Key Events In The Last Week Before Christmas

It might be the last full week before Christmas – with both newsflow and trading volumes set to slide substantially – but there’s still a few interesting events and data releases to look forward to next week. Among the relatively sparse data releases schedule, we get US GDP, core PCE, housing and durable goods orders in the US, as well as CPI and GDP across Euro area and UK PMI. After last week’s central bank deluge, there are a handful of leftover DM central bank meetings include the BOJ and Riksbank, with rates expected to remain on hold for both. In Emerging markets, there will be monetary policy meetings in Czech Republic, Hungary, Thailand, Taiwan and Hong Kong.
Perhaps the most significant will be in China when on Monday the three-day Central Economic Work Conference kicks off. This event will see Party leaders discuss economic policies for the next year and the market will probably be most interested in the GDP growth target. Deutsche Bank economists have noted that it will be interesting to see if the government will change the tone on its growth target by lowering it explicitly from 6.5% to 6% or fine-tuning the wording to reflect more tolerance for slower growth.
Away from this, tax reform in the US will once again be a topic for markets to keep an eye on with final votes on the Republican legislation in the Senate (possibly Monday or Tuesday) and House (possibly Tuesday or Wednesday) tentatively scheduled. Also worth flagging in the US is Friday’s release of the November personal income and spending reports and the Fed’s preferred inflation measure – the core PCE print. Current market expectations are for a modest +0.1% mom rise in the core PCE which translates into a one-tenth uptick in the YoY rate to +1.5%.

This post was published at Zero Hedge on Dec 18, 2017.

AlphaZero for President

From KurzweilAI:
Demis Hassabis, the founder and CEO of DeepMind, announced at the Neural Information Processing Systems conference (NIPS 2017) last week that DeepMind’s new AlphaZero program achieved a superhuman level of play in chess within 24 hours.
The program started from random play, given no domain knowledge except the game rules, according to an arXiv paper by DeepMind researchers published Dec. 5.
‘It doesn’t play like a human, and it doesn’t play like a program,’ said Hassabis, an expert chess player himself. ‘It plays in a third, almost alien, way. It’s like chess from another dimension.’
I started programming IBM machines in the late 60s, and at the time there was talk about the possibility of a computer someday beating a competent human at chess. Though the first programs stumbled along like children learning to walk, slowly, over the years, they improved, thanks in part to Moore’s Law and the genius of certain computer scientists. In February 1977 Chess 4.6, the only computer entry, won the 84th Minnesota Open against competitors just under Master level; it later defeated the US chess champion. [source] In 1988, Deep Thought became the first computer to defeat a grandmaster in a tournament. IBM bought Deep Thought, pumped it up and renamed it Deep Blue, and beat World Chess Champion Garry Kasparov in 1997.

This post was published at GoldSeek on Friday, 15 December 2017.

10/12/17: Rationally-Irrational AI, yet?..

In a recent post (I mused about the deep-reaching implications of the Google’s AlphaZero or AlphaGo in its earliest incarnation capabilities to develop independent (of humans) systems of logic. And now we have another breakthrough in the Google’s AI saga.
According to the report in the Guardian (“AlphaZero, the game-playing AI created by Google sibling DeepMind, has beaten the world’s best chess-playing computer program, having taught itself how to play in under four hours. The repurposed AI, which has repeatedly beaten the world’s best Go players as AlphaGo, has been generalised so that it can now learn other games. It took just four hours to learn the rules to chess before beating the world champion chess program, Stockfish 8, in a 100-game match up.”

This post was published at True Economics on Sunday, December 10, 2017.

Stagflation Looms As PMI Shows Surging Costs And Sinking Growth

Following Manufacturing’s drop, the US Services sector PMI disappointed in November, falling to its lowest since June (as business confidence tumbled to its weakest since February). Average selling prices soared as growth slumped setting the scene for a stagflationary future. ISM Services confirmed this weakness, tumbling to 3-month lows.
Of course, between Markit and ISM, there has been at least something to hang some hope on but in November they appeared to line up with PMI Manufacturing and Services (5mo low) sinking (upper pane) and ISM Manufacturing (4mo low) and Services (3mo low) also tumbled…
Under the covers, ISM shows busines activity, new orders, and employment weaker…

This post was published at Zero Hedge on Dec 5, 2017.

