Chillin' out till it needs to be funded
A sure sign of disaster for the Euro to start the proceedings after the Halloween/Thanksgiving break as European PMIs shrank to all time lows in France ( 3 month low) and Germany (18 month low) esp in new activity indices, and the Euro instead started strong even as investors should have prepared to flee equity markets en masse, serving as a sign of future dissonance too as bond investors find refuge in the countries’ bonds. In a small discomfort on our side of the pond, the weak factory data from China and Europe was followed through by a swish down in Oil to $67 on the Brent and $63 on way down to below $60 in West Texas Intermediate Oil prices, heading to below US producer prices.
Even as equity markets take another lease of life, markets renewing the up bid, charging Oil producers a small short to lend health to good market volumes, Global investors continue to look at US economic data also with a philosophical shrug ahead of the GDP reports tomorrow and Jobs Friday likely to go diverging ways with the Jobs additions stuck at 220,000 and thereabouts ( in a 10% range) . US GDP grew a record 4% in Q3. However with the Chicago lead index nosing zero this month last week’s report and the Chicago PMI at 60, GDP could shutter down in the 4th quarter and disappoint in linked quarter reports.
The morning’s ISM manufacturing data report report however was much better than expected at 58.7 and even the Manufacturing PMI report, usually at Odds with the ISM data stayed above 54 levels. That means that the chain store sales that brook no criticism and were up a robust 4% on yearly sales and even more than a 1% up on the week before the Holiday weekends were likely to give those rerating US growth after the robust third quarter reason for hope, if only the housing data was near looking up and the Jobs report could actually jump out from just sustaining the Economy bands to actually growing a few jobs and denting that long term unemployed data strongly as it did earlier in the year.
Auto sales have been chirruping past the post at 16.2-16.3 million every month this year and Wednesday will be no exception. Deals business has finally started slowing up but has been enough to get the banks past a bad year and come back in demand as choice picks.
In College Football, the Dawgs (Miss. Bulldogs) lost the Egg Bowl and Dan Mullen can keep some Eggo for the long winter ahead while in the NFL, AFC South looks like a Iron stake driven thru the pirates’ Hearts with the Falcons and the Saints both a lousy 5-7. Brady finally lost a good game to get a reality check going into the winter’s playoffs while the Cards look no worse after losing to Matt Ryan , still ahead of the Seahawks in the AFC West. The big winner this week, not the phenomenal Bengals, Browns or even the Philadelhpia Eagles, were the Chargers out in the Big bad west, with San Diego getting better of the Ravens to also shrug off another bad couple of weeks. To cap off our non business winter curtain raisers, College Football is up for a good year with USC Trojans, Arizona, Florida State and GA Tech winning big rivalry games while Auburn fizzled out bowing to Bama in yet again inexplicable turnaround of fate that switches almost every season. This is the first year for the new Playoff system with Buckeyes as of now making to the Cotton Bowl, which with Fiesta and the Peach bowl sits out from the Big Four bowl ranks for the first two years.
The Economic data however could keep snowy winter cheering markets for some more time as this week sees a Consumer Credit report which we have been tipping for the surprise run even as the first comscore reports for Black Friday and Cyber Monday came in at 26% for Friday and 11% growth in sales for Cyber Monday, leaving Equity markets to go higher from 2080 levels on the S&P this week and the record 4800 on the Nasdaq which saw 150 new highs on Friday(Reuters insider) ,. However early reports from NRF have narked the mood for Monday morning with a reported 6% downdraft in Dollar sales per consumer putting paid to earlier calculations on the Holiday rush the 11% down tick in sales meaning a big negative at the open and probably even accounting for a sad sentiment on the US Dollar taking out the shorts on the Euro after the big bad start to the week in Europe. ECB reports policy on Thursday, and markets may even ignore any positive moves on the QE much like they ignored the bad cycle data on Euro trades with the US Jobs report out the door next afternoon ( 8:30 am ET on the East coast) The ISM Services data is out on Thursday while the Construction spending is in earlier on Tuesday ticking up after residential construction picked up in September in the last report.
Factory Orders have also been bucking the trend after a robust Q3 including a record September bump in the PMIs but last weeks durable orders were mostly from Aircraft orders again 😦
Meanwhile China’s woes are not likely to ruffle anyone, even the Chinese posting a 7% growth in the year , enough for US exports to count another big year ( Trade report was in last Tuesday) though the move on the Yen seems to be finally topping off at 120 levels (118 reached on the USD JPY pair) after a big 20% move through October.
In currencies, the UK economy’s better recovery prospects continue to struggle against the Euro too, with the Euro Pound cross going back to a semblance of the pre crisis 70 cents at 79 cents (pennies) on the Euro, climbing down from 0.95 early in the crisis and consequent to some good fines being paid to forex regulators, there could be more movement in that pair to reflect on the changing political realities with Scotland staying with the UK as well.
The Banking regulator in Europe continues to have their hands full even as they look to a changing regulatory map to get actioned, not just on paper in the coming year and credit growth remains negative. In the US the net Wealth report edition on December 18th could also interestingly define a changed post crises mood even as the Housing market remains dull , growth in the single digits after the FHA rule changes and Obama’s second term counting down its days with Republicans in control at the Senate.