Tuesday, 1 September 2015

A few macro thoughts and related today

A few macro thoughts and related today...

China - Caixin final August manufacturing PMI 47.3 (flash 47.1, 6.5-yr low). New orders, exports, employment, input prices all contracting.  Even the composite (including services) was below 50.0. 

Another day of Chinese market volatility despite (and perhaps because of) China Securities Regulator Commission encouraging companies to increase dividends and buy back shares.

According to a translation by the FT the securities regulator said: To further optimise cash bonus policy and increase dividend amount, listed companies with the ability to do so are required to offer cash bonuses. Repurchasing their stocks in due time is an important way for companies to repay investors, which could also better adjust companies' capital structure.

Probably due to margin calls Shanghai Margin Debt Balance Falls To Lowest In Eight Months

Japan –
The revised PMI reading from Nikkei and Markit came in at 51.7 for August, versus 51.9 in the preliminary reading. It's still up from 51.2 in July.

Capital spending rose 5.6 per cent in the three months to June 30 from a year earlier, data showed this morning. That was down from a 7.3 per cent pace in the first three months of the year, and also below expectations for an 8.8 per cent gain.

Other Asia

Indonesia – 11th successive sub 50 manu PMI

South Korea - Production contracts at solid pace

Overall...pretty shabby as nicely shown by this chart from @david_scutt: 

Oil – a third day of bounce on Monday (although partially reversing Tuesday) helped by Organization of Petroleum Exporting Countries (OPEC), said that it's ready to talk with other producers about achieving "fair prices".  Bit of a climb down…

Currencies – FT research showed that of over 100 emerging market currencies studied, a lower FX value did not stimulate exports but only led to lower imports.  That’s what it can be like in a lower growth world.  Better to concentrate on domestic structural reform

Final selection of charts

We live in a strange world with non-existent money supply volatility... 

(h/t @Mick_Peel)

...and slumping investment levels.  Neither suggest a huge amount of underlying confidence. 

(h/t @NickatFP)

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