9/10/17: BRIC Composite PMI 3Q: Failing Global Growth Momentum

Two posts above cover Manufacturing PMIs and Services PMIs for 3Q 2017 for BRIC economies. The following updates Composite PMIs performance. Global Composite PMI came in at 53.7 in 3Q 2017, matching exactly 1Q and 2Q 2017 readings and basically in line with 53.6 reading in 4Q 2016. In other words, Global Composite activity PMI index has been showing relatively robust growth across the two key sectors for the last 4 quarters running. In contrast to Global indicator, BRIC economies posted relatively underwhelming performance with exception of Russia. Brazil Composite PMI index stood at 50.0 (zero growth) in 3Q 2017, which is a marginal gain on 49.8 in 2Q 2017. This marks the first time since 1Q 2014 that Brazil Composite indicator reached above the outright contraction levels, but it is a disappointing reading nonetheless. For one, one quarter does not signal stabilisation in Latin America’s largest economy. Worse, Brazil’s economy has been performing poorly since as far back as 2H 2011. It will take Brazil’s Composite index to hit above 52 mark for 2-3 consecutive quarters to start showing pre-2011 levels of activity again. Russia Composite PMI, on the other hand, remains the bright spark in the BRIC’s dark growth universe. Although falling to 4 quarters low of 54.1 in 3Q 2017, the index remains in strong growth territory. 3Q 2017 marked 6th consecutive quarter of robust post-recession recovery, consistent with 2.5-3 percent growth in GDP, quite ahead of the consensus forecasts from the start of 2017. The last quarter also marks the sixth consecutive quarter of Russian Composite PMIs running above Global Composite PMIs. This means that for the last 18 months, Russia has been the only positive contributor to Global growth from amongst the ranks of the BRIC economies.

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

Wells Fargo’s Artificial Intelligence Defies Analysts, Slaps ‘Sell’ on Google and Facebook

Oh the irony!
Google, which makes almost all of its money on ads and internet user data, is undertaking herculean efforts to get a grip on artificial intelligence (AI). It’s trying to develop software that allows machines to think and learn like humans. It’s spending enormous resources on it. This includes the $525 million acquisition in 2014 of DeepMind, which is said to have lost an additional $162 million in 2016. Google is trying to load smartphones with AI and come up with AI smart speakers and other gadgets, and ultimately AI systems that control self-driving cars.
Facebook, which also makes most of its money on ads and user data, is on a similar trajectory, but spreading into other directions, including a ‘creepy’ run-in with two of its bots that were supposed to negotiate with each other but ended up drifting off human language and invented their own languagethat humans couldn’t understand.
And here comes an AI bot developed by stock analysts at Wells Fargo Securities. The human analysts have an ‘outperform’ rating on Google’s parent Alphabet and on Facebook. They worked with a data scientist at Amazon’s Alexa project to create the AI bot. And after six months of work, the AI bot was allowed to do its job. According to their note to clients on Friday, reported by Bloomberg, the AI bot promptly slapped a ‘sell’ rating on Google and Facebook.

This post was published at Wolf Street by Wolf Richter ‘ Oct 7, 2017.

The Biggest Global Tax Break Ever Bubbles Up from Texas Oil Industry

Recently, I had the privilege of appearing on ‘Countdown to the Closing Bell,’ Liz Claman’s program on Fox Business. When asked if I was nervous that stocks are heading too high, I said that I’m very bullish. All around the world, exports are up, GDPs are up and the global purchasing manager’s index (PMI) is up.
Oil prices continue to remain low, however, thanks in large part to the ingenuity of Texas fracking companies. As I told Liz, this has served as a multibillion-dollar ‘peace dividend’ that has mostly helped net importing markets, including ‘Chindia’ – China and India combined, where 40 percent of the world’s population lives – Japan and the European Union.
I can’t emphasize enough how impressive it is that Texas shale oil producers continue to ramp up output even with crude remaining in the $50 per barrel range.
This underscores their efficiency and innovation in drawing on oil reserves that were largely out-of-reach as recently as 10 or 12 years ago. What’s more, common law property rights here in the U. S. benefit mining companies in ways that simply can’t be found in Latin America and other parts of the world that operate under civil law.
According to the Energy Information Administration’s (EIA) most recent report on drilling productivity, total U. S. shale oil output is expected to climb above 6 million barrels a day for the first time in September. The biggest contributors are Texas shale oilfields, which will exceed 4 million barrels a day. West Texas’ Permian Basin alone represents nearly 400 percent of these gains, according to research firm Macrostrategy Partnership.

