November, 2010
[Wilmot's PMI tour] The Japanese swing
Ok, it is time to get started with the hard data…
The Japanese PMI actually came out last night — ahead of the rest.
Since March, Japanese PMI new orders and production have been heading rapidly south.
[Wilmot's PMI tour] Keeping score
To keep a running tab on how things are going we have a couple of friendly widgets:
The Heat Map
After each fresh PMI release, we will update our global heat map. Each country will be coloured according to whether its PMI reading was above or below 50.
[Wilmot's PMI tour] The big three
Here in pictures is what the big three – China, the eurozone and the US (each of them making up about 20 per cent of global production) — look like going into their November PMIs.
First, China:
Now the Euro area:
Further further reading
For the commute home,
- SEC charges Deloitte partner and wife in international insider trading scheme.
- Bond sales tumbling in worst month since Lehman.
- Two Fed presidents wanted the discount rate increased to 1 per cent.
Assange backed (in)securities [update]
Until now the Wikileaks swag bag has included little of immediate interest to finance buffs (German reaction to GM’s decision not to sell Opel, anyone?).
But Clusterstock today picked up on a 2009 Computer World interview with wikileaks founder Julian Assange:
[Wilmot's PMI tour] From rebound to expansion?
So far we haven’t said much about global demand, without which there would be no production.
That doesn’t mean we don’t think about the demand side of things. On the contrary, over the longer run global (goods) demand and production must by definition grow at roughly the same rate.
[Wilmot's PMI tour] Why PMI?
Why PMI?
Embarking on a global PMI odyssey may seem a little mad when Europe is in turmoil once again. But trust us, there’s method in our PMI madness….
As far as we are concerned, the cycle in global growth remains the single most important macro influence on equities,
[Wilmot's PMI tour] Guest editing for the day…
FT Alphaville is being taken over!
From midnight London time on Tuesday, Jonathan Wilmot, the chief global strategist at Credit Suisse’s investment banking division, will be in control of the site (again).
Another house price decline
Because of the lag, the latest release of the S&P/Case-Shiller home price index won’t shock anyone, but it’s still worth noting:
New York, November 30, 2010 – Data through September 2010, released today by Standard &
The shrinking, shirking Tarp
As if it couldn’t get any rosier: $25bn is the new bargain basement Tarp cost, according to figures out Tuesday from the Congressional Budget Office.
This is an ostensible snip compared to recent, relatively whopping estimates from the White House’s Office of Management and Budget (OMB) at $113bn in October 2010 and the CBO’s previous forecast of $66bn in August 2010.
The euro job
As we conveyed earlier, the single fact which has critically changed the nature of the current European debt crisis is the spread of contagion into the Italian government bond market:
Italy, after all,
It’s a much bigger dollar squeeze this time
There’s been a lot of talk about dollar squeezes this week.
But it’s BNP Paribas who really explain the issue well on Tuesday. As they point out (in their daily FX strategy note) the prospect of quantitative easing in the third quarter led to a significant rally in ‘pro-cyclical and commodity currencies’ as investors prepared for potential dollar debasement.
The SMP to the rescue? [updated]
Thursday’s ECB meeting is taking on increased importance as tensions in the eurozone show no signs of easing.
Indeed, it’s becoming clear that many investors have lost faith in the EMU project and that market confidence can only be restored if there is a strong and forceful response from EU policymakers.
The 2012 sunspot sell-off
Sunspot market-cycle theory rears its scary head now and again.
(We wrote about it last in April 2009, for example — the prediction proved inaccurate, by the way.)
This time, though, it’s more worrying than usual since it’s beginning to tie itself with mystically predetermined “end of the world as we know it date”
BNP Paribas agrees, it’s the Merkel crash
It was first highlighted by economist Paul de Grauwe.
But, dare we say, the so-called ‘Merkel crash’ is quickly becoming analyst consensus for what really triggered this latest European debt rout.
As BNP Paribas points out on Tuesday:
Markets Live transcript 30 Nov 2010
Markets Live chat transcript for the chat ending at 12:21 on 30 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola NHit’s 11.04am NHand time for Markets Live
Insolvent – Greece, Ireland, Portugal and probably Spain
Former FT blogger Willem, ‘Maverecon’, Buiter has lost none of his power to shock.
He may be the chief economist of Citigroup but that doesn’t mean he can’t speak his mind as his latest essay for the bank’s clients proves.
Infected – German bunds
Is nothing immune from the sovereign debt woes of the European periphery?
Apparently not.
Now, throughout the sovereign debt crisis in Europe, the bund has been the beneficiary of safe-haven flows coming out of the periphery — Portugal,
The ‘Europeseta’ tests psychological resistance
Not quite the lows of the Greek crisis.
But EURUSD is on Tuesday convincingly pushing at the 1.30 resistance level, having penetrated the “psychological” boundary on a number of occasions already:
Time for the Merkel and co.
Barge-pole, European debt? – no thank you
Why, oh why, are European bond yields zooming higher on Tuesday?
Well, Deutsche Bank’s global markets research team has been asking around, and it seems the answer is that no one in the market is currently willing to take them on at any cost.
Spanish bonds go beyond the parabola
While all other European sovereign markets began Tuesday’s session relatively steady, there was one major exception — Spain.
The spread between the Spanish 10-year and German 10-year bund, meanwhile,
Further reading
Elsewhere on Tuesday,
- Did the bond bubble just pop?
- Restaurants are back in business.
- Closet indexing continues to flourish
- Delta one is back in the spot light.
- Corporate bond sales are collapsing.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: China reaps a vintage European crop
The news earlier this month that three bottles of Château Lafite, from the 1869 vintage,
Further further reading
For the commute home,
- It’s been a record year for oil & gas M&A.
- Mike Konczal summarises the new budget reform proposal from the Economic Policy Institute.
- After the weekend’s bailout,
European Commission forecast update
Highlights from the abstract below, with full documentation at the link:
GDP growth
GDP is projected to grow by around 1¾% in 2010-11 and by in 2012. A better than expected performance so far this year underpins the significant upward revision to annual growth in 2010 compared to the spring forecast.
Charts du jour, money supply edition
They come from James Hamilton of Econbrowser:
Read the whole post for more detail — recommended.
As we’ve said before, there are reasonable arguments against the Fed’s quantitative easing measures,
The return of (very cautious) optimism
Another favorable Fed manufacturing survey this morning, this one from the Dallas branch, which reports that all indicators of factory activity in the state of Texas are pointing upwards.
As Calculated Risk notes,