8/9/2014: Some Pretty Good Services Data from Ireland

Irish services sectors have been at the forefront of the latest recovery for over two years now, posting booming figures and rosy PMIs. Underlying trends, however, are less often voiced. So let’s take a look at the latest data here:
Overall, by value indices, Irish Services sectors posted a reading of 113.2 in July 2014, which is 1.34% up m/m. In previous month, June, m/m rate of increase was 1.45% which suggests slower growth in the sector overall. However, taking longer-range reading provides for a more encouraging picture. 3mo average through April 2014 was up 2.23% compared to same period 2013 and this rose in the 3mo period through July 2014 to 3.20%. 6mo average through July 2014 is also robustly up: 2.72% y/y.
So the above are encouraging trends and visible in the following chart:

This post was published at True Economics on September 8, 2014.

7/9/2014: What do PMIs Signal on Global Growth?..

Here’s an interesting point raised recently by @phil_waechter: the global growth that is supposed to accelerate in H2 2014 is really not happening and worse, compositionally, the prospect of such growth is heavily reliant on one country’s fortunes: the U. S.
Things are not pretty, but they are not as ugly as the above chart shows, at least in the short run of the last 2 months. Here are the summaries for global growth by index:

This post was published at True Economics on Sunday, September 7, 2014.

US Services PMI Falls For 2nd Month In A Row

From the earlier August flash print of 58.5, Markit’s US Services PMI rose modestly to 59.5 but has now fallen 2 months in a row to the lowest since May. While a solid number in ‘expansionary’ >50 territory, pressure on margins continues as input cost inflation picks up. Employment gained also, prompting Markit to question “how long policymakers will be comfortable with the economy growing at this pace before hiking interest rates?”

This post was published at Zero Hedge on 09/04/2014.

AAPL’s Worst Dump In 7 Months Sparks Nasdaq Slump

China’s Services PMI for August veered upwards, but that’s not the news. Noting that China’s massive but fracturing bubble in unused luxury apartments (upwards of 70 million are empty) is a serious headwind, analysts for HSBC were quick to plead for more stimulus:
The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery.’
Stunning. Even the comrades in Beijing know that China’s credit tsunami has unleashed a dangerous speculative mania throughout the land that has no parallel in human history. For crying out loud, total credit outstanding (which Beijing’s red capitalists are pleased to call ‘social financing’) has exploded from $1 trillion at the turn of the century to $25 trillion today.
It goes without saying that there is nothing in the financial world more dangerous than easy credit. But when it multiples by 25X in just 14 years in an economy where there is essentially zero market discipline (because all debts are bailed-out and rolled-over when push comes to shove), you are dealing with a monumental catastrophe in the making.

This post was published at David Stockmans Contra Corner on September 3, 2014.

The World Financial System Is Rife With “Stimulus” Junkies

China’s Services PMI for August veered upwards, but that’s not the news. Noting that China’s massive but fracturing bubble in unused luxury apartments (upwards of 70 million are empty) is a serious headwind, analysts for HSBC were quick to plead for more stimulus:
The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery.’
Stunning. Even the comrades in Beijing know that China’s credit tsunami has unleashed a dangerous speculative mania throughout the land that has no parallel in human history. For crying out loud, total credit outstanding (which Beijing’s red capitalists are pleased to call ‘social financing’) has exploded from $1 trillion at the turn of the century to $25 trillion today.

This post was published at David Stockmans Contra Corner on September 3, 2014.

ISM Manufacturing Surges With New Orders At 10-Year High; Construction Spending Jumps Most In Over 2 Years

ISM Manufacturing has risen almost without hesitation for the seven months from the January collapse to new 3-year highs, printing at a dramatic 59.0, its biggest beat in over a year, just shy of the recovery cycle’s highs in 2011. New orders grew for the 15th month in a row to the highest reading since 2004! Earlier, Markit’s US PMI missed expectations and fell modestly from preliminary data to 57.9, but moved to its highest since April 2010. Construction spending also surged, rising 1.8% (smashing expectations) – its biggest MoM gain since May 2012.

