Archives of “Economy” category

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BREAKING : China press: The US is doomed to fail if it acts arbitrarily on trade

  
Analysis, Economy

Official newspaper of the Chinese Communist Party, People’s Daily, carries on the stern words directed at the US.

  • If the U.S. acts arbitrarily, it will hurt its own international reputation and image and disrupt global cooperation
  • US politicians should listen to voices of American society as well as warnings and criticism of its trade policy from various countries
  • China hopes the U.S. politicians can wake up, become aware of their mistakes and step away from wrong path
via Bloomberg 

Brexit – UK car production in April fell by the largest amount since the global financial crisis

  
Analysis, Economy

The Society of Motor Manufacturers and Traders (SMMT) in the UK reports car production fell 44.5% y/y in April

  • The biggest fall in 10 years
  • Car factories shut down last month to sidestep the risk of supply chain disruption from a potentially chaotic “no-deal” Brexit on March 29, the original date for Britain’s departure from the European Union.
  • While this was pushed back to Oct. 31, the postponement came too late for carmakers to change plans, prompting a “dismal” collapse in output, the SMMT said.
“Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers,” SMMT Chief Executive Mike Hawes said. “Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.” 
via Reuters report.

Eurozone May final consumer confidence -6.5 vs -6.5 prelim

  
Analysis, Economy

Latest data released by Eurostat – 28 May 2019

  • Economic confidence 105.1 vs 104.0 expected
  • Business climate indicator 0.30 vs 0.40 expected
  • Industrial confidence -2.9 vs -4.3 expected
  • Services confidence 12.2 vs 11.0 expected
Prior month’s release can be found here. The notable thing in the release here is that economic confidence improves slightly to 105.1 in May from 103.9 in April. However, sentiment remains weak as the euro area economy continues to limp this year and the outlook remains cloudy amid ongoing US-China trade tensions.

China Global Times: US tries to suppress China, steal away interests, wants to rob China

  
Analysis, Economy

A very strongly worded opinion piece in the Chinese press, Global Times

When I say strongly worded, this (bolding mine, very confrontational):
  • What on earth does the US want with China? … Does it … seek to break the Chinese economy as its ultimate goal? 
  • For the sake of …  world peace … 
  • Washington rudely tries to use a tariff war to suppress China. US vice president and US secretary of state issued fierce speeches recently. The US is also opposing almost all of China’s actions on the international stage and is suppressing Huawei savagely. This behavior makes most Chinese believe the US is against China’s development, and the real purpose of the US is to deprive China of its development ability and the so-called fair trade is just an excuse for stealing away interests. In other words, the US wants to rob China of not only its money but also its future.
Media in China is not free of state control (cough) – this opinion piece won’t be too far out of line with official thinking.
Not a risk positive.
Chinese press, Global Times Xi at war with the US 

China: Global Times reports recommendations PBOC adopts ‘moderately loose monetary policy’

  
Analysis, Economy

Why? Well … “China should adopt a moderately loose monetary policy to offset the negative impact of the prolonged trade war with the US and provide a cushion against non-performing loans (NPLs) in the domestic banking system”

GT citing recommendations from the 2019 Semi-Annual Report of China’s Systematic Financial Risk.
Report released by the Tsinghua University National Institute of Financial Research at the Tsinghua PBCSF Global Finance Forum 2019 over the weekend.
GT is normally forthright with reporting on political developments in China with regards to the trade war. This piece is fairly mild. Still ….
  • negative impact of the prolonged trade war with the US
  • non-performing loans (NPLs) in the domestic banking system
gives a heads up to concerns in China.

Germany May Ifo business climate index 97.9 vs 99.1 expected

  
Analysis, Economy

Latest data released by Ifo – 23 May 2019

  • Prior 99.2
  • Expectations 95.3 vs 95.0 expected
  • Prior 95.2
  • Current assessment 100.6 vs 103.5 expected
  • Prior 103.3
Slight delay in the release by the source. A measure of business conditions and sentiment/expectations towards the German economy. Do be reminded the Ifo changed the indicator measurement to take into account of services data too as of April 2018.
The drop in the headline reading sees it fall to the weakest since November 2014 as business sentiment towards the German economy continues to weaken. The outlook improved slightly but it isn’t an area of confidence given that trade tensions and potential auto tariffs are still issues to worry about looking forward.

Eurozone May flash manufacturing PMI 47.7 vs 48.1 expected

  
Analysis, Economy

Latest data released by Markit – 23 May 2019

  • Prior 47.9
  • Services PMI 52.5 vs 53.0 expected
  • Prior 52.8
  • Composite PMI 51.6 vs 51.7 expected
  • Prior 51.5
Both the manufacturing and services prints disappointed and fell below their April estimates but the composite reading is seen holding steady somewhat. The slight drag on the data alongside weaker Ifo survey data sees EUR/USD slip a little to 1.1136 from around 1.1145 earlier but overall it’s not much of a change really in euro sentiment.
The data more or less confirms that economic conditions are still somewhat stable but any robust signs of a recovery from last year’s decline is still a long way from coming.
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