Wednesday, 18 March 2015

Financial Orbit wrap 18/03/15

Five sentences or graphics which sum up the Financial Orbit output over the last 24 hours across the website, twitter account and anything else thought about...

1. China - Property prices in China fell at a record pace in February at -5.8 per cent year-on-year last month.  Prices fell in 69 of the 70 cities tracked. In Beijing they fell 3.6 per cent year-on-year, versus a 3.2 per cent in January. In Shanghai prices slipped 4.7 per cent, from 4.2 per cent in January. Time for stimulus?!  Certainly there is a risk consumer spending may be impacted as per this excellent chart below:

(h/t @TomOrlik)

2. European economic surprise differential with the US still marked...but in my view more than factored into share prices currently:

3. Which leads us nicely onto the views of the Fed.  As I write the evolution of the 'patience' view following the poor recent run in economic data...

is pushing down the US dollar and pushing up Treasuries (in price terms) and US equities.  Quite right in terms of a reaction...just as falling European futures is right too.  US rates not going up as quickly as anticipated has a big knock-on impact...

Got to get those S&P 500 earnings up somehow...

4. What else from the Yellen speech?  A few other notes that particularly caught my attention: 

"Wage growth remains sluggish suggesting that some cyclical weakness persists"

"Room for further improvement in the labor market continues"

"Weaker outlook for net exports" dollar reference from Janet Yellen

Yellen: Some corporate debt markets showing "unusually low spreads"

5. There was also the UK budget today.  As always fiscal deficits are always with us. 

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