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EconGrapher (< 20)

July 2010

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Top 5 Graphs of the week: US GDP, Korea GDP, Japan, NZ

July 30, 2010 – Comments (0)

This week we look at the GDP numbers for Q2 from the US and South Korea. Then we look at the US consumer confidence and Case Shiller housing market data, and finish up with a look at inflation and unemployment in Japan, and New Zealand monetary policy.

1. US GDP
The US economy grew 2.4% SAAR in the second quarter (0.6% in normal terms), slightly below consensus 2.5%, and slower than the revised 3.7% in Q1. On an annual basis GDP is up 3.2% vs 2.4% in Q1. The main drivers of growth were residential investment, investment in equipment & software, and inventories; the main detractor was (surprise, surprise) a shrinking of net exports. So overall not a bad result, but probably as good as it gets for now, especially given where much of the US data points are at, there are several indicators (as well as underlying fundamentals e.g. weak housing market) that will make the second half a lot harder. So rumors about the potential for more easing both on the fiscal and monetary policy fronts may end up validated in the second half of this year... watch this space.  [more]

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RBNZ raises cash rate to 3.00%, signals go-slow

July 29, 2010 – Comments (0)

The RBNZ (Reserve Bank of New Zealand) increased the official cash rate at its July meeting 25bps to 3.00%, and signaled that further rate rises will likely be on the go-slow. It noted that policy normalization may be more moderate going forward, but of course with the caveat of monitoring the economic environment and financial market developments:

  Full Analysis: http://www.econgrapher.com/29jul-rbnz.html  [more]

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Economic Calendar - 26 July 2010

July 25, 2010 – Comments (0)

Here's the Economic Calendar for the week commencing the 26th of July 2010. This week the main event is Q2 GDP for the US, there's also the monthly GDP figure from Canada. The US also has the S&P Case-Shiller house price index, and consumer confidence. Elsewhere there's the RBNZ in New Zealand, which is expected to hike rates again. There's also a lot of key data out of Japan such as the jobless rate, retail sales, and industrial production; the Euro Zone also releases CPI and unemployment data.  [more]

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Top 5 Graphs of the Week: UK GDP, Monetary Policy Reviews, US Housing Market

July 24, 2010 – Comments (0)

This week we look at UK GDP, Canada monetary policy and inflation, review some of the monetary policy decisions of the week just gone, and then assess some of the housing data on the US real estate market.

1. UK GDP
The UK surprised in the second quarter of 2010, recording growth of 1.1% q/q vs expectations of a 0.6% increase, and accelerating since the previous quarters' much milder growth. However the growth spurt is widely expected to be short lived amid requisite government cuts in public spending. On an annual basis the UK economy grew 1.6%. But as with most advanced economies the bounce-back in late 2009 and early 2010 are likely to taper off into the 2nd half of 2010, potentially realising fears of a double dip recession, or at least proving true predictions of a stop-start, subdued recovery.  [more]

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Economic Calendar: Bank of Canada, UK GDP, US Housing Market

July 18, 2010 – Comments (0)

Here's the Economic Calendar for the week commencing the 19th of July 2010. This week there's multiple data points out on the US housing market, with June housing starts, building permits, existing home sales, and the house price index for May. There's also the first developed market GDP figures out on Friday from the UK, which also has retail sales out. On the monetary policy front the Bank of Canada is looking set to raise rates again. There's also PMI and confidence numbers due from Australia, New Zealand, and Europe.  [more]

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Top 5 Graphs of the Week: the Juggernauts - China and US...

July 17, 2010 – Comments (1) | RELATED TICKERS: CNY , DIA , QQQ

This week we look at some of the major data points out of the two economic juggernauts; China and the US. In particular we focus on China GDP, industrial production, and CPI for both China and the US, and the current path of the US trade balance.

1. China GDP
China, as expected showed signs of slowing down in the June quarter with year on year growth slipping to 10.3% from a blistering 11.9% in the March quarter this year. Year to date over year to date the economy grew 11.1%. The authorities appear to be reasonably successful so far at orchestrating a slowdown in order to prevent possible overheating. The September quarter is also likely to show a slower growth figure as the base period rises, and as industrial production continues to slow and global activity remains relatively subdued, however trade continues to recover.