This post was published at GoldSeek on Tuesday, 26 September 2017.

US Manufacturing “An Increasing Drag On The Economy” As PMI Drops For First Time Since March

Following a stronger-than-expected Eurozone PMI print this morning, Markit reports a mixed bag for preliminary September US PMIs with Manufacturing limping higher but Services missing expectations and slipping notably. After 5 straight months of gains, the US Composite PMI dropped back below pre-election levels.
As Markit notes, there were signs of underlying fragility in September, with new orders expanding at one of the slowest rates seen over the past year.
Latest data also indicated that new export sales remain close to stagnation.
Despite the ongoing collapse of ‘hard’ economic data, ‘soft’ surveys continue to remain hopeful…

This post was published at Zero Hedge on Sep 22, 2017.

World Markets Digesting Latest North Korea Nuke Test

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mixed overnight. Asian stocks were mostly lower and European stocks were mostly higher overnight as investors and traders around the world have had two days to digest the latest North Korea nuclear bomb test, which is reported to be the biggest bomb yet. The U. S. says North Korea is ‘begging for war’ as this major geopolitical matter is ratcheted up yet another notch.
U. S. stock indexes are pointed toward weaker openings when the New York day session begins. U. S. traders are seeing their first day back at work Tuesday, following the Labor Day holiday weekend.
Gold prices are higher and hit a 10-month high overnight, on safe-haven demand amid the North Korea crisis.
In overnight news, the Euro zone Markit purchasing managers’ composite index (PMI) came in at 55.7 in August, which is just below market expectations for a reading of 55.8. A reading above 50.0 suggests growth in the sector. Euro zone retail sales in July were reported down 0.3% from June and up 2.6%, year-on-year.

This post was published at Wall Street Examiner on September 5, 2017.

The Week’s Key Events: All Eyes On The ECB

With the US markets closed today, market events this week will be dominated by G10 central bank meetings, among which the ECB stands out, but also notable will be the RBA, BoC and Riksbank. Consensus does not expect policy changes yet. There is also a busy calendar for the UK (PMIs, housing, IP and trade balance) along with GDP/IP releases elsewhere. In EMs, there will be monetary policy meetings in Brazil, Poland and Malaysia. Brazil BCB is expected to cut rates by 100bp.
Central bank preview:
The ECB remains trapped between a strong(er) EUR and a rapidly shrinking universe of monetizable bonds; as a result Draghi will emphasize the impact of a strong EUR on inflation dynamics but will refrain from disclosing the destiny of QE after the 2018 expiry. Given the recent EUR appreciation, the ECB will prefer waiting for the September FOMC before committing on QE. Most sellside desks call for the October meeting where BofA expects a 6m QE extension at 40bn/month. The RBA is also expected to remain on hold with communication potentially getting more interesting now that forecasts and Parliamentary testimony are out of the way. On the longer term, the domestic housing market in particular to have a more significant influence on monetary policy with the balance of risks favoring rates up. For the BoC, unexpectedly strong economic growth, below neutral o/n rates and the Fed on a hiking cycle means that the Canada should follow with a hiking cycle as well. This said, low inflation and inflation expectations along with CAD appreciation do not argue for urgency. As a result while some have said the BOC’s meeting is “live”, most expected the central bank to remain on hold in September and hikes +25bp in October.

