Rational Capitalist Speculator

Apr 08

Europe’s Recovery Diverges as Italy Jobless at Record -

Markit France Manufacturing PMI -

Reported Apr 1st:

Suggests further strength ahead over the immediate term. Firms still are waiting to see if the recovery has legs, caution reflected in only marginal increases in employment.  Nonetheless it’s a step in the right direction.


In other news, Italian export orders seem to be rising smartly as per the country’s Markit/ADACI PMI indicator.

Markit Spain Manufacturing PMI -

Reported Apr 1, 2014

New orders rose as well as output.  Manufacturing expanded at its quickest pace since 2010.  Europe’s recovery continues.

Apr 07

U.S. Treasury says it is looking closely at weaker Chinese Yuan. -

Yellen Assures Markets on Interest Rates -

I do like the personal touch she brings.  Makes me think that they have some idea what the regular person is going through.  It ain’t fun, that’s for damn sure.

The Euro Zone Economy Is Feeling Frost In The Spring -

Eurozone still faces a s*&^load of problems, but at least we are continuing to see signs of firming growth. Furthermore, periphery yields just keep plunging and is a testament to investors’ confidence that the project will not fall apart.

Japan Current Account Rebounds to First Surplus in 5 Months -

Japan to Speed Up Spending as Consumers Flash Warning: Economy -

For all intents and purposes this report is a stake in the heart of Abenomics.  Stimulus will need to be deployed to salvage economic growth. Stimulus, both fiscal and monetary, are on the horizon.  What makes the situation more alarming is that this plunge (by the most in more than 2 years mind you) is occurring just in time for the sales tax hike. Where….

Nearly 70% of Japan household to cut spending post-tax hike: BOJ - (The Star Online)

- - - - - - - - - - - - -

Events continue to occur inline with my Thesis bit: “Japan: Are the clouds parting, or is it The Calm Before the Storm?”

Oklahoma Swamped by Surge in Earthquakes Near Fracking -

There have been more earthquakes strong enough to be felt in Oklahoma this year than in all of 2013, overwhelming state officials who are trying to determine if the temblors are linked to oil and natural gas production.

The state on April 6 experienced its 109th earthquake of a magnitude 3 or higher, matching the total for all of 2013, according to Austin Holland, a research seismologist with the Oklahoma Geological Survey. More quakes followed, including a magnitude 4 near Langston about 40 miles (64 kilometers) north of Oklahoma City.

A surge in U.S. oil and gas production by fracturing, or fracking, in which drillers use a mix of water and chemicals to coax liquids from rock formations, has generated large volumes of wastewater. As fracking expanded to more fields, reports have become more frequent from Texas to Ohio of earthquakes linked to wells that drillers use to pump wastewater underground.

“We certainly likely have cases of earthquakes being caused by different oil and gas activity,” Holland said in an interview. “Evaluating those carefully can take significant amounts of time, especially when we’re swamped.”

Within the past year, earthquakes thought to be tied to wastewater disposal wells were recorded in Azle, Texas; Jones, Oklahoma; and northeastern Ohio, according to Art McGarr, a geophysicist with the U.S. Geological Survey in Menlo Park, California.

Pumping fracking wastewater underground has been linked to a sixfold jump in quakes in the central U.S. from 2000 to 2011, according to the science agency, part of the Interior Department. — (Bloomberg)

UPDATE 1-Euro zone private sector loans contract further in Feb -ECB -

Despite continued contraction in loan growth, a look at the YoY chart shows a carving of a bottom.  Things are getting better.

Analysis: France Consumer Confidence Rises To July 2012 High | MNI -

March 27, 2014

PARIS (MNI) - French consumer confidence rose to its highest level since July 2012 in March as households were more optimistic about their future financial situations and less worried about unemployment, the national statistics institute Insee said Thursday.

Insee’s consumer climate indicator rose to 88 in March from 85 in February, above the MNI survey median of 85. The index is up from a low of 80 in May and June but remains below its long-term average of 100.

Confidence rose in March as indexes measuring sentiment on future family finances, the ability to save, the outlook for quality of life all turned more positive.- (MNI Deutche Borse)

Weak corporate earnings could put pressure on stock prices -

The stock market is hitting new highs — just as corporate profit growth is slowing to a crawl.

Rising earnings helped drive share prices to a series of record peaks in the last few years. But that dynamic could be tested this week when companies such as Alcoa Inc. and JPMorgan Chase & Co. begin releasing first-quarter results.

Quarterly profits are expected to drop for just the second time in four years.

The decline would be relatively small: 1.2% for companies in the Standard & Poor’s 500 index, according to FactSet Research Systems. Wall Street hopes that it will be nothing more than a blip caused by frigid temperatures that gripped the country in January and February.

Still, that’s a big change from the 4.3% jump that analysts expected at the start of the year.

Earnings will get close scrutiny given that the bull market is in its sixth year, which is fairly long by historic standards. A longer or more pronounced bout of weakness could put pressure on stock prices whose valuations are a bit stretched.

Of the 111 companies that have made first-quarter pre-announcements, 93, or 84%, have warned that results will disappoint, according to FactSet.

That far exceeds the 65% average over the last five years. And it’s just shy of the record 95 warnings in the fourth quarter of last year.


Italian Consumer confidence -

Weidmann's comments put the ECB a step closer to a stimulative policy -

Note however that the ECB decided not to take any action in the latest policy meeting on Apr 3, BUT it did say it remained vigilant on “lowflation” persisting.


Europe shares close higher as Draghi strikes a dovish tone - (CNBC)


European stock markets pared earlier losses to close higher on Thursday, as European Central Bank (ECB) President Mario Draghi used “ultra-dovish talk” in defending the bank’s decision to keep monetary policy unchanged.

Shares recovered their morning losses as Draghi stated that the central bank was committed to using unconventional measures if necessary, to ensure low inflation does not take hold for too long. He confirmed that all measures - including quantitative easing - were discussed by the Governing Council.

The lack of action by the ECB came despite figures this week showing inflation had slipped to 0.5 percent in the euro zone.

While Ishaq Siddiqi, a market strategist at ETX Capital, said: “Super Mario again proves he is a master wordsmith by shaking up financial markets with rhetoric about talk at the ECB over the possibilities of employing unconventional easing measures including QE.”

"Draghi is relying on his words as a form of action," he added.

The term for the last part is called “Moral suasion” or “jawboning.”

European officials line up against French deficit reprieve -