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from MacroScope:

Post-Lehman shadows creeping up on German economy again?

Germany's Minister of Finance Wolfgang Schauble speaks during a discussion during the World Bank/IMF annual meetings in Washington

The recent stretch of dire economic data from Germany is starting to bear an unfortunate resemblance to late 2008 – when Lehman Brothers collapsed and the world tipped into the worst recession since the Great Depression.

On a severity scale, a downturn now will probably be nowhere close to the first quarter of 2009 when Germany’s gross domestic product shrank 4.5 percent on the quarter.

Still, Europe’s biggest economy is careening toward a technical recession unless it's halted by a miraculous upturn in the September data.

An analysis of Reuters polls shows several of four key German economic indicators have come below the Reuters consensus over the past three months, in some cases below even the most pessimistic prediction.

from MacroScope:

A long haul

U.S. Navy handout shows EA-6B Prowler attached to the Garudas of Electronic Attack Squadron 134 landing aboard the aircraft carrier USS George H.W. Bush after conducting strike missions against Islamic State targets, in the Gulf

Having largely sailed through this year’s choppy (to say the least) geopolitical waters, markets are a little discomfited by U.S. air strikes in Syria targeting Islamic State militants ... though only a little.

The U.S. military said Monday’s onslaught was just the start, suggesting it could take years to “degrade and destroy” the group, as Washington puts it. It remains to be seen how effective air attacks alone, which have been conducted in Iraq for some time already, will be in that regard.

from MacroScope:

Britain’s export recovery looking a little more elusive

It looks like Britain might have to wait a while longer before its much-touted export recovery materialises.

Export orders growth flagged in July, according to two surveys of manufacturers over the last week.

from Data Dive:

Manufacturing and consumer spending edge up

Two reports out today suggest economic growth has been moderate in the US since the beginning of the year. Consumer spending rose more than expected in January, according to the Commerce Department, likely because of high demand for heating.

Additionally, the Institute for Supply Management reported that its manufacturing index rose to 53.2 from the previous month (anything above 50 indicates expansion). Here's what recent manufacturing growth looks like:

from MacroScope:

Oh là là, quelle surprise for the French economy

French economic growth unexpectedly picked up to 0.3 percent in the final three months of last year, welcome news and a rare positive shock for some particularly gloomy forecasters who were looking for shrinkage or no growth at all.

But the unexpected bounce may be partly for the wrong reason: government spending.

from Data Dive:

US sees moderate manufacturing growth in January

US manufacturing grew last month, although not as much as it had in the previous month. The US Manufacturing Purchasing Managers Index (PMI), compiled by Markit, fell to 53.7 in January from an 11-month high of 55.0 in December. Anything above 50 indicates expansion.

Here's what PMI has looked like over the last few years:

Reuters has more details on the report:

Output fell to 53.5, a four-month low, from 57.5. Some firms attributed the slower pace of growth to the extremely cold weather in large swaths of the country.

from Global Investing:

Perfect storm brewing for the rouble

A perfect storm seems to be brewing for the Russian rouble. It has tumbled to four-year lows against a euro-dollar basket. Against the dollar, it has lost around 7 percent so far this year, faring better than many other emerging currencies. But signs are that next year will bring more turmoil.

While oil prices, the mainstay of Russia's economy, are holding up, Russian growth is not. It is running at 1.3 percent so far this year and capital outflows continue unabated -- $48 billion is estimated to have fled the country in the first nine months of 2013 compared with $55 billion in 2012. Russia's mighty current account surplus has shrunk to barely nothing and could fall into deficit by the middle of next year, reckons Alfa Bank economist Natalia Orlova. Finally, the rouble can no longer count on the central bank for wholehearted day-to-day support. FX market interventions cost the bank $3.5 billion last month  but it also shifted the exchange-rate corridor upwards six times, indicating it is keen to move to a fully flexible currency.

from Global Investing:

Emerging equities: out of the doghouse

Emerging stocks, in the doghouse for months and months, haven't done too badly of late. The main EM index,  has rallied more than 11 percent since its end-August troughs, outgunning the S&P 500's 3 percent rise in this period. Bank of America/Merrill Lynch strategist Michael Hartnett reminds us of the extreme underweight positioning in emerging stocks last month, as revealed by his bank's monthly investor survey.  Anyone putting on a long EM-short UK equities trade back then would have been in the money with returns of 540 basis points, he says.

Undoubtedly, the postponement of the Fed taper is the main reason for the rally.  Another big inducement is that valuations look very cheap (forward P/E is around 9.9 versus a 10-year average of 10.8) .

from MacroScope:

History suggests rocketing British growth won’t last long

Britain’s economy is steaming ahead - by one measure faster than any other large developed or emerging economy – but history suggests it will struggle to sustain the rapid growth indicated in business and confidence surveys.

Data this week showed British businesses were at the forefront of Europe's nascent economic recovery, outpacing major euro zone peers that are still grappling for momentum.

from MacroScope:

Turning up?

Manufacturing PMI surveys for euro zone countries and Britain will be the latest litmus test of the durability of fledgling economic recoveries.

Even the readings from Spain and Italy have shown improvement over the summer so it may well be that they are the most interesting given we’ve already had flash readings for the euro zone, Germany and France which showed business activity across the currency bloc picked up faster than expected in August.

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