Judgement Day in America

November 6, 2012

Today’s U.S. presidential election outcome is generally considered too close to call.  Representing world opinion, the Economist and Financial Times endorsed Obama despite reservations about his first term.

In a surprise to many analysts, the Reserve Bank of Australia declined to cut the 3.25% Official Cash Rate further.  The Aussie dollar has climbed 0.7% against the greenback to a 5-week high in response and has pulled the kiwi and loonie up 0.4% relative to the U.S. currency.

Other overnight dollar moves have been limited to a gain of 0.3% relative to the yuan and dips of 0.2% against the yen and 0.1% versus the euro, Swiss franc and sterling.

Share prices rose 1.1% in South Korea, 0.7% in Taiwan, 0.5% in New Zealand and 0.3% in India and Indonesia, but such fell by 0.4% in Japan, China and Singapore.

European equities are firmer, gaining so far 0.8% in France, 0.7% in the U.K. and Germany, 9.6% in Italy, and 0.5% in Spain.

Ten-year sovereign debt yields are a basis point lower in Japan and Britain but a basis point higher in Germany.

Commodity prices have strengthened.  Gold is up 0.6% at $1692.50 per ounce, and oil has climbed 0.7% to $86.24 per barrel.

Euroland’s service-sector purchasing managers index for October was revised to 46.0 from a preliminary 46.1 reading.  The average score in 3Q12 had been 47.1.  The German index of 48.4 was a 2-month high but the third sub-50 score in a row.  France’s services PMI plumbed to a 12-month low of 44.6, well below a 50.0 reading as recently as July.  Italy’s 46.0 was the best reading since August 2011, and Spain’s 41.2 was a point higher than in September.

Euroland’s composite purchasing managers index fell to 45.7 in October, lowest since June 2009 and below the third-quarter mean score of 46.3.  This suggests negative GDP growth in 4Q of around 0.5%.  National composite PMI readings were at 47.7 in Germany, 45.6 in Italy, 43.5 in France and 41.5 in Spain.  Only Ireland’s 55.5, a 20-month high, surpassed 50 and thus reflected positive growth.

The Ezone producer price index rose by an as-expected 0.2% in September, keeping its 12-month rate of increase at 2.7%.  Over the past reported year, energy prices climbed 7.0%, while all other producer prices collectively rose by a tame 1.2%.

Russia’s service sector PMI rose 2.8 points to 57.3, highest since May 2011.  The composite Russian PMI in October of 56.6 was up from 54.3 and indicated the fastest overall expansion rate since April 2010.

German industrial orders plunged 3.3% in September, more than six times greater than forecast.  Such were 4.7% lower than a year earlier and produced a 2.3% 3Q-over-2Q drop.  Domestic demand for capital goods, a leading gauge of business investment, declined 1.5% in the month.  Overall domestic orders dropped 1.8%, while export demand slumped by 4.5% in the latest month.

British industrial production declined 1.7% in September, over twice as much as anticipated.  That disappointment trimmed the 3Q-over-2Q increase to 0.9%.  Production in on-year terms fell by 2.6% in September and by 1.4% in 3Q.  Manufacturing output edged 0.1% higher on month in September but remained 1.0% lower than a year earlier.

Same-store retail sales in the U.K. were 0.1% softer in October than a year before according to the British Retail Consortium.  Total store sales posted a 12-month advance of 1.1%, down from 3.4% in the year to September.  The Halifax British house price index showed greater-than-anticipated softness in October, dropping 0.7% from September and by 1.7% from October 2011.  New car sales in Britain were 12.1% greater than a year earlier in October.

Swiss consumer confidence remained the same in October as in September, with a reading on the SECO gauge of minus 17.

Czech industrial production was 7.1% lower in September than a year earlier.  Analysts had anticipated a drop of around 4%.  The Czech trade surplus of CZK 31.6 billion in September was a shade higher than forecast and considerably larger than the August surplus of CZK 16.3 billion.

New Zealand hourly earnings rose 1.4% between 2Q12 and 3Q12.  Private wages went up by 0.5%.  Australian house prices rose just 0.3% in the third quarter.

Japan’s index of leading economic indicators fell 1.5 points to a reading of 91.7 in September, lowest since April 2011.  The coincident index scored a 91.2 after 93.5 in September, and that was the worst result since May 2011.

Filipino consumer prices slid 0.2% in September and to a 4-month-low on-year drop of 1.1%.

U.S. voters will be selected all members of the House of Representatives and a third of the Senate.  The Democrats are likely to retain a senate majority, and the Republicans will keep control in the House.

The U.S. JOLTS survey results will be released by the Labor Department.  Canada’s IVEY-PMI index arrives as well.  Tomorrow brings the critical Greek parliamentary vote on austerity and central bank decisions in Poland and Iceland.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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