Wednesday, 1 April 2015

Macro thoughts today

Quarterly moves - S&P 500 gain for the quarter just 0.4 per cent. That's the worst showing for the index since the final three months of 2012.  By contrast in Europe:

EuroStoxx 50 +17.5%, DAX +22.0%, CAC 40 +17.8%, IBEX 35 +12.1%, FTSEMIB +21.8% , FTSE 100 +3.2%, SMI +1.6%.  

Of course all influenced by FX…and talking about this via Predicted Markets

'the 1.7% drop seen in EUR/USD over Monday and Tuesday marks the softest start to a week since 12th/13th Dec 2011, 172 weeks earlier'.  Of course EUR/USD just had its worst quarter ever… Euro down against all major peers except Brazil and Denmark. 

UK Election – FT reports highest probability coalition still…Labour/SNP (27% probability).  Probably the worst combination for markets…

Other important dates going forward:

2nd Apr – 7-way Debate (ITV)
16th Apr – 7-Way Debate (BBC)
30th Apr – Head to Head debate – Cameron/Miliband
7th May – Election

Asia - The final PMI reading for the Chinese manufacturing sector compiled by HSBC for March was 49.6, up from the preliminary reading of 49.2 and ahead of expectations for a revision to just 49.3.  Poor comments on pricing power/margins in survey.  In Japan Tankan survey v poor: Large All Ind. Capex: -1.2% (exp 0.5% prev rev 8.7%)

Key Asian PMIs comments –
China 49.6
Manufacturing PMI falls back into contractionary territory in March
Despite the sustained fall in cost burdens, any savings were generally passed on to clients as part of attempts to attract new business, suggesting a further squeeze on profit margins

the official PMI indicated manufacturers were in better health last month than February, moving upwards in March to 50.1. The result was better than expectations, with economists predicting that it would fall to 49.7 from 49.9 in February.

South Korea 49.2
Total new orders fall at fastest pace in over one-and-a-half years

Japan 50.3
Output growth slows to weakest since October 2014

Indonesia 46.4
Output and new orders drop at fastest rates in four-year survey history

Interesting on Asia debt too –

Australia / commodities -  iron ore tumbled 2.5 per cent, a fifth straight loss, to just $51.35 per tonne. Not only is that another six-year low for the steelmaking ingredient, it's below the breakeven rate for Fortescue Metals Group, Australia's third largest iron ore miner.

(Shane Oliver ‏@ShaneOliverAMP  7h7 hours ago
..or here's an idea: the #RBA should do QE but by buying iron ore! They could just put it back in the ground from which it has come!)

World inflation – 5 year low

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