24 January 2013

Posted by Graham Parlane on 24 January 2013

Good morning

Overnight

# Global equity markets continue to grind out mild gains (classic behaviour of bull markets? - bear markets tend to be very volatile, its proven!) despite the IMF once again lowering global growth forecasts. The EuroStoxx600 rose 0.19% and the S&P500 is up the same amount (Dow making bigger gains up 0.60%) at time of writing, advancing for the 6^th day in a row.

# The IMF marginally revised its global growth forecast for 2013 down to 3.5% from 3.6%, whilst looking for a rebound to 4.1% in 2014. It said the world economy grew 3.2 per cent last year. They suggest an unexpectedly stubborn Eurozone recession and weakness in Japan will weigh on global economic growth this year before a rebound in 2014 that should deliver the fastest expansion since 2010. The IMF said activity in advanced economies would likely remain weak this year with growth of just 1.4 %

# A solid U.S Q4 earnings season appears upon us with 20% of the S&P500 companies having now reported, positive earnings surprise sits at 6.60%.

# The building theme of 'currency wars', or at least 'competitive devaluations' once again reared its head with the release of the BOE's MPC minutes. The central bank said that they were concerned that "the sterling real exchange rate might be above the level compatible with the necessary rebalancing of the economy". Long-time clients will be familiar with my expectation that the USD mega weakening trend will not end until the whole world is wailing that the U.S. have gone too far with their soft USD giving them too much of an advantage at the expense of the rest of the world. Brace yourself for much more of this rhetoric.

# UK unemployment eased from 7.8% to 7.7% in November

# The Bank of Canada left rates on hold but returned to previous guidance from 6 months ago saying "over time some modest withdrawal of monetary policy stimulus will likely be required". Like the RBNZ they clearly expect that the next move will be to hike.

# NZD/AUD consolidated yesterday's gains after a very benign Australian inflation report. Certainly inflation is no impediment to cutting rates for the RBA if they think the economy warrants it (which I expect it will in due course as the leading indicator 'jobs adds' have declined for 8 straight months - down 18% over that period, suggesting trouble ahead for the labour market).

# Gold declined moderately as the U.S. House of Representatives voted to temporarily suspend the nation's borrowing limit, curbing demand for the precious metal as a haven asset. Further, India raised import duties on gold and platinum to 6 % from 4 % which is expected to soften demand from the large Indian jewellery sector.

# Crude Oil declined nearly 2% from 4 month highs, falling from US$97 to $95.

Ahead ( a good look at global manufacturing over the next 24 hours)

# Business NZ Manufacturing Index

# HSBC China Flash Manufacturing Index

# NZ Credit Card Spending

# Eurozone Flash Manufacturing PMI's

# U.S Flash Manufacturing PMI

Regards G.

BBY (NZ) Limited, a specialist advisor in Futures - FX - CFD - Options - Shares - Gold - Silver - Commodities

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