Three Years Ago QE, Last Year It Was China, Now It’s Taxes

China’s National Bureau of Statistics reported last week that the official manufacturing PMI for that country rose from 51.6 in October to 51.8 in November. Since ‘analysts’ were expecting 51.4 (Reuters poll of Economists) it was taken as a positive sign. The same was largely true for the official non-manufacturing PMI, rising like its counterpart here from 54.3 the month prior to 54.8 last month.
None of these results, however, are meaningfully different from each other. Rather than indicate any improvement, they actually suggest quite the opposite. According to the PMI’s, China’s economy isn’t falling off but it isn’t accelerating, either. The latter is what really matters, and here in the sentiment data marks the best case for the Chinese.
On the manufacturing side, the headline index is supported almost entirely by the reported experience of China’s biggest firms (many state-owned of one variety or another). The PMI for this size category has been consistently above the overall index, though importantly remaining almost at the same level going back to the latter half of last year.

This post was published at Wall Street Examiner on December 4, 2017.

Key Events In The Coming Week: Jobs, Brexit, PMI, IP And More

The first full week of December is shaping up as rather busy, with such Tier 1 data in the US as the payrolls report, durable goods orders and trade balance. We also get UK PMI data and GDP, retail sales across the Euro Area, as well as central bank meetings including Australia RBA and BoC monetary policy meeting.
Key events per RanSquawk
Monday: UK PM May To Meet EU’s Juncker & Barnier Tuesday: UK Services PMI (Nov), RBA MonPol Decision Wednesday: BoC MonPol Decision, Australian GDP (Q3) Friday: US Payrolls Report (Nov), Japan GDP (Q3, 2nd) The week’s main event takes place on Friday with the release of November’s US labour market report. Consensus looks for the headline nonfarm payrolls to show an addition of 188K jobs, slowing from October’s 261K. Average hourly earnings growth is expected to slow to 0.3% M/M from 0.5%, while the unemployment rate and average hours worked are expected to hold steady at 4.1% and 34.4 respectively. Hurricane induced volatility should be absent from the November release, and consensus points to a headline print much more in-keeping with trend rate.
Other key data releases next week include the remaining October services and composite PMIs on Tuesday in Asia, Europe and the US, ISM non-manufacturing in the US on Tuesday, ADP employment report on Wednesday and China trade data on Friday.
Focus will also fall on Wednesday’s Bank of Canada (BoC) interest rate decision, with the majority looking for the Bank to leave its key interest rate unchanged at 1.00%, although 3 of the 31 surveyed by Reuters are looking for a 25bps hike. Following the BoC’s back-to-back rate hikes in Q3, interest rate markets were pricing in a 40-50% chance of a hike at the upcoming decision, that has now pared back to 25% as the BoC has sounded more cautious in recent addresses, highlighting that it expected the economy to slow (GDP growth moderated to 1.7% in Q3 on a Q/Q annualised basis, from 4.3% in Q2) while stressing that it remains data dependant. RBC highlights that ‘the BoC has been focused on the consumer’s reaction to the earlier hikes and is content to wait-and-see for the moment. Wage growth – another key metric for the central bank – has improved in recent employment reports (reaching the highest level of growth since April 2016 in November’s report). Despite its softer tone, the BoC continues to stress that ‘less monetary stimulus will likely be required over time’ and as a result the statement will be scoured for any changes in tone. At the time of writing, markets are pricing a 57.2% chance of a 25bps hike in January, with such a move 91.0% priced by the end of March.

This post was published at Zero Hedge on Dec 4, 2017.

US Manufacturing’s Hurricane-Rebound Is Over: New Orders Sink, Costs Soar

The brief rebound in US manufacturing after the hurricanes appears to have ended as Markit’s PMI dropped from 54.6 to 53.9 as new orders slowed amid soaring inflation. For once ISM Manufacturing also agreed with PMI – dropping to its lowest since July – with employment and export orders sinking.

While new orders slowed, the most notable item in the PMI data was that inflation is surging…

This post was published at Zero Hedge on Dec 1, 2017.

Market Talk- December 1, 2017

Although Asian indices opened well on the back of a strong US session, they unfortunately could not hold the levels. Part of the reasoning was the tax Bill would be delayed and having seen the DOW blast through the psychological 24k level many were concerned this delay could threaten Thursday gains. The Nikkei was up over 1% at the open but the uncertainty depleted over half of that gain. The Yen continues to drift with the high 112’s a comfortable trading range as the US markets reopen. Exporters were again leading the way but the weaker currency was a definite factor! Both the Hang Seng and Shanghai indices opened better but the lack of confidence and weak economic data (Manufacturing PMI) added to the uncertainty.