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Economic Calendar - 12 July 2010

July 11, 2010 – Comments (0)

Here's the Economic Calendar for the week commencing the 12th of July 2010. This week there's inflation figures due out from China, US, UK, EU, and New Zealand. China is also set to release its Q2 GDP figures this week, as well as fixed asset investment, retail sales, PPI, and industrial production. The EU, Japan, and US are also set to release their latest industrial production figures this week. There's also more confidence numbers from the US, Australia, Japan, and the Euro Zone.  [more]

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China International Trade Review - July 2010

July 10, 2010 – Comments (0) | RELATED TICKERS: CNY , CYB

China released its monthly trade figures for the month of June; reporting a trade surplus of $20.2 billion (vs consensus estimates of $15.6 billion), much improved on figures earlier this year, and a surplus of $8.2 billion for the same period of 2009. The outlook is likely for continued trade surpluses for China this year (certainly, it's likely we've seen the bottom level of the rolling annual trade balance), unless global demand and trade volumes slip again; or if the Yuan significantly appreciates.  [more]

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Top 5 Graphs of the Week: a global perspective on the recovery

July 09, 2010 – Comments (0)

This week we look at the languishing US consumer credit figures, and the slowing non-manufacturing PMI, then examine the continued string of strong jobs growth in Australia, followed by a wrap-up of some of the key monetary policy decisions this week, and a review of the IMF World Economic Outlook update.

1. US Consumer Credit
Unsurprisingly, given the way much of the US data is pointing lately, the consumer credit figures dropped-off further in May, as deleveraging continued and consumer appetites for new lending remained cool. Consumer credit fell -$9.1 billion in May, vs expected -$2.0 billion, and a revised (down from positive $1 billion) -$14.9 billion. But in some ways a negative is a positive, sure in the short term it's not great, but it's a process that needs to continue, the US consumer needs to continue recovering; pay down debt after excessive borrowing, re-build balance sheets, and generally live within their means (which will be made even more difficult by potentially more constrained means in which to live!).
chart
2. US Non-manufacturing PMI
Sticking with the theme of growing pessimism in the US (have you noticed all the articles being churned out on the next depression, the double dip, etc etc?) - whether it is warranted or not... The ISM non-manufacturing PMI or NMI, disappointed as well; falling to 53.9 from 55.4 (consensus 55). The employment sub-index fell back below 50 to 49.7, new orders slipped again to 54.4, and prices (similar to the manufacturing index) fell -6.8 to 53.8 - signaling a potential mismatch between supply and demand, and pointing to further slowing of inflation in the short term. The first half of this year has been easy for the US, the second half will be a little bit more difficult, and it's likely the W-shaped recovery will start seem more and more likely. But as noted in the previous chart; this has to be a structural recovery - not a cyclical one, and it's going to be hard.
chart
3. Australian employment
Australia saw further jobs growth in June, adding 45.9k jobs vs an expected 15k, and building on the 22.8 added in May. This brings the total to 185k YTD, and 105k for the June quarter (-22.8k in Q2 2009). So overall a good outcome for the Australian economy, the strong labour market will likely underpin the economy as some of the stimulus measures start to run out (e.g. monetary policy tightening). It will also increase the case for further hikes of the interest rate as employment growth sees increasing rates of capacity utilisation. But as noted by the RBA in its recent monetary policy announcement, the Australian economy is basically fine at the moment - it's the global economy that will make or break the recovery from here.
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4. Monetary Policy review
The week saw a few non-events on the monetary policy front with the BOE (Bank of England), ECB (European Central Bank), and RBA (Reserve Bank of Australia) holding each of their respective policy rates steady - as expected. But there was a couple of interesting moves in Asia; BNM (Bank Negara Malaysia) increased rates 25bps again to 2.75% as growth continued to surge. Likewise the BOK (Bank of Korea) increased rates for the first time in in 2 years, lifting the rate 25bps to 2.25%, having held at 2% for about 17 months. The actions are consistent with the view of a 3-tiered economic recovery; the fast growing emerging markets, the selected developed economies, and the languishing advanced economies.
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5. IMF World Economic Outlook
Another key update out this week was the IMF's periodic update to its World Economic Outlook. The IMF updated its global growth forecasts, projecting the global economy to growth 4.5% in 2010, and 4.25% in 2011; representing an increase of about 0.50% in 2010 - reflecting stronger activity in the first half of the year. They rightly pointed out however that risks to the recovery "have risen sharply amid renewed financial turbulence", and that one of the key risks to the economic recovery - and to a more sustainable recovery is policy reform; the growth forecasts "hinge on implementation of policies to rebuild confidence and stability".
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Summary