This post was published at Zero Hedge on 09/02/2014.

The Manufacturing World Suddenly Goes Into Reverse: Global August PMI Summary

While yesterday everyone was focusing on the ongoing escalation in Ukraine, or BBQing, the real story was the sudden and quite dramatic collapse, or as we called it, “bloodbath” in global manufacturing as tracked by various PMI indices.
Here, via Bank of America, is the bottom line: as the below table shows, out of the 26 countries that have reported so far, 9 reported improvements in their manufacturing sectors in August, while 15 recorded a weakening, and 2 remained unchanged. A reading above 50 reflects expansion, while below 50 indicates contraction. In this regard, there were 5 countries in negative territory and 21 in positive. In particular, Brazil, Greece, Korea and Turkey moved from contraction to expansion, while Australia and Italy did the reverse. The biggest concern: virtually every core and pierphral Eurozone country of note (from France and Germany to Spain and Italy) saw substantial contraciton. Which, as is well-known in the New Normal, is the stuff new all time S&P500 highs are made of.

This post was published at Zero Hedge on 09/02/2014.

Eurozone manufacturing slows further in August

Manufacturing in the eurozone slumped in August to a 13-month low, a closely watched survey showed on Monday, in a further sign that recovery is faltering and that tensions with Russia are taking their toll.
Markit's purchasing managers' index (PMI) measure of output in the eurozone's manufacturing sectors fell to a figure of 50.7 in August, according to the final estimate.
That was still above the 50-point boom-or-bust mark and it compared with the previous flash reading of 50.8.

This post was published at France24

USDJPY (And Nikkei) Surge Higher as Japanese Car Sales Collapse To 3-Year Lows

And for tonight’s menu of disastrous Japanese economic data, we have (drum roll please)… Auto sales. Overall auto sales fell 9.1% YoY to 333,471 – the lowest in 3 years. Minicars dropped a stunning 15.1% YoY according to the Japanese auto dealers association. The response – rather obvious by now – to this terrible news… a 35 pip vertial ramp in USDJPY which can mean only one thing – the Nikkei 225 rallied 150 points… On a side note, following disappointing PMIs, China fixed the Yuan at 4-month lows.

This post was published at Zero Hedge on 09/01/2014.

The Bad News Out Of Europe Is Intensifying

All of the economic signals confirm that growth in the eurozone economy is going nowhere.
The Eurozone manufacturing purchasing managers index plunged to a 13-month low of 50.7 in August., down from 53.8 in July. This was worse than the 50.8 expected by economists.
Any reading above 50 signals growth, and the eurozone’s PMI is rapidly tumbling to that no-growth level.
“Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible,” Markit’s Rob Dobson said. “This is also the case on the demand front, with growth of new orders and new export business both slowing in August.”

We already know that GDP growth in the Eurozone fell to 0.0% in Q2. However, the July and August data have suggests a failure to rebound in Q3.
“In one line: Alarming signs from the eurozone manufacturing sector,” said Pantheon Macroeconomics’ Claus Vistesen. “The downbeat economic news is intensifying.”

This post was published at GotGoldReport on September 01, 2014.

1/9/2014: Irish Manufacturing PMI: August 2014

Irish Manufacturing PMIs released by Markit and Investec today show very robust and accelerating growth in the sector in August. These are seasonally adjusted series, and given this is a generally slower month for activity, acceleration is more reflective of y/y trends than m/m. Nonetheless, the PMI hit 57.3 in August, up on already blistering 55.4 in July, marking the highest PMI reading since December 1999.
Per release: “…output and new orders each rose at sharper rates. This encouraged firms to up their rates of growth in input buying and employment. Meanwhile, input prices fell for the first time in over a year and firms lowered their output charges.”

This post was published at True Economics on September 1, 2014.