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

Chicago PMI Refuses To Bounce After July Plunge

Following Chicago PMI’s collapse in July, August failed to provde any bounce in the soft survey data, printing unchanged at 58.9 (July was revised slightly higher).
While marking the eighteenth consecutive above-50 reading, this month’s unchanged result follows July’s sharp decline that snapped a run of five straight monthly increases in business optimism.
Only 2 components managed any improvement in August (production and new orders) with both employment and inventories weak:
Inventories fell and the direction reversed, signaling contraction Employment fell and the direction reversed, signaling contraction

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

China’s Services Economy Growth Just Cratered

Amid the global growth party of hope-strewn PMIs across the world (all of which have been shown time and time again to hold zero correlation to actual economic data), China’s non-manufacturing data just puked in the punchbowl, crashing to its weakest level since May 2016 (despite amodest uptick in manufacturing).
Is China’s lagged credit impulse finally starting to leak into reality?

Manufacturing PMI rose from 51.4 to 51.7 in August but employment fell, new export orders fell, and both input and output prices soared. Notably large enterprises actually downticked with medium-size entities the most hopeful.

This post was published at Zero Hedge on Aug 30, 2017.

Two-Thirds Of Rising Global Growth Is Due To Emerging Markets, And 9 Other Interesting Facts

For all the talk about a “coordinated global recovery”, it may come as a surprise that 57% of the acceleration in global GDP this year has come from a handful of commodity exporters (those whose food/metals/fuel exports are > 40% of total), which together combine for just 17% of global GDP growth. A slightly different way of looking at the same data, is that 66% of the global acceleration in GDP is due entirely to emerging markets.
Another way of representing the dramatic reliance on Emerging Markets for global economic growth: in 2017 the EM vs DM contribution to growth was split roughly 75%/25%, while as shown in the charts below, the gap between EM and DM manufacturing PMIs is at an all time high!

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

India’s Economy Crashes After “Mind-Bogglingly Inane” Tax System Strikes Back

With just a hint of schadenfreude, we note that, following our discussion of “how to destroy an economy”, India’s Composite PMI collapsed to 46.0 in July – its lowest on record (well below the kneejerk lows after demonetization in November) as the “mind-bogglingly inane” new tax system and demonetization efforts continue to crush the poor and feed the wealthy.
As Goldman Sachs notes India’s Nikkei Markit services PMI contracted in July after reaching a 8-month high in June, following a decline of manufacturing PMI on Tuesday. The fall was led by a significant decline in new business, suggesting a worsened business sentiment after the GST implementation on July 1.
Main points:
India’s Nikkei Markit services PMI contracted to 45.9 (the lowest reading since September 2013). Combined with the manufacturing PMI reported on Tuesday, the July composite PMI fell to 46.0, the lowest reading since March 2009. Among subcomponents, the new business index fell the most to 45.2 (from 53.3 in June), reflecting disruptions caused by the GST. As the press release from Markit Economics mentioned, ‘Most of the contraction was attributed to the implementation of the goods & services tax and the confusion it caused”. The employment index for services fell to 48.9 (from 51.8 in June). That said, the index for business expectations rose to a 11-month high to 62.3, suggesting optimism from services providers about the future once they have more clarity about the new tax system.

This post was published at Zero Hedge on Aug 3, 2017.

BOE Preview: Whispers Of 25bps

All eyes are now on the midday announcement from the BoE, where a 25bp rate rise is only expected by a very few, but more anticipating signals that a move is forthcoming later this year.
The vote split will tell is whether Haldane – or anyone else – has moved to the hawkish camp, but with Forbes having left the commitee, a 6-2 split is also likely. Comments from Messrs McCafferty and Saunders suggest there is little or no chance that they have changed their stance from the previous meeting.
Looking at the PMIs, the data is relatively healthy at the present time, with both manufacturing and services up on expectations as well as June levels, but for consideration at the MPC will be the growth rate, which has slipped from 2.0% in Q1 to 1.7% in Q2.
Wage growth is also a concern, but although earnings were down on May levels, Jun was not as soft as expected.

This post was published at Zero Hedge on Aug 3, 2017.

