Pretty slow day in terms of economic data. Eurozone PMI shows that manufacturing remains pretty strong but detailed analysis reveals the gap between Germany/France and rest of eurozone is growing. Any weakness by these two countries can precipitate a massive selloff.
Looking ahead I think the two most important piece of economic data are US initial jobless claims on Thu and final Q2 US GDP number on Friday. The expectation for the revised Q2 GDP is significant downgrade – from 2.4% initially to a meager 1.4%. I am thinking this would be another tough week for stocks and commodities.
Copper continues to outperform oil on falling global inventory and the metal’s higher leverage to EM. Oil continues to trade with macro sentiment with a near 1 correlation to the stock market. Last week’s DOE report was bearish as well.
I am going through looking at Chinese commodity trade data for July. Will post on that tomorrow.
Eurozone august flash PMI dips but remains healthy
• The Eurozone Flash Composite Purchasing Managers' Index (PMI), which gauges activity in thousands of services and manufacturing companies, fell in August to 56.1 from 56.7 in July, a slightly bigger fall than expected. But it remained well above the 50 mark that divides growth from contraction
• Divergence in economic strength among different nations is becoming more obvious. Germany and France show continuing strength while everyone else is limping along. Any sign of German weakness could cause Euro (currency) and european stock market to plummet.
Tomorrow will be another fairly slow day:
Richmond fed survey
Canada June retail sales
US existing home sales for July
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