Spain Sells First-Ever 50 Year Bonds At 4% Coupon

Perhaps in order to celebrate its manufacturing PMI dropping from 53.9 to a below expectations 52.8, refuting the “growth story” promoted by its definitionally re-revised GDP (where the long overdue boost from hookers and blow is finally leading the country to new and improved Keynesian growth curves), moments ago Spain joined the likes of Canada, Caterpillar and Goldman and just issued, for the first time in its history, 50 Year bonds in a private placement. From Bloomberg:
SPAIN SELLS EU1B 50-YR BONDS SPAIN TREASURY SELLS FIRST-EVER 50-YR BONDS, COUPON 4%

This post was published at Zero Hedge on 09/01/2014.

Eurozone Manufacturing PMI at 13-Month Low, with Germany Worse than Expected, Italy and France in Contraction

The Markit Eurozone Manufacturing final data shows Eurozone Manufacturing PMI at 13-month low in August.
The rate of expansion in eurozone manufacturing production eased to its lowest during the current 14-month growth sequence in August, as companies faced slower increases in both total new orders and new export business. The final seasonally adjusted Markit Eurozone Manufacturing PMI posted 50.7 in August, down from 51.8 in July, its lowest reading since July last year. The headline PMI was also below its earlier flash estimate of 50.8. National PMI data signalled a broad easing in the manufacturing recoveries underwa y across much of the currency union. Although Ireland was a noticeable exception, with its PMI at the highest level since the end of 1999, rates of expansion slowed in Spain, the Netherlands and Germany.

This post was published at Global Economic Analysis on September 01, 2014.

Markets Set To Surge On Global Manufacturing PMI Bloodbath

If last week’s disappointing global economic data, that saw Brazil added to the list of countries returning to outright recession as Europe Hamletically debates whether to be or not to be in a triple-dip, was enough to push the S&P solidly above 2000, even if on a few hundreds ES contracts (traded almost exclusively between central banks), then the overnight massacre of global manufacturing PMIs – when not one but both Chinese PMIs missed spurring calls for “more easing” and pushing the SHCOMP up 0.83% to 2,235.5 – should see the S&P cross Goldman’s revised year end target of 2050 (up from 1900) sometime by Thursday (on another few hundreds ES contracts).
Some of the highlights, or rather lowlights: Dutch PMI 51.7, down from 53.5, Hungarian PMI 51.0, last 56.7; Spain PMI 52.8, Exp. 53.3, Last 53.9; Czech PMI 54.3, Exp. 55.5, Last 56.5; Swiss PMI: 52.9, Exp. 53.7, Last 56.5; Sweden PMI 51.0, Exp. 54.8, Last 55.1; Italy PMI 49.8, Exp. 51.0, Last 51.9 (back into contraction mode to go along the GDP decline and the record low inflation), French PMI 46.9, Last 46.5, Germany 51.4, Exp. 52.0, and Last 52.0 and finally the UK at 52.5, exp. 55.1, and last 54.8, was the lowest reading since June 2013.
Some more observations from Goldman: on Europe’s absolute manufacturing disaster:
The Euro area final manufacturing PMI printed at 50.7 in August, 0.1pt below the Flash and the consensus estimate (Flash, Cons: 50.8). This implies a 1.1pt contraction from the July print. The French component was revised up relative to the flash ( 0.4pt), while the German component was revised down (-0.6pt). The August figure in both Italy and Spain showed continued loss of momentum, with the manufacturing PMI easing 2.0pt in Italy and 1.0pt in Spain relative to the July print (against a consensus expectation of a smaller decline).
The Euro area aggregate Final manufacturing PMI printed at 50.7, 0.1pt below the August Flash owing to a considerable 0.6pt downward revision in Germany, outweighing a 0.4pt upward revision in France. The breakdown of the manufacturing PMI reflected the weaker headline print: New orders fell 1.4pt to 50.7 while stocks remained stable, thus implying a 1.3pt contraction in the forward-looking order-to-stocks ratio. Employment edged 0.6pt lower and remains relatively weak at 49.3. Output also declined by 1.7pt, now standing at 51.0.

This post was published at Zero Hedge on 09/01/2014.