To provide a brief summary; US consumer confidence disappointed in May, adding to a string of disappointing US data, and adding to the case of further slowing. The non-manufacturing PMI did nothing to improve the outlook. And as noted the US economic recovery will need to be structural (because there just isn't the capacity for a cyclical recovery at the moment), so there will be a recovery - but it's going to be hard.

Meanwhile, Australia is cruising along (one of the tier-2 economies), adding jobs left right and center, and possibly adding to the case for a further increase or two of the interest rate. But as the RBA noted, while the economic recovery in Australia is relatively entrenched, it is very much exposed to the course of the global economy.

On the monetary policy front, the developed economies held as expected, but the faster growing Asian economies hiked rates, as the risks shifted to containing inflation over stimulating growth. And on that note, the IMF slightly lifted its global growth forecasts for 2010 in its update to the world economic outlook, but noted significant risks to the recovery.

Sources
1. US Federal Reserve www.federalreserve.gov
2. US Institute for Supply Management www.ism.ws
3. Australian Bureau of Statistics www.abs.gov.au
4. Bank of England www.bankofengland.co.uk ECB www.ecb.int Reserve Bank of Australia www.rba.gov.au Bank Negara Malaysia www.bnm.gov.my Bank of Korea www.bok.or.kr
5. International Monetary Fund www.imf.org

Article Source: http://www.econgrapher.com/top5graphs10jul.html  [more]

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RBA - holds at 4.5% - waits and watches the world

July 06, 2010 – Comments (1)

The RBA (Reserve Bank of Australia) today left interest rates unchanged at 4.50% for a second time as it continued to wait and see. Indeed it is probably the correct move given that it has tightened reasonably aggressively, and probably finds itself near neutral at present. The next move will be dependent on whether the Australian economy strengthens further (or indeed, if the global economic and financial system goes into relapse).  [more]

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Top 5 Graphs - further signs that the recovery aint gunna be easy

July 04, 2010 – Comments (0)

In this edition we look at the PMI numbers for China, and the US, and review the results of the quarterly Tankan in Japan. We then look more closely at some of the other data points out of the US last week; the Case-Shiller house price index, consumer confidence, and of course nonfarm payrolls.  [more]

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Economic Calenadar - Week starting 5th July 2010

July 04, 2010 – Comments (0)

Here's the Economic Calendar for the week commencing the 5th of July 2010. This week there's a couple more PMI figures out, following the disappointing results from China and the US last week. There's also interest rate decisions due from Australia and Europe, with no changes expected. Other than that the other notables are employment figures from Australia and Canada, and industrial production metrics from UK, Germany, and consumer credit stats from the US.  [more]

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US PMI - is the double dip recession approaching?

July 01, 2010 – Comments (1) | RELATED TICKERS: DIA , QQQ

The US manufacturing PMI came in well under consensus at 56.2 vs an expected 59 even, and down sharply from 59.7 in May. The drop was notably in several key areas e.g. new orders down -7.2 to to 58.5, production down -5.2 to 61.4, and exports down -6 to 56. Though the index is still in expansionary territory the drop is possibly cause for concern.  [more]

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China Report: PMI Numbers Indicate Possible Slowdown

July 01, 2010 – Comments (0) | RELATED TICKERS: CNY , CYB

China had its PMI numbers out today, with the official CFLP index registering at 52.1, down both against consensus estimates (Reuters) 53.1, and the May figure of 53.9. The HSBC index (which surveys 400 businesses, and is weighted to smaller/privately owned businesses than the CFLP index) confirmed the direction; down to 50.4 vs 52.7 in May.  [more]

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