This post was published at Armstrong Economics on Dec 1, 2017.

Europe Rebounds From Chinese Rout After Stellar PMIs; US Closed For Holiday

#Eurozone output #PMI hits 79-month high (57.5) in November. Employment rises to greatest extent in 17 years. pic.twitter.com/hCY1Dx9uzh
— Markit Economics (@MarkitEconomics) November 23, 2017

Nothing can keep the BTFD spirit at bay in Europe this Thanksgiving morning.
Having started the session on the back-foot after the biggest Chinese stock market tumble in 17 months (the SHCOMP dropped -2.3%, most since June 2016) amid tighter liquidity conditions as a result of today’s Thanksgiving holiday in the US and attempts by regulators to rein in asset management firms and the micro-loan market, the negative sentiment was short-lived however, a slew of blockbuster November Eurozone PMIs, among which the highest output print in 79 months, with the highest employment number in 17 years, helped revive sentiment in Europe – and brought the Eurostoxx back to green on the session. Among the notable composite PMI prints:
France 60.1 vs est. 57.2 Germany 57.6 vs ext. 56.7 Euro zone 57.5 vs est. 56.0 Markit noted this was a multi-year highs seen for all main indicators of output, demand, employment and

This post was published at Zero Hedge on Nov 23, 2017.

FX Weekly Preview: EUR Darts Back To Uptrend, But Can It Last

Submitted by Shant Movsesian and Rajan Dhall MSTA of fxdailyterminal.com
The key move in the FX majors last week as the upturn in EUR/USD, where the first key area of support on the downside at 1.1500-1.1625 held well to generate the move up into the mid-upper 1.1800’s. In the previous week we also asked whether the USD correction was over, and some may assume that based on the key weighting in the USD index – it is. Clearly the longer term outlook on Europe has been the driver of what is now seen as a default position in FX. The German economy has been leading the way with solid growth, as Q3 saw a rise of 0.8%, which should be confirmed on Thursday. Alongside this, we get the PMI data for Nov which will likely confirm more of the same across the whole Euro region, with the German IFO on Friday unlikely to buck the positive trend as the institute maintain their positive growth projections.
Over the weekend however, the coalition talks in Germany have made the headlines with the FDP leader walking out of the negotiations with Chancellor Merkel’s CDU and the Greens, with wide ‘differences’ of opinion on immigration and climate amongst other issues lower down the pecking order. This leaves Merkel with 3 options; a new election, governing without a majority or continuing talks for an eventual agreement – all 3 to keep the EUR from maintaining the upside bias with clear conviction. That said, we are in a market which is getting used to brushing aside key risk factors, and the early Asian response is usually tempered to some degree by the more liquid London markets – as we saw with GBP the previous weekend!

This post was published at Zero Hedge on Nov 20, 2017.

Warming Economy, Red Hot Stock Market

With 15% gains in the major stock indices (Nasdaq 28%) stocks are on pace for their 4th best year since 1999. Precursors of accelerating economic growth abound in 2017, reflective of the rebounding earnings and future expectations. The stubbornly sluggish US GDP continues to hover near its 2.1% post mortgage bubble 7-year expansion cycle. Underlying proxies of manufacturing and service sectors are approaching historic rates of expansion with record demand for job seekers. Factories are struggling to find capacity as New Orders and Shipments are outpacing depleted customer inventories. Today’s 3.0% GDP report for the 3rd quarter, following the 2nd quarter pace of 3%, is a strong sign that real growth is finally percolating to the economy’s bottom line GDP.
US Manufacturing as measured by ISM’s Purchasing Managers Index (PMI) hit a 13 year high in September, one of the most comprehensive rates of expansion ever recorded. Should legislative winds provide corporate tax cuts and an estimated $3 Trillion repatriation of foreign earnings in 2018, then there may yet be hope for GDP growth rates above 3% despite the impedance of a tight labor pool. Lower business taxes here would boost global growth as other countries follow suit.

This post was published at FinancialSense on 11/02/2017.

