Macro charts and thoughts today

A few macro and related thoughts today...

China – CPI unch at 1.4% but strikingly producer prices deflated for a 37th consecutive month in March at -4.6%.  Still plenty of room for stimulus in my view...

(chart via Fast FT)

HK market – frenzy of last couple of days abated a bit with index flattish.  However Hong Kong Exchange & Clearing CEO says will definitely increase the quota for stock connect

Japan – Nikkei 225 breached 20,000 in early trading.  Great comment from Japan EcoMin Amari: ‘If Stocks Are A Mini Bubble I Would Welcome It’. Of course helped by the yen/$ rate back above 120…

Lower for longer – striking months to first rate hike chart.  50 months for the EZ!

(chart via @MktOutperform)

Europe -

Came across the statistic via @PredictedMarkets

A close on Friday below 1.0635 in EUR/USD would make this the biggest weekly drop for at least 187 weeks.  

Looking quite plausible so far…

Hence this too from the same source: 

'Eurostoxx futures end Thursday at the highest closing level seen in the front month contract since 30th May 2008, 358 weeks earlier'

However… ‘By any valuation metric, the recent surge in markets has driven constituents up to (P/B) or well above (P/CF, P/S, P/E) historic peaks’.  Great link and charts here:

My view: you may have stimulus and lower for longer but the fundamentals always win out.  Keep watching earnings season! 

UK election – striking image on the front page of the FT today re Sterling/cost of insurance against volatility

Meanwhile as this link in the Telegraph notes:

Foreign investors are slashing holdings of British gilts at a record pace on concerns over electoral gridlock and the long-term stability of sterling.

Data from the Debt Management Office show that non-residents sold a net £14bn of gilts over the two months of January and February, an even bigger sell-off than during the white heat of the financial crisis in early 2009.

The bid-to-cover ratio at gilt auctions has been slipping relentlessly across all maturities for the past nine months, dropping to a six-year low of 1.19 at a sale of five-year debt on Wednesday.

Surely nothing to do with the Labour/SNP combo still being the most likely coalition scenario...