Chart via Calculated Risk using data from Josh Lehner, and it compares the current US employment recovery against “the previous Big 5 crises, as identified by Reinhart and Rogoff, in terms of job loss and the return to peak time line”. Read more
Get this. Jonathan Wilmot, chief global strategist at Credit Suisse, reckons that Europe is set to lead a rebound in global growth this year. He and his team are saying BUY Spanish and Italian bonds, and probably equities as well.
While a note dispatched to CS clients this week contains a few escape chutes, the core bullish argument is broadly as follows: Read more
Alternative title: Why France and Germany are likely to strike a momentous deal on fiscal union sooner than anyone thinks.
Welcome back, Jonathan Wilmot. Read more
Credit Suisse’s economists publish an excellent Global PMI chartbook, with details of all the different components, that is easy on the eye and highly informative.
It should be out later today. [here it is - ed.] But for me, sadly, its time to go…. Read more
Here’s a heretical thought to sign off with.
Some day, and perhaps not in the very far future, robots will become the low cost producers in global manufacturing. Displacing and replacing a high percentage of human workers, whether in the developed or the emerging world. Read more
Here is the final heat map for November 2008.
So that’s it: US ISM new orders are out and fell by 2.3 points to 56.6, following last month’s 7.8 point jump.
We were expecting a 1.5 point drop, the most typical outcome after huge jumps. So that’s marginally weaker than we expected. Read more
A slight disappointment from Brazil: PMI New orders were up 0.4 but still below 50. Potentially stabilizing, but no clear sign of rebound.
But then again, the Brazilian real is the most overvalued of all currencies in our real effective exchange rate universe – see chart below: Read more
The euro area PMI was a bit weaker than the flash estimate from last week, but new orders were still up in November by 0.6 points to 55.6, after rising nearly 2 points in October.
Despite all the current turmoil, Germany and France are running hot, with new orders at 59-61, but Italy is down near 50 (and down on the month) – at rather similar levels to Ireland and Spain. New orders in Greece were up marginally, but lag the pack down in the low 40s. Read more
Clearly growth is not the only issue for Europe’s periphery, but, without growth, there is no good way forward. More on that later on Wednesday.
Irish PMI New Orders picked up slightly in November and were just in positive territory, which under the circumstances is a good result, in our view. Read more
So far the news from Asia is good.
Production in Japan and Korea looks set to bounce in the months ahead after a pretty poor run, while China looks likely to cool a bit after four steamy months. Read more
Yet another relatively small share in our global industrial production framework, Taiwan’s PMI New Orders were also very supportive, increasing 5 points after moving sideways for three months. Together with Korea and Japan, its IP momentum is likely to pick up again in the next month or two.
Russia and India come next and so does the BRIC! Read more
Chinese PMI New Orders rose marginally in November. The headline PMI index rose too and will likely make headlines.
Be warned, however, there is clear (residual) seasonality in these data. A simple procedure to adjust for that suggests PMI new orders actually fell 0.6 points, a small moderation after its steady rise since the summer. See chart below. Read more
First stop of the day on the PMI odyssey is South Korea.
Like Japan, new orders and IP have been on a pretty steep downward slope since April. Read more
Ok, it is time to get started with the hard data…
The Japanese PMI actually came out last night — ahead of the rest. Read more
To keep a running tab on how things are going we have a couple of friendly widgets:
The Heat Map Read more
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: Read more
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. So – though the data is harder to come by – we also track a global proxy for private sector demand – which consists of real retail sales and business investment in about 45 economies. Read more
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…. Read more
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). Read more
And see Jonathan’s scene-setting Hell or Heaven in 2011? for more. Read more
Jonathan Wilmot, global strategist at Credit Suisse Investment Bank, sets the scene for next Wednesday’s ‘Around the world in 21 PMIs’ guest editing day at FT Alhpaville.
Heaven or Hell in 2011? Read more
You might need a glass of sherry before tackling this lot.
Some recommending reading over the holidays from Jonathan Wilmot, the free-wheeling Credit Suisse strategist… Read more
Jonathan Wilmot, the Credit Suisse strategist who recently graced us with his presence here on FT Alphaville, has decided against sending out a 2010 tome this year.
Instead, he’s come over all Twitterish. Read more
The Global Composite Valuation Indicator combines a number of key valuation metrics. It covers US, European, Japanese and EM real equity returns, G5 equity-to-bond returns, BBB credit spreads and our World Wealth index. Given its importance as collateral, we also include US house prices. All input variables enter the indicator standardised and relative to their long-term trend.
Even after early cycle momentum peaks risk appetite tends to ebb, and risk assets tend to struggle for a while: developed equities usually under-perform bonds and emerging equities usually under-perform developed equities, before setting up the next leg higher with somewhat different leadership.
In the last recovery, momentum made its early cycle peak in November/December 2003 but equities made marginal new highs in the three months following: the real correction didn’t start until April 2004, by which time the Fed was starting to signal towards the exit. Emerging equities were down 20% in just over a month, developed markets more like 10-15% over several. Read more
We called for a very strong bounce in global industrial production back in February/March.
Global IP (as we call it) is now roughly 9% above its March trough (on our estimates for October) and is already back to the pre-Lehman’s level. Read more
If there is one axiom of today’s Pigovian pessimism it is the idea that after decades of decadent reliance on debt to goose up consumption, US consumers are structurally over leveraged. And that it may take a decade or more of pain to unwind the damage, during which time US consumption and GDP growth will be pitifully slow.
Arguably this is the most overbought idea to come out of the current crisis: Read more
Another favourite: J.K. Galbraith this time.
That the free enterprise economy is given to recurrent episodes of speculation will be agreed. These — great events and small, involving bank notes, securities, real estate, art and other assets or objects — are, over the years and centuries, part of history. What has not been sufficiently analyzed are the features common to these episodes, the things that signal their certain return, and have thus the considerable practical value of aiding understanding and prediction. Read more
All the US bank runs and panics of the late 19th century — 1857, 1861, 1866, 1873, 1877, 1890, 1893, 1896 and 1907 — are clearly visible in the chart below of the call money rate — the rate for borrowing collateralised against equities.
The call money market was the “shadow money” of its day — and lending terms almost always tightened when the underlying collateral was in a bear market, and usually eased remarkably quickly once it was over. Read more