US Manufacturing Shrugs Off Fires, Floods, & Storms In October But ISM Disappoints

Against disappointing China PMIs, US Manufacturing PMI surged back near 2017 highs in October – shrugging off the efects of recent storms, floods, and wildfires – with factory jobs near their best since the financial crisis and gains broadening out to smaller firms too. However, ISM Manufacturing disappointed, falling back from 13 year highs.
So take your pick… is manufacturing momentum picking up (PMI) or fading (ISM)?

Under the hood, ISM reported weaker production, lower prices paid, and weaker new orders and while PMI reported a surge to 28-month highs for employment, ISM saw a drop to 3 month lows.

This post was published at Zero Hedge on Nov 1, 2017.

Market Talk- October 31, 2017

A slow but steady day in Asian equity markets, but happy in the knowledge that the BOJ left almost everything unchanged. The Nikkei closed almost unchanged but has set an impressive two month rally. At above 22k the index closes at a 21 year high, but after the weak opening it took all day to recover unchanged. The Yen was a little weaker (0.5%) as it challenges the 114 handle again. The Australian ASX did open better but drifted throughout the day eventually closing on its low. However, irrespective of todays price action it has been a constructive month for the All Ords with a gain of around 3%. Shanghai managed to shake-off the PMI miss (51.6 against market expectations of 52), with Services also declining. In Hong Kong the Hang Seng we closed down -0.3% with bank stocks weighing on the market.
Although we finished the month on a positive note, volumes were low. This usually is the case when a large index is closed and with Germany on a national holiday the absence of the DAX was noticeable. Spain’s IBEX helped sentiment though with a daily gain of +0.7%. The market is valuing ‘no news’ as positive these days, so with the demand for yield ever present any quiet day is good for low grade paper. This is present when comparing global credits to the states where it is not uncommon to find BBB credits trading even yield with US treasuries. The CAC managed a small +0.2% gain whilst the largest bank (BNP Paribas) recorded as the worst performing European bank stock today (-2.7%). UK’s FTSE managed a small positive for the day but an +0.5% in the currency helped international investors as traders continue to price in a BOE move on Thursday. Talk is that BREXIT discussions may be progressing better than many had expected but we have yet to hear details.

This post was published at Armstrong Economics on Oct 31, 2017.

US Futures Rebound After Disappointing Chinese, European Data

Yesterday’s sharp Chinese selloff is now a distant memory after the BTFDers emerged, and this morning U. S. equity futures are once again levitating as the FOMC begins its two-day policy meeting, following an uneventful BOJ announcement on Tuesday morning which left all QE parameters unchanged. Asian stocks traded mixed steady while European shares climb.
The key event overnight was the BOJ meeting, in which the central bank maintained QQE with Yield Curve Control and kept NIRP unchanged at -0.1% as expected. The decision to keep QQE with YCC was made by 8-1 vote, with Kataoka the sole dissenter again who suggested the BoJ needs to buy JGBs so that 15yr yield stays below 0.2%, while Kataoka also commented that the BoJ should ease if domestic factors lead to delays in reaching the inflation target. In terms of changes to its outlook forecasts, the BoJ raised FY 17/18 Real GDP growth forecast to 1.9% from 1.8%, while it cut Core CPI forecasts to 0.8% from 1.1% for FY 17/18 and to 1.4% from 1.5% for FY 18/19
Asian shares rose in afternoon trading, with the MSCI Asia Pacific Index gaining 0.1 percent to 168.29 and ignoring the overnight miss across the board in Chinese PMIs…

This post was published at Zero Hedge on Oct 31, 2017.

UBS Slams “#FakeEconomics” As PMI Surveys Suggest Economy At 9-Month Highs

Preliminary prints for October Services and Manufacturing in America beat expectations and rose to 2017 highs pushing the composite index to its highest since January.
Commenting on the flash PMI data, Tim Moore, Associate Director at IHS Markit said:
‘The US economy seems to have made a strong start to the final quarter of 2017. Resilient service sector growth and an encouraging rebound in manufacturing production combined to generate one of the sharpest rises in private sector output for twoand-a-half years during October.

This post was published at Zero Hedge on Oct 24, 2017.

