Independent Strategy

Posts by Nick Kennedy

Another weak durable good orders report, with the outcome surprising to the downside of expectations, pushing the y/y rate deeper into negative territory.  Ex-ing out the more volatile components improves the picture somewhat but the overall story is still unimpressive.

Germany

POST » 24th June, 2019 » Germany June IFO Survey

The survey data still continues to paint a rather bleak picture for German industry with the expectations component taking a renewed step lower in June and while current conditions were a shade better than expected together this marked a new low point in this leg of the cycle for the overall climate index.

US

POST » 12th June, 2019 » US May CPI

Slight downside surprise versus market expectations but really nothing too unexpected.  The underlying inflation story remains moderate short-term disinflation.  There is not much sign the initial raft of tariffs have had much of an effect on consumers, with goods prices a little easier.

China

POST » 12th June, 2019 » China May Money & Credit

Money supply growth remains steady.  Credit growth has quickened a touch from April but overall there isn’t much evidence that the governments stimulus efforts have opened the credit spigots, particularly the private sector.  Debt is growing a little faster than GDP again, but not markedly.

Modest improvement in the UK wages story.  But it still appears that nominal gains are topping out with data flattered by the number of hours worked (at 32.2 vs. 31.8 in the same period a year ago).  The stabilisation in nominal growth rates is not necessarily bad news for consumption given that inflation also looks to be moderating again, certainly at the headline level.

China

POST » 10th June, 2019 » China May Trade Balance

China recorded a larger than expected trade surplus in May, but mainly due to weakness on the import side rather than any underlying improvement in export performance.

Mirroring the weak ADP figure the May payrolls numbers also surprised on the downside.  Revisions also downward, which also showed up in ADP’s release.  The participation rate was stable, as was the unemployment rate.  Hourly earnings were a little softer than expected and hours worked were flat at 34.4, which is down versus a year ago, dampening gains in weekly wage growth.

Germany

POST » 7th June, 2019 » Germany April Production

April turned out to be another poor month for German industry with the decline in overall industrial production fairly modest compared to the drop on the manufacturing side, where output dropped 2.5% on the month leaving output down 3.4% y/y.

US

POST » 5th June, 2019 » US May ADP

For those sensitive to bad data its not a good update.  The May ADP report saw job growth slump to a meagre +27.3k jobs, the weakest outturn since March 2010.  Some sectors seem to have been hit by temporary factors, with the decline in construction particularly notable.  But while this sector can ebb and flow you still have to go back to the end of 2010 to get a worse reading.

Eurozone putting together some better credit figures in April (once adjusting for sales and securitisations) amid strong growth in non-financial corporate borrowing in Germany and consistently strong credit demand (at both a corporate and consumer level) in France.  This growth has more than offset ongoing weakness in Italy, where NFC lending continues to contract rapidly.

UK

POST » 24th May, 2019 » UK April Retail Sales

While there was some deceleration in retail sales growth m/m in April the numbers still bettered consensus and looking at the y/y rates activity still looks solid.  We’ve actually been in this growth range (4-6% ann. value) for pretty much the entire Brexit period, while volumes have increased more recently, after the initial hit from post-referendum inflation.

UK

POST » 22nd May, 2019 » UK April Inflation Report

While the headline rate pushed up and there was a move higher in services, core inflationary pressures looked relatively stable in April.  Future pressures look equally contained, in part reflected in steady PPI output prices.  Sterling has been weakening but the rate of decline has, thus far, has been fairly measured

Japan

POST » 20th May, 2019 » Japan Q1 GDP

First quarter real Japanese GDP registered a surprise expansion.  But digging below the surface and there isn’t that much to get excited about. Underlying demand remains weak both in terms of household spending and government.  It was left to net exports – where imports declined at a faster rate than weak exports – and a further and faster inventory build to provide the statistical boost.

Eurozone

POST » 17th May, 2019 » Eurozone April HICP

Eurozone April inflation matched the increase the market was expecting, notably core which now stands at its highest level in 43 months.  But this really flatters the overall picture given the increase in package holiday prices (notably in Germany) which lifted the recreation component of core this month, alongside an overall uptick in corresponding services.

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