also posts decent GDP for Q2
• After slowing to 0.2% in 1Q (revised up from +0.1%), GDP growth picked up again to 0.6%. Five quarters of recovery since the recession trough left activity 1.7% higher on the year, but still more than 2% below the pre-crisis peak.
• French economic growth rebounded more than generally expected in 2Q, as a recovery in private consumption and investment and a big boost from inventory changes offset a drag from foreign trade, the national statistics institute Insee said Friday.
US retail sales – car sales were strong but weak otherwise
• Retail sales rose 0.4 percent from June to 362.7 billion dollars on the back of strong auto sales, the Commerce Department said.
• The July figure was slightly lower than the 0.5 percent rise expected by most economists but it was the first rise in three months after declines of 0.3 percent and 1.0 percent in June and May respectively.
• Sales rose strongly at auto dealers and gas stations while declines were more widespread, but generally modest outside of department stores, the government data showed.
• Economists were little impressed by the latest retail data as excluding transactions in auto dealerships and gas stations, "core" sales fell 0.1 percent -- reflecting the lackluster state of the world's largest economy.
US inflation remains subdued in july – I do not see ANY inflation risk on the horizon
• Inflation metrics in the United States continue to point to slow price rises. The consumer price index climbed 1.2% year-over-year in July, exactly what economists were expecting and slightly higher than the 1.1% y/y rise in June. Excluding the volatile food and energy components, the CPI rose 0.9% y/y, in line with forecasts and the same as in June. With this low level of inflation the story will continue to be fear about deflation, rather than rising prices.
Some rebound in US consumer confidence but still stuck in DISMAL level
• Consumer confidence (U of M survey) inches up from 67.8 in july to 69.6. does that mean anything I don’t think so. This index remains at a dismal level and is still well below the level of around 73 earlier in the year. And it is likely the good stock market performance in second half of july and first week of aug.
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