Global Stocks Up As Commodity Mkts Rebounding; Busy Day For U.S. Data

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mostly higher overnight, boosted in part by upbeat corporate earnings reports and upturns in several raw commodity markets. U. S. stock indexes are pointed toward higher openings when the New York day session begins.
Gold prices are slightly lower on mild profit taking from recent good gains. The gold bulls still have the overall near-term technical advantage as prices are in an uptrend on the daily chart.
In overnight news, the Euro zone reported its gross domestic product at up 0.6% in the second quarter from the first, and up 2.1%, year-on-year. The second quarter saw the best GDP performance for the Euro zone since 2011.
The Euro zone manufacturing purchasing managers’ index (PMI) came in at 56.6 in July versus 57.4 in June. A reading of 56.8 was expected for July. A number above 50.0 suggests expansion in the sector.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ August 1, 2017.

RBA Preview: Beware Of Doves, Leaks And Stop Hunts

In addition to the Chinese Caixin Manufacturing PMI due out shortly, which will either confirm or deny Sunday’s modest decline in the official Mfg PMI, the Reserve Bank of Australia’s (RBA) decision (due at 2:30pm Sydney time) headlines the region’s risk events this week.
All of those surveyed expect the RBA to stand pat, which would leave its cash rate sitting at 1.50%. The minutes from the July meeting reaffirmed labor and housing markets as particular areas of interest, with both leaving many questions unanswered. The most interesting note to take from the minutes was the discussion surrounding the neutral interest rate, which some market participants deemed as hawkish, and which sent the AUD surging. However, in his most recent address last week, RBA Governor Lowe turned unexpectedly dovish and rejected this view, with Westpac suggesting that he reinforced the Bank’s ‘firmly on hold’ stance. Lowe also tried to talk down the currency, stating that it “would be better if the AUD was a bit lower”.
This was underscores by last week’s sub-consensus headline 2Q CPI print (0.2% QoQ vs. 0.4% expected) which supports the RBA’s view that domestic inflationary pressures are lacklustre, but officials may take some comfort in the slightly firmer core readings, according to analysts at ING.

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

Key Events In The Coming Week: Payrolls, Central Banks, China And More

As many traders quietly leave for summer break soaking up even more liquidity as they go, a busy US calendar unfolds in the week ahead, with ISM, PCE price data and, of course, payrolls in the spotlight.
Key Events, courtesy of RanSquawk
Monday: Eurozone CPI (Jul, P), China Official PMIs (Jul) Tuesday: RBA MonPol Decision, Eurozone GDP (Q2, Initial) Wednesday: ADP, Fed’s Mester, Williams speak Thursday: BoE MonPol Decision, Meeting Minutes & Quarterly Inflation Report Friday: US Labour Market Report (Jun), Canadian Labour Market Report (Jun), RBA SoMP In North America, June’s US Labor Market Report headlines the docket next week. Analysts expect the Nonfarm Payrolls headline to print at 187,000, with the unemployment rate expected to tick down to 4.3%, while hourly earnings are expected to remain subdued. The H1 average for the Nonfarm Payrolls release sits at 180,000. Following its latest statement, the Federal Reserve noted that ‘job gains have been solid, while household spending and business fixed investment have continued to expand.’ The main worry is wage growth, which has remained muted, and is perhaps keeping a lid on the Federal Reserve’s hiking cycle at present, as inflation has been kept in check.

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

Global Stocks Rise On “Growth Optimism”, Ignore Political Turmoil; Dollar, Oil Creep Higher

S&P futures rose 0.1% on the last trading day of the month, trailing European and Asian markets boosted by China’s July Mfg. PMI, which despite declining from from 51.7 to 51.4, and missing expecations of 51.5, saw the construction index rise to its highest level since December 13, sending Chinese iron ore futures surging and the European commodity sector broadly higher.
DCE Iron ore futures +6.43% pic.twitter.com/z7TDGWHOkQ
— Sunchartist (@Sunchartist) July 31, 2017

In equities, the MSCI All-Country World Index advanced 0.1%, and the MSCI Emerging Market Index increased 0.3%, while MSCI’s broadest index of Asia-Pacific shares outside Japan reversed early losses to rise 0.25%. Stocks have rebounding from Friday’s selloff spurred by raw-material producers on “optimism the global economy is gathering momentum” amid “evidence points to resilient global growth, with investors assessing numbers from the world’s top three economies” according to Bloomberg.

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

FX Week Ahead: Can The Swiss National Bank Breathe A Sigh Of Relief?

