China Beige Book - Business Insider
Official Chinese economic data have a reputation for being unreliable.
According to the Wall Street Journal’s Real Time Economics blog, a new survey is using the same methods as the Federal Reserve to get a more accurate view of the conditions on the ground.
It’s called “The China Beige Book”… — Business Insider
Starting the Week: Jul. 23-27, 2012
- Taiwanese Industrial Production
- Chicago Fed National Activity Index
July 24
- French Business Survey and PMIs (Manufacturing/Services)
- German PMIs (Manufacturing/Services) and Ifo Biz Climate Survey
- Canadian Headline and Core-Retail Sales
- Redbook and Goldman ICSC surveys (U.S.)
- Richmond Manufacturing Index (U.S.)
- U.S. Home Prices
- Australian CPI
July 25
- U.S. New Home Sales
- Thai Interest Rate Decision
- Italian Consumer Confidence
- U.K. GDP and Industrial Orders
- Mexican Economic Activity
- South Korean GDP
July 26
- Singaporean Industrial Production
- German GfK Consumer Climate and CPI
- Italian Retail Sales
- European Private Loans
- Brazilian Unemployment Rate
- South Korean Current Account
- Japanese Retail Sales
- U.S. Durable Goods Orders and Kansas City Fed regional manufacturing survey
July 27
- Thai Industrial Production
- French Consumer Confidence
- Spanish Unemployment Rate
- Italian Business Confidence
- U.S. Q2 GDP (Advance)
- UMich Consumer Sentiment
- Resistance: 1,372-1,380
- Support: 1,358-1,360 (100-day MA and strong support line)
- Support: 1,334-1,341 (Upward trend line from June lows and 50-day MA)
- Support: 1,315 (200-day MA)
- On the bullish end, market (S&P 500) broke out of triangle (daily view) to the upside; however, it wasn’t able to hold and fell back into the pattern on higher volume and is a bearish event.
General Notes:
- Bearish: Unsustainable situation in Europe — Spanish and Italian yields.
- Bearish: Hard sell off in copper at resistance.
- Bullish Housing data — will it be enough to counteract slowing manufacturing and job market?
- Bullish: China stabilization — wildcard in the outlook. China is a blackbox. Rumblings from leaders are not very optimistic.
from 
S&P Says Rising Euro Recession Risk Requires Government Action - Bloomberg
The increasing risk of a euro area recession heightens the need for the region’s governments to move quickly to implement last week’s agreement to unify regional bank regulation and give support to Spanish banks, Standard & Poor’s chief European economist said. — (Bloomberg)
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This confirms my belief: “There’s a dangerously high probability that Europe’s announcement has come too late and that European officials will find themselves obligated to take very uncomfortable and hurried steps towards fiscal union in the months to come.” (Executive Summary: RCS Investments Outlook (Mid-2012))
The end game seems to be in view. Europe must make the decision now to unite or fall apart. Recent signals from infighting authorities makes me wonder whether they can.
RCS Investments Macro Outlook (Mid-2012)
Hello there,
In my updated macro outlook, I have compiled all my Weekly Bull/Bear Recaps from the past 6 months, together with my latest research and interpretation of current events. In it, I cover the most important macro trends to watch over the coming year as well as their possible implications. I am encouraged by the fact that the majority of my past forecasts have been on target. I look to publish my market outlook by the end of the week.
I hope my work will prove beneficial to your interpretation of current events.
Thank you for your support
Romney Aide Calls China Clash Defining Economic Element - Bloomberg
This confirms my view, expressed below . The upcoming elections will signal a big macro event.
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“The clouds of protectionism are gathering and could pose a large negative risk for global trade in the quarters ahead. Mitt Romney has bluntly stated that China is a currency manipulator. Should he win the presidential election this year, the probability of protectionism would increase markedly. As I mentioned in a prior article more than a year ago (near the bottom of the 3rd paragraph), U.S. politicians need to practice stern patience. It is truly a tightrope they need to walk. China is taking the necessary steps. Give them time. Losing patience and enacting protectionist policy is the last thing the global economy needs right now, contrary to my own protectionist talk a few months ago.”
