Sun, 28th May 2017

Anirudh Sethi Report


Archives of “signs” Tag

German consumer confidence hits 6-year high

On a light day for economic data in Europe, the fact that German consumers are feeling more confident may give the markets some sense of direction.

A closely-watched consumer confidence barometer has rebounded to a new 6 year high heading into October, hitting 7.1 from an upward revised 7.0 in September.

GfK’s forward-looking sentiment survey, based on a survey of 2,000 people, signals further momentum for the German economy, as the country’s traditionally cautious consumers become more willing to spend amid broader signs of recovery.

Here’s the chart from 4Cast:

Spain’s state debt still rising; banks borrow less from ECB

SPAIN12Spain is heading for a big debt resaca, or hangover, as its national debt climbed to 92.2 per cent of gross domestic product in the second quarter, data from the country’s central bank show. To put that in context, that is more than double the 40 per cent reading at the end of 2008.

It is also up sharply from a reading of 77.5 per cent a year ago as Madrid still shoulders the burden of sorting out its former regional savings banks, paying for a misguided mid-crisis stimulus programme instigated by the previous government, and sharply reduced tax receipts as a result of its recession.

But there are signs that funding pressures are easing for Spain’s lenders. Total borrowings from the European Central Bank in August fell to €246bn from €248.2bn in July – representing a twelfth consecutive month of reduced borrowing.

Relief comes to those who wait.

Mexican central bank cuts overnight rate to 3.75% from 4.00% in shock decision

None of the 20 economists surveyed by Bloomberg forecast a rate cut

The statement US economy has gradually strengthened but the growth in the industrial sector has slowed. They cite Fed action as a catalyst.

  • It’s the first cut since March
  • Inflation risks have diminished
  • Inflation expectations for 2013 have decreased
  • 2013 growth to be considerably below earlier forecasts

A theme we have been highlighting for the past few months is weakness in emerging markets. Signs like this don’t get any clearer.

Greek unemployment up to 27.6% in May

It might be the height of the summer in southern Europe, but a long winter for Greece’s jobs market drags on, with unemployment in May reaching record levels.

The jobless rate among the crisis-stricken country’s workforce shows no signs of bottoming out, as the austerity measures in place under the terms of its financial bailout continue to bite.

The Hellenic Statistical Authority ( El Stat) said the unemployment rate reached 27.6 per cent in May, the worst figure since the data series began in 2006. April’s data were revised higher to 27 per cent.

The chart below, taken from the El Stat website, shows the trend for the number of people in work now heading down towards 3.5m. Greece’s total population is just over 11m.

12 straight months of trade deficits in Japan

Underscoring the need for the three-pronged “Abenomics” growth programme to revive the economy, Japan produced a trade deficit for the 12th consecutive month in June.

The weaker yen has produced a boost for exports — they rose for a fourth straight month — but that’s still being outweighed by rising import costs.

Highlights from the report:

  • The trade deficit in June was Y180.8bn, a larger gap than forecasts of Y155.7bn (Prior was Y996.4bn).
  • June exports rose 7.4 per cent from the prior year, a weaker reading than forecasts for a 10 per cent gain (Prior figure was 10.1 per cent).
  • June imports rose 11.8 per cent, a slower pace than forecasts at 13.8 per cent (prior gain was 10.1 per cent).
  • The adjusted merchandise trade balance–a measure of “visible” trade including goods such as cars and electronics–showed a deficit of Y598.7bn, near forecasts of Y594.7bn. (The prior figure was revised to a smaller gap of Y777.9bn).
  • Exports to the US rose 14.6 per cent y/y.
  • Exports to the EU rose 8.6 per cent y/y. Read More 

Goldman earnings easily exceed expectations (again)

Goldman Sachs, the US investment banking giant, has just released its second quarter earnings, and once again, it has easily exceeded analysts’ forecasts.

Here’s the quick run-down by the numbers:

EPS: $3.70 (Consensus: $2.82)

Net revenues:$8.61bn (Consensus: $7.98bn)

Return on equity: 10.5%

Compensation ratio: 43 per cent (43%)

Net revenues by division:

Investment banking: $1.55bn (+29% Y/y, -16% Q/q)

Institutional client services (sales & trading): $4.31bn (+11% Y/y, -16% Q/q)

Investing & lending: $1.42bn (-32% Q/q)

Investment management: $1.33bn (unchanged Y/y, Q/q)

From Goldman chairman and chief executive Lloyd Blankfein: Read More 

BoJ upgrades economic assessment (Full Text )

  • Sees core CPI in fiscal 2015/16 at 1.9% vs April forecast also at 1.9%
  • retains plan for 60 to 70 T yen monetary base annual pace
  • Will continue easing until stable price growth is reached
  • Japan’s economy starting to recover moderately
  • Revises up assessments on Capex and output
  • Says Capex has stopped weakening and is showing some signs of picking up
  • Output is increasing moderately
  • Annual; CPI growth is likely to turn positive
  • Board member Kuichi proposed making the 2% target a medium to long term goal, was voted down 8-1
  • Says uncertainty for Japan economy is still high, BOJ will make adjustments as needed

-So, the BOJ has left policy as is and will continue to keep very accommodative policy

-Here is the link to the BOJ statementStatement on Monetary Policy, July 11, 2013

European markets end sharply higher

So, a good start to the week as far as stock markets are concerned. Investors were buoyed by a rethink about the US jobs figures from Friday, fairly upbeat comments on the economy from ECB boss Mario Draghi, and signs of progress in Greece and Portugal. Here are the closing scores:

• The FTSE 100 finished 74.55 points or 1.17% higher at 6450.07

• Germany’s Dax is up 2.08% at 7968.54

• France’s Cac closed 1.86% higher at 3823.83

• Italy’s FTSE MIB ended up 1.71% at 15,799

• Spain’s Ibex added 1.9% to 8017

• In Athens the market put on 2.08% to 858

Eurozone Unemployment: 12.1%

There are clear signs that the Euro economy is coming back from the brink.

But the situation is dismal, and if there’s not a decisive turnaround, then mass unemployment threatens to destroy the whole thing.

For May, Eurozone unemployment has hit a new record of 12.1%.

That’s actually down from the last reading, but that last reading was revised lower to 12.0%, so this is technically a new record.

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