Monday, 1 June 2015

A few macro and related thoughts today

Greece – countdown to Friday’s first IMF repayment.  Greek PM making comments in Le Monde: ‘the lack of an agreement so far is not due to the supposed intransigent…Greek stance…it is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people’.  Ouch!  

Greece #2 – a Yanis Varoufakis tweet from yesterday: ‘Rumours of my impending resignation are (for the umpteenth time) grossly premature...’.  “Premature” – interesting choice of words!  Meanwhile to inflame the situation a little Germany's Schaeuble offers Varoufakis chocolate euros for his nerves (link here).  That's not going to help the situation...

Oil  - OPEC is likely to keep its output target unchanged when it meets on Friday because the global oil market appears to be in good shape and prices are expected to firm up from current levels, a senior Gulf OPEC delegate told Reuters.

China – Looks like more rate cuts.  As Fast FT noted, 'the "official" PMI for the non-manufacturing sector fell from 53.4 in April to 53.2, the lowest since December 2008. A sibling index looking at manufacturing, China's economic engine, ticked up, but only slightly. Its score rose to 50.2, representing marginal growth for a third straight month, but missing forecasts'. 

Factory employment dropped for the 18th month in a row...and that was not the only micro detail in the numbers which was not good.  Check out the magnitude of the 'red blocks' in the May data below: 

Staying with China I was struck by a graphic on the front page of today's Financial Times which highlighted the extent of the real estate overhang...even lower rates may not help sort this out fully. 

Meanwhile South Korea's manufacturing PMI continued to lag as their exports suffered due to the weak Japanese yen...

...meanwhile in Japan the manufacturing PMI was at a neutral 50.0 mark.  Interesting that based on this long history chart the Topix index is also close to a level of nominal resistance.  Something to watch: 

A final couple of charts...interesting flow data.  Latam very out-of-favour (so should be taking a look?)

 And finally a fascinating unprofitable IPO chart.  Not the greatest signal!

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