US stock market post a modest gain while Europe generally struggles. We will see if this pattern upholds – we certainly hope so.
USD keeps getting clobbered. There is no real news to warrant this. Perhaps momentum at work.
The world basically looks like this:
China – was looking weak for a while but looks like they’re fine and making a bit of comeback Asian EM – still going strong with no real sign of slowdown Europe – Slowdown is notable especially outside of Germany and France. And perhaps just a little glimmer of weakening Germany is starting to show… Japan – an outright mess. There is no good data here. But expectation is at rock bottom UK – slowdown slowdown slowdown US – Nothing to cheer about data shows that US is still on a recovery - just not a strong one
Macro commodities – energy and industrial metals – are enjoying a good day as are gold and silver. Ags didnt fare as well.
South Korean inflation surprises to upside
• September CPI surged to 3.6% due to robust domestic economy powered by exports. Weak KRW probably contributed to inflation. This would probably result in a rate hike and some appreciation in KRW.
• Inflation remains extremely weak in developed world but we are definitely seeing it creep up in EM especially Asia.
Japan – still in deflation Nationwide August CPI is at -1% yeat over year. But very slightly better than it was in July.
• Meanwhile unemployment edged slightly lower but this is likely due to discouraged folks dropping out of job market.
• Two words to describe Japan : BAD ECONOMY
• Translated to : MORE STIMULUS TO COME
China manufacturing in September – on solid footing and rebounding
• China's September PMI rose to 53.8 from 51.7 in August
• China's upbeat PMI reading indicates that the negative impact of government measures to control the property market is probably waning, ING's Mr. Condon said. This means China's slowdown will probably be less abrupt than expected, especially in the fourth quarter
• As I said China has been stabilizing and rebounding from a notable slowdown since early in the year. Industrial production, fixed asset investments, retail sales all showed stabilization in August and this makes second straight month PMI did well. I like industrial metals as it seems to me China managed a soft landing. Even if the property market cools infrastructure buildout will continue.
A rare bad news for Germany – august retail sales drop
• Retail sales in Germany fell unexpectedly in August, casting doubt on a strong recovery of the country's weak private consumption.
• Perhaps the positive business environment isn’t stoking consumer enthusiasm? Understandable given coming austerity.
• I wont take this news seriously on its own as any one piece of econ data is volatile but I think we will continue to see disappointing data pile up from germany and Europe throughout this month although it probably wouldn’t be a huge pile for another month or so.
Euroland manufacturing – very much inline with earlier flash data
• No new data here. Manufacturing slowed everywhere except France.
UK manufacturing slips to 10 month low
• Activity in Britain's manufacturing sector grew at its slowest pace in 10 months in September
• The figures are likely to reinforce concerns that Britain's recovery is losing steam after strong growth in the Q2, and could lend weight to Bank of England policymaker Adam Posen's view the BoE should inject more stimulus.
• In particular the PMI report showed plummeting demand for export –perhaps due to strong pound. Would BoE also engage in currency devaluation? I think so.
US manufacturing – not great but certain better than many feared.
• US manufacturing activity grew more weakly than predicted in September and the slowdown is expected to continue in the fourth quarter, a key survey showed Friday.
• ISM is now at 10 month low. Particularly concerning is slowdown in New Orders – widely considered to be the best leading indicator of manufacturing.
US personal income – better than expected.
• Spending picked up in August with non-durable goods purchases leading the way. August is a big month for back to school shopping and the gains here are consistent with the August retail sales report. Even in hard times, consumers make sure the kids have what they need for school.
• But overall, the reported figures were all right in the expected range. No big surprise here.
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