A Fearful Mood in the Marketplace

September 14, 2016

Investor confidence has turned very fragile because of 

  • The erosion of Clinton’s lead. A Trump victory is expected to be followed by vast changes in U.S. policy on a wide range of policies and procedures.
  • Signs that monetary stimulus has hit the wall of diminishing returns even as global growth remains lackluster and inflation too low.
  • Another banking scandal, this time involving Wells Fargo.
  • A continuing glut of oil supply.

Sovereign debt yields are at multi-month highs.

Stocks fell overnight by 0.7% in Japan and China, 1.3% in Indonesia and 0.6% in New Zealand. Equities in Europe recovered 0.5% in Germany but just 0.2% in Switzerland and Spain and 0.1% in France, Italy and Greece.

The dollar lost 0.3% against the kiwi, 0.2% relative to the Swiss franc, and 0.1% against the yuan, euro, and Australian currency. The dollar was unchanged overnight versus the loonie and sterling and edged up 0.1% vis-a-vis the yen.

Industrial production in Euroland fell 1.1% in July. That matched May’s drop. Those two 1.1% slides sandwich a 0.8% increase in June but leave July’s level 1.0% below the second-quarter mean and 0.5% lower than in July 2015.

Japanese industrial production for July was revised from zero change on month to a decline of 0.4%, which is now associated with an on-year plunge of 4.2%. Capacity usage fell 4.6% on year, while capacity was 0.8% lower than a year earlier.

New Zealand’s current account deficit widened to NZD 1.826 billion in the second quarter from NZD 1.639 billion in the first quarter. The accrued current account deficit over the last reported years equaled 2.9% of GDP.

The Bank of Thailand’s one-day repo rate was left unchanged by unanimous vote at 1.5%. This was the expected outcome. The rate has been at 1.5% since cuts of 25 basis point cut in March and April of 2015. There were six previous reductions of that size squeezed between November 2011 and March 2014.

French consumer prices rose 0.2% in the year to August (0.4% on a harmonized basis). Italian consumer prices fell 0.1% on year in August on both a national and harmonized basis. Finnish CPI inflation in August was 0.4% (0.5% harmonized).

Greek import prices fell 0.9% on month and 3.2% on year in July.

Irish GDP advanced 0.6% on quarter and 4.1% on year in the second quarter.

Swedish GDP grew 0.5% on quarter and 3.4% on year in 2Q.

Switzerland’s ZEW expectations index of investor confidence printed 5.5 points higher in September at 2.7 than August’s reading.

British labor statistics revealed 1) a greater-than-expected 2.4K rise in jobless claims, 2) an unchanged 4.9% unemployment rate on an ILO basis, and 3) on-year wage earnings growth in May-July of 2.3% overall and 2.1% on just regular pay. Both gains were less than in the second quarter.

In the year to July, industrial production was unchanged in Romania and fell by 4.7% in Hungary.

Indian wholesale price inflation picked up to 3.74% in August from 3.55% in July.

Australian consumer confidence according to the Westpac gauge weakened to 0.3% this month from 2.0% in August.

U.S. import prices will be reported today, as well as weekly oil inventories.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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