Chillin' out till it needs to be funded
Firstly, it wasn’t us to blame for not starting you off on Monday the last 2-3 weeks as we did deliver the Bank results and well, you have not been writing much back. The month is about to close however, and if you notice this week is an exceptional flurry of activity in the ecumenical United States of the Economy. The Chicago Fed National activity monitor set things off underlining a very low but persistent return of confidence on the price and unemployment frnt that probably would have encouraged Bernanke to reconsider his exceptional optimism during the testimony last week. However and one notes with sadness as lack of inflation worries had marred April earlier for us, the return of positive notes to price and employment are marred by a stronger continuation of reduction in production activity from the CFNAI indices in June and that of significant dullness in consumption esp Housing sector woes already underlined by bankers and noticed in the cFNai index today. Market opens to a quick recount of existing home Sales, with the week filled with real catch up on whether Housing is slowing down as China’s Flash manufacturing data followed by the surprise of the month from Europe are hardly going to be woorth talking about esp to those outside China or europe, waiting for trade to pick up.
FT notes that Brazilian forecasts have been cut yet again at 2.5% and India continues to struggle as Gold and Oil try to make a comeback last also driving down its forecasts. outward FDI esp in North America continues to be led by an exploding share of the pie from China and followed by surprise participation from Chile and Thailand and the FDI story indicates the churn in economic confidence and thence supports again the posit that there is nothing much to worry about even as China slows down over the next few years to even under 5% as the policymakers wait for domestic consumption to catch on and producers and manufacturers to make peace in new geographies domestically ( towards the interior) and internationally ( as manufacturing bases closer to their markets)
Oil fDI also continues to keep economic growth hopes alive world wide as Norway joins the Middle East Sovereigns in making big ticket investments notably in infrastructure items around the world. US consumers did start eating up inventories of oil and gas this month, ut that could well be snared by the month’s slowdown in industry again being give cognizance. The July 08th Consumer credit Report did show a better turn with Banks adding up nearly $8 Bln in consumer credit but with the slowdown in housing the hope for the same this month are unlikely to come as easy except in card spends
Interestingly, the MBA purchase data has seen the Ref share go down from 5 in 6 to as low as 2 in 3, and thats stil on a lower denominator overall as first time mortgages continue to lag behind as rates climbed to 4.5% on the bond meltdown redenomination. However, thats done and rates could continue improving through mid august likely to give retail bank arms some respite as Banks posted wonderfully rich results for the quarter and from here will gain from the rising rates as things stabilise more than the losses on their fixed income portfolios which ahve been dealt with severely in the immediate after of th announcements
McDonalds’ started off the retail sector’s Q2 reports with June same store sales lagging behind globally and the secnd half of the year not looking promising according to the management. Auto sales could stay above 15.5 m run rate for the month even as gM cuts fleet sales and the markets return to normal after the explosive 15.8 mln run rate scored in June that helped the industry ignore news from across the pond that continues to bother as Sales remain lower by almost double digits over last year after a brutal 2012
With all the investment churn in Q2 though, one would see flows returning to Emerging markets like India as the opportunity in India and probably even Chile , Brazil and Thailand make a positive return easy at the bottom of their cycle and the bets on China and Japan come full circle as in the bond markets. Dollar would likely make a return from 82.5 levels this month even as interest returns now move North in line with Economic data and not as a sell down entrusted in May around this time. Meantime, bullish economics In China are lending crednce to a developing asset bubble as a slower growth rate yet bullish precludes investments in most sectors and property and assets find no exit and continue climbing north with easy credit
NASDAQ has opened at a record 3595 led by Yeahoo, and S&P 500 is also a point u from its 1692 close on Friday while the Dow Jones indusriala verage trends down weighted by McDonalds, Intel and Amazon