16 September 2014
# RBA Meeting Minutes
# China Foreign Direct Investment
# BOJ Gov. Kuroda speaks
# UK Inflation
# German ZEW Economic Sentiment
# European stocks spent the session in the red, albeit modestly, dragged down by disappointing Chinese economic data released over the weekend. The EuroStoxx600 was down as much as 0.4% before ending the day little changed, down just 0.10%. U.S. stocks were particularly mixed with the Dow up, the S&P500 near flat and the Nasdaq down heavily. The suggestion here is the market is focussing on the Alibaba IPO on Friday, billed as the biggest IPO in history, with sector specific pre-positioning going on. The Dow ended up +0.21%, the S&P500 down 0.07% and the Nasdaq off a nasty 1.3%.
# Mixed data from the U.S. with the Fed’s Empire State Manufacturing survey coming in at an eye watering 27.5 from 14.7, business conditions rising at the fastest pace in 5 years. New orders rose but the employment sub-index slowed. However the euphoria was cut short by weaker than expected Industrial Production. Not only did the headline figure fall but prior revisions were also lowered. The production of U.S. factories, mines and utilities fell 0.10% in August, the first drop since January. The report surprised analysts, who expected a 0.3% increase. The August decline was accompanied by a correction in the Fed's figures for July, showing an increase of 0.2% instead of the 0.4% reported earlier.
# What is it with the likes of the IMF and OECD? As we have constantly opined in our previous work, these guys are so far behind the pace. Overnight the OECD revised down growth expectations for the Eurozone and the US, amongst others. It now sees 0.8% growth from the Eurozone from a previous 1.2% forecast and the U.S. economy to expand 2.1% this year, having forecast growth of 2.6% in May. It reserved its biggest recalibration for Italy, and now expects that nation's economy to contract by 0.4% in 2014, having estimated it would grow by 0.5% in May. "The global recovery from the crisis has been inadequate in several ways," the OECD said. "Economic slack has persisted, potential growth has slowed, and inequality has risen. Meanwhile, external imbalances and threats to financial stability have remained." Oh really….
# US 10-year yields drifted down from 2.61% to 2.58% whilst the USD is commensurately lower by about 0.2%.
# British PM Cameron says a Scottish exit from UK would be forever, tells Scots head & heart & soul we want you to stay.
# Alibaba plans to increase the size of its U.S. initial public offering because of "overwhelming" demand for the deal, people familiar with the deal said on Monday. The Chinese e-commerce company launched the IPO last week and had enough investor demand to cover the entire deal within two days. Alibaba could set a new record for the world's biggest IPO if underwriters exercise an option to sell additional shares to meet demand, pushing it as high as $24.3 billion.
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