Monday, 13 April 2015

Some macro thoughts today

A few stories today...

Europe - I mentioned the German 'taxi driver' jibe towards the Greeks on Stories we should be thinking about yesterday.  Here is a further update...still messy and the need for a Q2 deal very clear.  Probably a good job the Greek markets are closed today for the Orthodox Easter.

Euro - $EURUSD has fallen for 4 days in a row (-3.7%). Sequence of daily falls has extended to 5 days only once since 3rd Sep 2013 (via @PredictedMkts).  The pressures of a strong US dollar are still rising...

Bad news for European exporters? - poor Chinese trade figures underlined the continued slowdown in the world’s second-largest economy with the monthly trade balance was only $3.1bn, far from the $40bn surplus expected by economists.  Not good for European exporters…

...nor helpful for Chinese economic growth levels. China looks set to report its worst quarterly growth since the financial crisis, according to a CNNMoney survey of economists.  Going to be an interesting Q1 GDP release on Wednesday...

(h/t @sophia_yan)

And then there's the stock market of course...Hong Kong turned around today whilst the Shanghai bourse pushed further above the 4,000 index point level.  I note that Chinese investors are to be allowed to have up to 20 trading accounts from today and the market regulator relaxes limits of speculative trading positions from 1,200 contracts to 5,000…so an appropriate cartoon via the South China Morning Post

AIIB - becoming an increasingly important grouping

The Netherlands, Brazil, Finland, Georgia and Denmark have been approved as prospective founding members of the Asian Infrastructure Investment Bank (AIIB), this brings the total number of prospective founders to 46, the ministry said in a statement on its website.  However, Taiwan is unable to become one of the prospective founding members of the China-proposed Asian Infrastructure Investment Bank (AIIB), a Chinese official said Monday without giving any reasons.

Australia – relevant headlines from a variety of sources were downright poor.  

China's iron ore imports in first three months of 2015 is nearly same vs same period last year but price paid halved approx. (h/t @)

China Imports From Australia Decline for Record Seventh Month

treasurer, Joe Hockey, forecast the iron ore price dropping to $35 a tonne, which could see commonwealth revenue fall $25bn over four years.

The World Bank predicted that a further slowdown in China, Australia’s biggest trading partner, would affect Australia and its neighbours: “The significant negative impact on Australia and New Zealand, among the world’s largest commodity suppliers, would lead to indirect spillovers on the Pacific Island countries, given their tight links through trade, investment and aid.”.

The Australian dollar is weak...

...but that's held up the Australian bourse.  

Another contributor to 'currency war' problems.  I remain cautious on the Australian bourse - not because of the miners per se but that financials make up a third of the index...

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