Dollar Firms and Share Price Retreat Extended

November 13, 2015

Investors are quite confident that the Fed will raise the federal funds rate next month and that the ECB will ease policy, including a possible deposit rate cut.  The confidence rests not only on U.S. data but on more uniform signals from Fed official comments favoring a rate hike before yearend.

The dollar climbed overnight by 0.7% against the euro, 0.4% relative to the Swiss franc, 0.3% versus the loonie and kiwi, and 0.1% vis-a-vis the yen.  The dollar is unchanged on balance against the yuan, Aussie dollar and sterling.

Another decline in U.S. share prices occurred at the open.  In the Pacific Rim, equities fell 2.1% in Hong Kong, 1.4% in China, 1.2% in Taiwan, 1.5% in Australia, 1.1% in Singapore, 1.2% in Taiwan, 0.7% in New Zealand and 0.5% in Japan.  Losses in Europe so far amount today to 1.0% in Switzerland, 1.1% in France, 0.9% in Spain, 0.7% in Germany, 0.5% in Italy, and 0.4% in Great Britain.

West Texas Intermediate crude oil slid another 0.3% to $41.61 and has only 8.2% more to slide before revisiting the 6-1/2 year low of $38.19 hit August 24th. 

Comex gold is unchanged at $1,085.56 per ounce.

Ten-year German bund, U.S. Treasury, and British gilt yields are a basis point lower.  The Japanese JGB is unchanged.

U.S. retail sales grew by a slower-than-forecast 0.1% in October after September’s zero change.  Sales of motor vehicles and parts declined 0.5%, and all other sales were just 0.2% higher than in September.  The 12-month rise in retail sales fell to 1.7% from 2.2% in September.

U.S. producer prices dropped another 0.4% in October.  There hasn’t been a monthly rise in producer prices since June, and the 1.6% 12-month decrease in the PPI was twice as large as that posted in July.

A slew of European third-quarter GDP results were published.  These are preliminary estimates, and they show eurozone GDP advanced only 0.3% on quarter, down from 0.4% in the second quarter and 0.5% in 1Q.  On-year growth was 1.6% in 3Q.

German and French GDP also rose 0.3% in the quarter, with respective on-year increases of 1.7% and 1.2%.

Italian GDP growth slowed to 0.2% from 0.3% in 2Q and 0.4% in 1Q.  Belgian GDP was 0.2% after 0.5% in the second quarter. 

Spanish GDP growth decelerated from 0.9% in 1Q and 1.0% in 2Q to 0.8% in 3Q.

Dutch GDP edged up 0.1% for a second straight quarter, depressing on-year growth to 1.9% from 2.2% in 2Q and 2.5% in 1Q.  Austrian GDP also rose merely 0.1%.

Even more depressed quarterly growth occurred in Portugal (0.0%), Greece (-0.5%), and Finland (-0.6%).  There respective on-year growth rates were 1.4%, -0.4% and -0.7%.

Among some eastern European economies, Polish GDP advanced by 0.9% on quarter and 3.6% on year.  Czech GDP rose 0.5% from 2Q and 4.3% from 3Q14.  Hungary also had quarterly growth of 0.5%, but the year-over-year pace there slid to 2.2% from 2.4%.

The eurozone seasonally adjusted trade balance widened EUR 1.1 billion to 20.1 billion euros in September, as exports increased 1.1% on month while imports went up just 0.5%.  The unadjusted EUR 176.9 billion surplus in January-September was 49.8% wider than a year earlier on year-over-year export growth of 6.1% and a 2.1% net rise in imports.

Japan’s tertiary index, which is a measure of service-sector activity, unexpectedly fell 0.4% in September, cutting the 12-month increase to just 0.6% from .4% in August.  The tertiary index edged up just 0.1% last quarter after falling 0.2% between 1Q and 2Q.

Japanese industrial production growth in September was revised up 0.1 percentage point to 1.1%, not enough to prevent a 1.2% third quarter decline from the 2Q level.  Capacity usage rose 1.5% in September but remained 2.9% lower than a year earlier.  Capacity was unchanged both on month and on year.

Hong Kong GDP growth accelerated to 0.9% in the third quarter but produced a smaller year-over-year increase of 2.3% after 2.8% between 2Q14 and 2Q15.

Malaysian GDP growth slowed to 0.7% last quarter from 1.1% in 2Q.  GDP was 4.7% greater than a year earlier in 3Q.

New Zealand’s manufacturing purchasing managers index fell 1.7 points in October to a 5-month low of 53.3.

South Korea’s indices of leading and coincident economic indicators advanced by 1.2% and 0.6%, respectively, in September.

In the year to October, consumer prices fell 0.7% in Spain and 0.3% in Finland. Italian consumer prices increased 0.3% in the 12-month period.

The Swiss domestic PPI rose 0.3% in October, while the combined PPI/import price index edged up 0.2%.  Their respective changes from October 2014 were declines of 4.5% and 6.6%, respectively.  Swiss National Bank officials still worry about deflation.

British construction output slipped 0.2% in September following back-to-back plunges of 1.2% in July and 3.4% in August.  Construction output was 1.6% lower than in September 2015.

The University of Michigan/Reuters preliminary November U.S. consumer sentiment index gets released later today.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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