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Thursday, August 21

21st Aug - PMIs mixed, Jackson Hole ahead

Previously on MoreLiver’s:

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Nobel economists say policy blunders pushing Europe into depressionThe Telegraph
German Chancellor Angela Merkel defends eurozone and says it is hard to manage a currency for 18 states

Draghi Gets Weaker Euro With Economy Needing It MostBB
European investors facing record-low interest rates are sending the most money overseas in six years, an ECB report showed this week. That has helped push the euro to an almost one-year low versus the dollar

The OMT programme was justified but the fiscal union question remainsBruegel
The monetary union, even with the OMT programme, is incomplete and the issue of fiscal union remains unresolved. To permanently stabilise monetary union, the EU will need to agree on a small fiscal union.

How to jumpstart the Eurozone
The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation.

Italy’s Downward SpiralProject Syndicate
Hans-Werner Sinn: Italy is now in a triple-dip recession. But it didn’t get there by itself: Though the economy’s long slide reflects Italian leaders’ failure to confront the country's loss of competitiveness, it is a failure that is widely shared in Europe.

Euro area deflation monitorDanske Bank
Inflation declined to a new cycle low of 0.4% in July and, excluding taxes, was only 0.2%...We expect a further decline in inflation to 0.3% in August (released 29 August), which could result in new downward movements in inflation expectations…Later this year, we forecast an increase to 0.7% partly as higher global food prices will increase food consumer prices.

Italy to delay budget update to accommodate new EU rulesReuters
Italy will release its regular autumn budget in October rather than September to allow it to use the European Union's most up-to-date accounting methods.

Worse than the 1930s: Europe’s recession is really a depressionWaPo
It's a policy-induced disaster. Too much fiscal austerity and too little monetary stimulus have crippled growth like almost never before. Europe is doing worse than Japan during its "lost decade," worse than the sterling bloc during the Great Depression, and barely better than the gold bloc then

Weaker German Industry Needn’t Be A Disaster WSJ
The more German domestic demand picks up, the more likely it is that the economy will draw in exports from the rest of the euro zone and thus end up supporting growth across the single currency region. That’s the theory anyway.

UK retail sales growth falls to eight-month low, public finances weak – Reuters
August 2014: Flash Consumer Confidence Indicator – Europa

Fed’s George: Easy-Money Policies Should End Sooner Rather Than LaterWSJ
Fed’s Williams Still Sees Rate Hikes Some Time Next YearWSJ
Despite Retreat, Fed to Keep Bond Buys in Policy ToolkitWSJ

  FOMC MINUTES (more in yesterday’s post)
Cherry picking for hawks and doves – TradingFloor
Goldman Post-Mortem: Minutes Have More Hawkish Tone – ZH
Hawkish Fed Sends USD, Bond Yields Soaring; Stocks Dump & Pump – ZH
The Fed’s July Minutes show it, predictably, inching towards the exit – WaPo

New Fed Exit Strategy Emerges and Foreign Banks Big WinnersWSJ
Fed officials haven’t decided when to raise short-term interest rates, but they are closer to finishing a blueprint for how they’ll do it.

Jackson Hole: 'Tremendous' Downside Risks If Yellen Doesn't Go Full-DovishZH
Citi’s Englander: The consensus expectation is overwhelming that Fed Chair Yellen will deliver a dovish message at Jackson Hole….Our question is whether Yellen can be more dovish than what is now priced in, not whether she will be dovish on the Richter scale of dovishness.

The Legend of Jackson HoleFT
Jackson Hole’s reputation owes much to the speeches Ben Bernanke gave from 2007 to 2012… But much of this was an accident of timing rather than a deliberate plan to use Jackson Hole to send a message. It happened each year that the economy deteriorated during the spring and summer, leading the Fed to launch a new round of stimulus in the autumn

Not One Analyst Thinks Yellen Will Say Anything Remotely HawkishZH

How Jackson Hole became such an important economic talking shopThe Economist
Wall Street Cut From Guest List for Jackson Hole Fed MeetingBB

U.S. existing home sales rise at fastest pace in 10 months – Reuters
Foreclosed-Property Sales Fall to Lowest Levels Since 2008 – WSJ
Existing Home Sales 5.15 million SAAR, Inventory up 5.8% YoY – Calculated Risk

U.S. leading indicator increases solidly in July – Reuters
Philly Fed factory activity accelerates in August – Reuters
Jobless Claims in U.S. Declined More Than Forecast Last Week – BB
U.S. jobless claims fall, bolster labor market outlook – Reuters

China’s Fire Next TimeProject Syndicate
The Chinese economy has been stabilizing in recent months, easing fears of a financial crisis. But, with the economy's fundamental problems – particularly a sharp rise in corporate debt – remaining unresolved, the respite may be brief.

News In Charts: Is the PBOC Now Pulling On A String?Alpha Now
The risk of a hard landing in China has been creeping up over the past few years. Recent data, notably on total social financing and on house prices, suggest that process has accelerated. Without swift, effective policy action, our hard landing scenario could quickly become our central case – with profound implications for China and the rest of the world.

Daily Central BanksWSJ
Douglas’s Take: BOE Dissents Mean Higher Risk of Early Rate Rise * Fed Minutes: Rate-Hike Debate Heating Up * New Fed Exit Strategy Emerges and Foreign Banks Are Big Winners * Brazil Announces New Measures To Improve Credit Transactions * China Economy Flashes Red Again

Daily MacroWSJ
After all the nervousness they exhibited in the first week of August, investors have adopted the opposite sentiment since then, with stocks again seemingly impervious to negative news. European equities are higher this morning, for example, despite a significant deceleration in HSBC’s China “flash” manufacturing PMI and in a mixed bag of results from the equivalent data out of the euro zone. The main reason for the improved mood is an easing in geopolitical tensions but it also seems to suggest that with central banks still continuing to err on the side of stimulus, there’s simply too much money on the sidelines. It can’t sit idle for too long.

EMEA Weekly, Week 35Danske Bank
CEE stuck between geopolitics and deflation fears

Japan Manufacturing PMI – Markit
China Manufacturing PMI – Markit
Economists React: China Set for a Summer Slump After All – WSJ
China HSBC flash PMI at 3 month low – TradingFloor
China PMIs appear to have peaked, possible stimulus limits downside – Danske Bank
Japanese PMI Surges To 5-Month High; China PMI Tumbles, Misses By Most On Record – ZH
Japan manufacturers' mood, output rise, outlook dims – Reuters
China economy fears deepen as August HSBC flash PMI at three-month low – Reuters
Japan August flash PMI shows manufacturing accelerated as orders grow – Reuters
China Manufacturing Gauge Drops as Growth Pickup Stalls – BB

France Composite PMI – Markit
Germany Composite PMI – Markit
Eurozone Composite PMI – Markit
Euro PMIs continue to indicate solid domestic demand – Danske Bank
French business activity stagnant in August – Reuters
Euro zone business growth slows in July, prices fall – Reuters
Euro Area Shows Signs of Weakening as Surveys Miss Forecasts – BB
Global PMIs point to punch-drunk and confused economyTradingFloor
Europe Is Failing – BI

US Manufacturing PMI Surges To Over 4-Year High, Biggest Beat On Record – ZH
U.S. factory activity expands at fastest pace in over four years in AugReuters

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