US household income growth looked pretty solid with a 0.6% m/m gain during January, which tends seasonally, to be a weaker month. That lifts the y/y rate back to a shade under 4.0%, although the near-term trend remains one of moderation. On the spending side the increase surprised on the downside at +0.2% m/m and that pulled y/y growth back to 4.5%
In recent years equity markets have been driven more by central bank largesse than by corporate profit performance. With bond yields close to record lows — in both real and nominal terms — investors have charged into higher-yielding risk assets with gusto. Still it behoves us to keep an eye on the underlying earnings picture.
China looks to have the Coronavirus (COVID-19) under control. The rate of daily infections has been on a clear downward trend since the start of the month, suggesting the initial measures to quarantine areas were largely effective. As knowledge and understanding improves, it seems highly unlikely this is a temporary lull, even if economic disruptions surrounding the outbreak become more prolonged.
The weekend election in Hamburg ran largely to script (see our report Thuringian tremors 7th February 2020). The SPD-Green coalition,…
Chinese January credit data came in quite a bit stronger than expected, amid firm new loan growth and local government spending, which contributed to significantly a higher overall total social financing number (CNY5.7trn vs. the CNY4.3trn consensus). Chinese New Year fell earlier this year, but it’s not clear if that accounts for the strong outcome.
Well, that didn’t take long. After last week’s debacle in Thuringia (see our report Thuringian tremors 7 February 2020) CDU leader Annegret Kramp-Karrenbauer (AKK) found her authority fatally undermined and announced that she would soon step down to allow a new leader to be elected in the summer. This leader, she said, should also become the party’s chancellor candidate for the next federal election, scheduled for autumn 2021.
CPI recorded a modest rise in January, headline up to 2.5% yoy from 2.3%, a shade above mkt estimates. Core flat at 2.3% yoy which was a touch above consensus too, but really not much more than rounding. Overall the inflation picture still looks fairly settled.
The Irish political paradigm is shattered. Deservedly so. The two political parties whose only difference is what side they fought…
Tracking the strong ADP release on Wednesday, the January non-farm payrolls report also comfortably beat expectations. Weather has helped a bit last couple of months, with seasonal disruptions lower than normal, but that doesn’t detract from the underlying strength of the labour market.
The expected bounce in German factory orders remains elusive with a further sharp (-2.1% m/m) decline recorded in December. That leaves the y/y rate at a scary -8.6%, a new low and overall orders now 12.6% from their peak using the seasonally adjusted volume numbers.
Donald Trump is on a roll. He presides over the longest cyclical upswing on record. On his watch, unemployment is…
The improvement in the surveys continues to provide a realistic guide to Chia’s improving fortunes with the December real activity data corroborating this picture. The strong recovery in industrial production is most noticeable, with y/y rate jumping to 6.9%, the highest since March
China December money supply ticked up, reflecting easier financial conditions. We also saw solid growth in total social financing, which came in ahead of expectations. The authorities have been keen to avoid an overt debt splurge, trying to generate more targeted easing, particularly focusing on transmission to SMEs in the private sector. These numbers suggest this has been a partial success...
Disinflation resumed in December with consumer prices surprising to the downside. Headline and core both registered a 1.3% y/y gain, a decline from 1.5% and 1.7% respectively in November. In constant tax terms the decline was a little faster. On the producer price side there is scant evidence of any inflationary pressure. Although headline output prices edged up, core output prices - which are more closely correlated with CPI - ticked a little lower.
UK economy continued to slow in November. According to the monthly GDP estimate the economy shrank by -0.3% m/m. Although the smoothed 3/3m rate still showed a +0.1% rise, this was the slowest pace since fears of a hard Brexit dominated thinking back in the summer and on a y/y basis the +0.6% recorded was the weakest since back in the days of the Eurozone debt crisis (June 2012 to be exact).
Slight undershoot in the December payrolls report, but the 145k jobs created is only modestly below the 164k market guess and while the revisions from November were slightly downward that was a strong report in itself. Over 12-months revisions are very mildly negative but not showing any real deterioration in trend since the summer.
Germany has just reported much-improved industrial production numbers for November. In volume terms they jumped 1.1% mom on a seasonally-adjusted basis, better than consensus expectations for a 0.8% rebound. So the downturn is over? Don’t bet on it.
Does populism pose a risk to markets in 2019? Yes! but not from the expected quarter. 2019 brought a surprise on the European front. The support for traditional parties has been plummeting for a long time. We call this the European souffle where support for the centre ground continues to cave over time. Populist parties gained 20% or more of the vote in many national elections this year, thought there were signs of their vote stabilising in the most recent polls.
Better performance from industry during November, IP and manufacturing production both rising 1.1% mom. Partly this was due to one-offs, following disruptions from the GM strike, which flattered November’s bounce. There are still a couple of sectors that look weak, notably chemicals and machinery, the latter in particular important given this is basically the capital goods part of activity.
Another batch of soft numbers. Although we saw another m/m rise and a mild upward revision, the y/y growth rates continue to look fragile, particularly when stripping out more volatile items like gas and vehicle sales. The control group reading in fact dropped to the weakest rate since March, when comparing to the period a year earlier.