Is the SNB at it again? EURO-phoria takes off as longer term investors get the nod.
Having focused on the USD in recent weeks, and how the market has rounded on the greenback ‘en masse’, we can finally look to some exchange rate moves outside of the major spot rates. Sharp losses in the CHF have shown that the big money is taking note of the recovery in the Euro zone, and that investment prospects look good as the smaller member states are gaining traction alongside the power house that is Germany. Last week, IFO economists said they saw little which could derail the domestic economy, including the strengthening EUR, which has traded to a little shy of 1.1800 in the past week, but more significantly, taking out the 1.1711/12 (long term range highs in the process. This led to the ‘follow through’ which saw EUR/CHF shooting up to levels close to 1.1400, having spent a year long slumber inside a 1.0600-1.1000 range.
More data out next week is expected to confirm the above, headlined by EU wide Q2 GDP on the Tuesday, with updated manufacturing PMIs due out for all the leading states, as well as unemployment data. Focus on Germany will be shared out a little to Spain and Italy, also seeing marked improvement in economic activity. Spanish jobs have increased significantly, and in Italy, industrial orders have taken off, so no surprise for widespread calls for the ECB to rein in their APP, but once again, market forces are threatening to choke off some of this recovery. As such, there is growing sentiment that once the ECB do signal policy change in Autumn, there will be a sense of disappointment – naturally linked to the rampant gains in the EUR seen already. German 10yr hit levels shy of 0.65% a few weeks back, but the moderation of some 10bps or so looks to have been a short lived affair as Bunds took a sharp hit as the regional inflation data out of Germany saw healthy pick up. On Monday we will see whether CPI is rising across the region as a whole, but consensus is looking for 1.3% in the headline, 1.1% in the core.

This post was published at Zero Hedge on Jul 30, 2017.

Durable Boring

Durable goods orders were up a seasonally-adjusted 6.5% in the month of June 2017. Nearly all of that gain, however, was due to a jump (131%) in new orders for civilian aircraft. That meant demand for transportation equipment, a highly volatile segment, rose 19% in the month. Excluding all that, durable goods were up just 0.2% month-over-month.
Sentiment indicators like the ISM Manufacturing PMI suggest ebullient conditions that just aren’t matched by activity levels. Halfway through 2017, that shouldn’t any longer be the case. You can understand some lingering problems especially given the nature of the downturn/manufacturing recession, but long before June those should have fully disappeared.
Unadjusted, new orders for durable goods in June 2017 were up only 6% from June 2016. According to both the adjusted as well as unadjusted figures, last June was the bottom or trough in terms of durable goods. Shipments a year later are up only 5.5%.

This post was published at Wall Street Examiner on July 27, 2017.

There Is Only One Empire: Finance

Any nation-state that meets these four requirements is fully exposed to a global loss of faith in its economy, debt, balance of payments and currency.
There’s an entire sub-industry in journalism devoted to the idea that China is poised to replace the U. S. as the “global empire” / hegemon. This notion of global empire being something like a baton that gets passed from nation-state to nation-state is seriously misleading, in my view, for this reason: There is only one global empire: finance. China and the U. S. both exist within the Empire of Finance. Virtually every mercantile nation with access to global markets lives, works and thrives/dies within the Empire of Finance. Every nation that allows capital to flow into its economy is subservient to the Empire of Finance. Every nation with capital and debt markets exposed to (or dependent on) global financial flows is just another fiefdom in the Empire of Finance. China has thrived within the Empire of Finance by creating more debt and at a faster rate of expansion than any other fiefdom. China has brought 20 years of future growth and income forward, and eventually that vein of “wealth” runs out as time advances into the stripmined future.

This post was published at Charles Hugh Smith on MONDAY, JULY 24, 2017.

Manufacturing Rebound Sends US PMI To 6-Month High (As European PMI Hits 6-Month Low)

Following Europe’s PMI slump to six-month lows this morning, US Composite PMI rose to a six-month high, with Manufacturng surprising to the upside (4-mo high). The stronger PMI reading was supported by accelerated growth in output, new orders, employment and stocks of inputs during July, but the principal weak spot in the economy remained exports, with foreign goods orders dropping.

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