” I sense that the tide is slowly turning against continued globalization. While Obama has exercised enormous patience for China’s economic restructuring, political will is clearly decreasing. Mitt Romney looks to be the front-runner for the Republican Party in the presidential elections. It is clear that he has no misgivings on China being a currency manipulator. If the U.S. economy were to go into a double-dip recession, Obama’s chances of reelection would decrease markedly, while Romney’s would increase. The probability of this political outcome can be seen in real time here,here and here (notice the inverse correlation between the final two charts). Should Romney become the Republican front-runner, a double-dip recession could clear the way for his election and dangerously increase the risk of protectionism. Note that this progression of events would increase in likelihood if the US economy fell into a double dip recession.”
—RCS Investments Macro Outlook Begn-2012: January 16, 2012
(via RCS Investments Outlook (Begn-2012) « RCS Investments)
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This is my latest official macro outlook. Enjoy!
—Latest missive—- Financial Times. Here’s some info on Ray Dalio.
His concerns are the same as mine.. I’ve mentioned various times recently on how “protectionism” is seeping into both the popular and political psyche. I’ve also voiced my concerns over the past year. See below.
— RCS Investments Outlook—Excerpt on China (Mid-Year 2011)
— RCS Investments Outlook— Excerpt on China (Beg- Year 2011)
The Week Ahead — Macro Factors to Watch
The most immediate tail-wind for risk markets is the arrival of an agreement for the US budget. This may result in a relief rally as it removes the most immediate uncertainty from investor’s minds. Additionally, for as much as China PMIs show that the region’s manufacturing is just a hair away from contraction, copper is within striking distance of its bull market high. If the the price action breaks through in strong fashion, then it would be a big arrow in the bull’s quiver.
Headwinds include a worsening Eurozone situation (yet again) as Italian and Spanish bond yields are challenging recent highs. Concern has recently crept up as to whether the bailout fund will be able to actually fulfill its obligation. This will be a factor to keep a close eye on over the course of the week.
US Economic data will be plentiful. Among the more important releases in my view will be auto sales as well as factory orders. These indicators may give us further confirmation on whether the recent soft patch is transitory or not. The ISM number should provide confirmation that manufacturing continued weakening if the regional reports are any indication. Finally, Friday’s jobs data will cap off what I believe is an important week for risk markets.
On the international front, we have important manufacturing data coming out of France and Germany on Monday. I’ll also be checking out Australian economic data to see if recent deterioration will persist. Coinciding with a Chinese slowdown, there’s also the possibility of a property bubble having burst in the island-continent. Economic data has been confirming a larger than expected slowdown. Thursday will be an important day as German factory orders will indicate whether the region’s strongest economy will improve in the months ahead. The ECB will also decide on whether an interest rate adjustment, if any, takes place.
Take a Trip Through Rational Capitalist Speculator’s Mind.
I’ve just posted my updated Macro thesis as well as my financial market outlook. I update these outlooks twice a year. I put many hours into their preparation and regard them representative of my core beliefs and forecasts on the macro backdrop and financial markets.
The updated macro thesis is a pretty long piece so grab a cup of coffee and get comfortable before you break into it. I split this outlook into main “sections” in an effort to leave few “macro-stones” unturned.
My financial outlook is published separately in case you just want to know my current opinions on the markets.
I hope you enjoy them as much as I enjoyed creating them.
Thanks for your support,
Rodrigo
Mixed Signals from China (click here)
On the one hand, Chinese officials are letting the Yuan appreciate, albeit slowly. On the other, you have some rebuking Geithner on balancing trading accounts.
This signals to me that China is willing to play ball in rebalancing their economic system, but at their pace. The finance minister acknowledged that the Eurozone issues aren’t going away (I agree). These concerns will keep Yuan appreciation slow.
Overall, the prospects for protectionism have declined markedly, contrary to what I though would occur, but there are still disagreements to how to proceed with rebalancing the world economy.
Bullish / Bearish Thoughts for today
Bullish
Confidence is rising.
Reports of more job openings as per the confidence report.
Corporate Profits continue to come in strong
Bearish
Mortgage applications show that sales continue to be sluggish
Gallup Poll of Job creation has been receding
More grumblings from China as they introduce more measures to reduce sales.
