Thursday, 16 January 2014

The daily charts-fest: it remains a mixed world out there

One of the most interesting data disclosures yesterday was on German economic growth.  If you want a quick visual on the strength of Europe's leading economy...well I guess this is it.  Europe's lacklustre recovery continues.  Germany needs to give Mr Draghi the ok for the ECB to introduce more stimulus. 

I note too that European auto sales have just come out...and in a similar vein car sales jump 13% in December, the most in 4 years. However look at 2013 overall: 12.3m auto sales is the lowest since 1995.  Hmmm.

There is a bigger future economic growth debate than just Europe though.  The Financial Times put this fascinating graphic about the size of some leading emerging markets' foreign exchange reserve on its front page today, with the implication of potential emerging market crises and challenges

Still, that didn't stop the Indian market hitting a record high this morning...

As the World Bank put it in a report though even interest rate normalisation driven by the start of US tapering, would still have longer-term interest rates below the average of recent years...

 ...of course, as the German data above shows, growth rates are lower too.  And that doesn't stop individual emerging markets from having their own self-induced crisis.   Did you see Brazil raise interest rates yesterday to just over 10% - up more than 3% in the last six months - as they battle 5-6% inflation?

Put all that together and that sounds like a changeable backdrop with scope for volatility.  Continuing this theme of a mixed world were these survey results from the leading small business lobbying group in the US.  From an index component perspective 5 improvements, 3 deteriorations and 2 factors unchanged from November which feels decidedly mixed.  But look at the negative 'scores' for 'expect economy to improve', 'expected credit conditions' and 'earnings trends'

So everything is great...apart from earnings, economic growth and credit availability trends.  


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