22/10/17: Robot builders future: It’s all a game of Go…

This, perhaps, is the most important development in the AI (Artificial Intelligence) to-date: “DeepMind’s new self-taught Go-playing program is making moves that other players describe as ‘alien’ and ‘from an alternate dimension’”, as described in The Atlantic article, published this week (The AI That Has Nothing to Learn From Humans– The Atlantic
The importance of the Google DeepMind’s AlphaGo Zero AI program is not that it plays Go with frightening level of sophistication. Instead, it true importance is in self-sustaining nature of the program that can learn independently of external information inputs, by simply playing against itself. In other words, Google has finally cracked the self-replicating algorithm.
Yes, there is a ‘new thinking’ dimension to this as well. Again, quoting from The Atlantic: “A Go enthusiast named Jonathan Hop …calls the AlphaGo-versus-AlphaGo face-offs ‘Go from an alternate dimension.’ From all accounts, one gets the sense that an alien civilization has dropped a cryptic guidebook in our midst: a manual that’s brilliant – or at least, the parts of it we can understand.”

This post was published at True Economics on Monday, October 23, 2017.

Car Manufacturers Are Electrifying Copper, ‘The Metal of the Future’

As many of you know, copper is often seen as an indicator of economic health, historically falling when overall manufacturing and construction is in contraction mode, rising in times of expansion.
That appears to be the case today. Currently trading above $3 a pound, ‘Doctor Copper’ is up close to 28 percent year-to-date and far outperforming its five-year average from 2012 to 2016.

Several factors are driving the price of the red metal right now. Manufacturing activity, as measured by the purchasing manager’s index (PMI), is expanding at a pace we haven’t seen in years in the U. S., eurozone and China. The U. S. expanded for the 100th straight month in September, climbing to a 13-year high of 60.8.
Speculators are also buying in response to word of copper shortages in China, despite September imports of the metal rising to its highest level since March. The world’s second-largest economy took in 1.47 million metric tons of copper ore and concentrates last month, an amount that’s 6 percent higher than the same month in 2016.

This post was published at GoldSeek on Tuesday, 17 October 2017.

Overheating China PPI Sends 10Y Yields To 30 Month Highs As Banks Inject Another Quarter Trillion Dollars In Loans

Despite a disappointing US CPI report on Friday, which saw core inflation miss once again despite an expected spike due to the “hurricane effect”, moments ago China reported that in September, its CPI printed at 1.6% Y/Y, in line with expectations, and down from, 1.8% in August largely due to high year-over-year base effects, but it was PPI to come in smoking hot, jumping from 6.3% last month to 6.9% Y/Y, slamming expectations of a 6.4% print and just shy of the highest forecast, driven by the recent surge in commodity costs and strong PMI surveys.
***
While there has been no reaction in the Yuan, either on shore or off, the stronger than expected PPI has pushed China’s 10Y yield to the highest in 30 months, or since April of 2015.

This post was published at Zero Hedge on Oct 15, 2017.

9/10/17: BRIC Services PMI 3Q 2017: Another Quarter of Weaker Growth

Having covered 3Q 2017 figures for BRIC Manufacturing PMIs in the previous post, let’s update the same for Services sector. BRIC Services PMI has fallen sharply in 3Q 2017 to 50.8 from 52.1 in 2Q 2017. This is the lowest reading since 2Q 2016 (when it also posted 50.8). The drivers of this poor dynamic are: Brazil Services PMI remained below 50.0 mark for the 12th consecutive quarter, rising marginally to 49.5 in 3Q 2017 from 49.0 in 2Q 2017. Current reading matches 1Q 2015 for the highest levels since 1Q 2014. Statistically, Brazil Services PMI has been at zero or lower growth since 1Q 2014. Russia Services PMI fell to 54.0 in 3Q 2017 from 56.0 in 2Q 2017 and 56.8 in 1Q 2017, indicating some cooling off in otherwise rapid expansion dynamics. The recovery in Russian Services sectors is now 6 quarters long and overall very robust. China Services PMI decline marginally from 52.0 in 2Q 2017 to 51.6 in 3Q 2017. This is consistent with trend established from the local peak performance in 4Q 2016. Overall, Chinese Services are showing signs of persistent weakness, with growth indicator falling below statistically significant reading once again in 3Q 2017. India Services sector has been a major disappointment amongst the BRIC economies, with Services PMI falling from 51.8 in 2Q 2017 to a recessionary 48.0 in 3Q 2017. The Services PMIs for the country have been rather volatile in recent quarters, as the economy has lost any sense of trend since around 4Q 2016.

This post was published at True Economics on Monday, October 9, 2017.