Double Whammy China PMI Misses Spark Sell-Side Demands For More Stimulus

A record-breaking surge in monthly credit creation and a trillion Yuan of QE-lite was enough to provide a glimmer of hope into the tumbling Chinese economy for one or maybe two months but with the real estate market continuing to free-fall, it should be no surprise that China’s PMIs finally catch down to the erstwhile reality simmering under the surface in the ultimate centrally-planned economy. China’s official government PMI dropped from 30-month highs, missed expectations and the early month flash print, to less exuberant 51.1 reading (with Steel industry new orders totally collapsing) with both medium- and small-companies printing contractionary sub-50 levels. Then (after Japan’s PMI beat – of course it did as hard data crashes worst on record), HSBC China PMI also missed, printing a slightly expansionary 50.2 Showing, as BofA warns “the two PMIs both show that the current recovery is relatively weak and choppy…” and RBS adds “we expect the government to interpret such an outlook as challenging its growth target and to take more, and more significant, measures to support growth.”

As Goldman writes,
August official PMI tends to be biased on the upside. Since the data started in 2005, this is the second time it fell in August (first time was August 2012). The degree of seasonality probably has been reduced in recent years but may still exist. This suggests underlying slowdown might be more meaningful, which is consistent with the weak reading of the HSBC PMI.

This post was published at Zero Hedge on 08/31/2014 –.

Chicago PMI Explodes To Biggest Beat In 10 Months, Employment Drops Further

Having collapsed to 13-month lows in July – with the biggest miss on record – Chicago’s PMI rebounded the way only US macro ‘soft-survey’ data can. After plunging from 62.6 in June to 52.6 in July, August printed a magnificent 64.3 – its highest since May – showing up this data’s noisy nature as entirely useless. From worst miss on record (and 13-month lows) to best beat in 10 months and 5 month highs… brilliant. It would seem ISM has entirely given up on any credibility at all… However, given this exuberance (in production and new orders), the employment sub-index dropped yet again.
“we’re gonna need a better seasonal adjustment”

This post was published at Zero Hedge on 08/29/2014.

China Industrial Commodities Collapse As Sentiment Tumbles To 15-Month Lows

Unlike the QE-lite-driven exuberance in Chinese stocks of the last few weeks (which faded dramatically overnight), China’s industrial commodities (with near-record inventories) and seeing prices collapse. This may shock some who espy PMIs and government-created trade data and proclaim, China is fixed. In fact, as JPMorgan’s China Sentiment Index (JSI)shows, things are anything but bright as it fell to the lowest since June last year (at 48.3 in August). Sales and margins are tumbling – despite supposedly lower input costs. Lastly, those focused on spot Yuan movements (strength in recent weeks) have suggested this also confirms China strength – inflows – but looking out 12-months shows the market is expecting a dramatic devaluation from current levels in the Chinese currency is coming.

This post was published at Zero Hedge on 08/26/2014.

Doing The Math

Grant Williams is a strategy adviser for the hedge fund, Vulpes Investment Management in Singapore, as well as the blogger behind the popular Things That Make You Go Hmmm….  In the following video, Williams reviews the disconnects between the economic realities that exist in today’s world and the rosy pictures painted by governments, central banks and the main stream media.

  • Williams’ problem #1: The disconnect between fundamentals and equity prices.
  • Williams’ problem #2: The paradox behind China’s mysterious GDP growth during a time of reduced manufacturing, shrinking demand for raw materials and declining imports/exports
  • Williams’ problem #3: How is France able to sell its sovereign bonds at such low interest rates when all indications of its own economy are performing like those of the European periphery?
  • Williams’ final problem: The difference between the “Gold Price” and “The Price of Gold”

In the end, the laws of mathematics cannot be subverted by governments or central banks.  Central banks’ zero percent interest rate policies are damaging:

  • In the short term through the confiscation of savings and the forcing into riskier investments in the search for yield
  • In the long term by suppressing market volatility, which must be reconciled at some point


Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere.
– Bertrand Russell