Chillin' out till it needs to be funded
The first week of April as expected, went down in flames with China reporting the worst score on the HSBC MarkIT indices, at 47.3 for new orders, India scoring the west worldwide probably but at a 5% lower than January for 54.7 in February closer to the neutral 50 mark below which everything is contracting, closest yet for the subcontinent.
EU scored at 47.7 and though retail consumption died a slow death in Swiss and unemployment rose as the men caught up to gossip on the bench, the EU unemployment at 10.8% could not stop things from looking up as most were expecting a worst result that was belied by lack of imports in the last 3 months, likely as the Euro remains strong on LTRO induced liquidity trying to keep the befuddled banks happy enough to spill over to credit clients. Service sector data reports on Wednesday will underline whether there is still a light at the end of the tunnel, UK getting out while there is evening light Q1 PMI stronger at 52 with January data revised to 51.5. China’s state sponsored Production survey points to a hyped up recovery at 53 and one feels the HSBC nnumbers could be the key numbers unless Imports have indeed picked up this month as well.
The deeper cuts in France and Germany production, continuing for the last 2-3 months induce the fear that Europe could break down as health and education spending in the south is made impossible by tighter budget compact that is chafing the politics of the zone.
February data is likely to show a resurgent ISM manufacturing number continuing from January as all regional Feds reported great follow on data while the Housing recovery though stalled will get a lot of attention today as Construction Spending points its nose up after a 0.1% dip in January.
On the weekend for example, news of Korea reducing US dollar assets to 60.5% down 3% than 2010 in its Sovereign reserves basket was not treated as a negative by many of us as it increases the weight of Equities in the reserves of $306 bln to more than 5% and is now looking at 2% higher weightage for Sovereign bonds, some Gold and Euro and Yen in currency holdings while evaluating investment in China, its most important neighbour thru Equities.
It is the same for many other Global central Banks, Yuan signing loclal currency trade swaps for 3-10 year term including one with Australia for $30 bln allowing easier trade growth in most denominations without affecting Dollar trade where it is already in place. Global Trade is likely to grow $1.0 Tln annually in the next 3 years and doubling in the next 15-20 years with Asia adding the most in Exports and thence imports for consumption and raw materials.