The Banking and Strategy Initiative

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US Economy: No Euro scares anymore, yet only production data is up

If you don’t understand the headlines of the daily morning report this week, you and I could be excused as the flux int he situation of march and April has apparently turned a lot of heads and most with no prospects as we sit down with the morning cuppa before market open. Existing Home sales tomorrow

Alexis Tsipras in a press conference in Komoti...

Alexis Tsipras in a press conference in Komotini. Ελληνικά: Συνέντευξη Τύπου του Αλέξη Τσίπρα στο ξενοδοχείο Ξενία στα πλαίσια της επίσκεψης του στην Κομοτηνή 13.11.2008 (Photo credit: Wikipedia)

will likely be treated as good news irrespective of how much we move (and if we do) from the 4.5 mln homes mark for existing sales. The Euro’s strongest oppoent the Greek Left headed by Alexis Tsipras, confirmed he would not be foolhardy enough to call for Greece’s exit from the Euro. that of course merely increases the pissibility of the EU north coming down strictly on Greece for enforcement of the austerity in the budget even as the new Growth Compact is worked out to allow for probably $20 bln of expenditure per government. Spain walked into the party with a Fiscal Deficit that was 50% higher than the target 6% after it revised data from three districts earlier today. it’s banks still need to be capitalised but the day’s Euro rebound is almost scary as the Irish referendum is likely to be another big win for the Euro as they agree to the Fiscal Compact. the new Aviation tax and the proposed Financial Transaction Tax ( backed by Hollande and hated by David Cameron) or the standoff on new bank regulations and the need to go to the EU committee for every material change in law are not helping business across the pond.

Back on the continent, US still needs to improve a lot of Economic Data esp related to Jobs even as Housing provides new hope from April Data this week if it does confirm last week’s MBA and Fed data points. And most of the good news in the US data is coming from production indices, the latest being the Chicago Activity index which was negative for March and a high positive for April following on the Empire State index.. One could for example start doubting the Employment data sub indices in these indices if it does not convert into hard jobs soon. The Jobs data has settled to the lower peg of 120,000 jobs which is more or less saying we cannot provide enough jobs for those joining the workforce ( new adds to the qualified population and looking for a job), retail sales and inflation are trending lower than higher and  even inventories at retail or for energy and business are not really showing much offtake or interest from manufacturers in replenishing these inventories more than last month

More confusion coming our way this week and next as the Euro will keep trending down even as Greece Exit does not happen, Spain probably doe s not implode but recessionary conditions get europe into a deeper rut and one finally gets back to the topic of Industrial growth across the pond. To remind the ordinary man out there, all the austerity makes sense only idf the repaying capacity of the governments is kept on an even keel or even improved with GDP growth in each and all of these Economies; and that is hardly even on the agenda with all the obvious methods already done with.  Also to differentiate the Continent with a single currency from its global companies, most Euro Stoxx 50 companies are doing very well off the markets this year except those with aa large domestic presence and Europe historically does not have many of those as most of its larger corporates have been attractive to US corporationd fro having a global presence in Emerging and underdeveloped markets which are growing in attractiveness for most companies.

Also bank regulation in the Us has apparently reached the plateau where nothing much would come out of further discussion, at least it would seem from the calendar of events which are more about JP Morgan defending its hedging strategy and Wall Street trying to reduce the numbe of loss days on the Q2 and Q3 calendar.

The last word probably is that UK’s Chelsea conned Germans again on the Soccer field with Bayern Munich defeated by last minute equalisers and a bad shot in the shootout, which probably would mathmatically correlate t o more of Dsavid Cameron sound bytes this week as Angela merkel gets busy with house cleaning never having had to move on her point of view throughout the 4-5 years of the crisis yet.

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