New Overnight Developments Abroad: Continuing Confusion Over Implications of Dubai Debt Crisis

November 30, 2009

$64,000 question is whether Abu Dhabi will underwrite Dubai’s debt.

Stocks rebounded in Asia but fell further in Europe.  Equities recovered 3.8% in China, 2.9% in Japan, 1.8% in India, 3.3% in Hong Kong, and 2.8% in Australia.  The Paris Cac, German Dax and British Ftse are trading 1.1%, 1.0%, and 0.8% lower.

The dollar shows a gain of 0.9% against the yen and a rise of 0.2% versus sterling, but it has fallen 0.6% relative to the New Zealand and Australian dollars, 0.5% against the Canadian dollar, and 0.3% against the euro and Swiss franc.

Ten-year bund, gilt and JGB yields edged down 5 basis points, 4 bps, and 1 basis point.

Oil is steady at $76.09 per barrel.  Gold slid 0.4% to $1170.90 per troy ounce.

Japan released industrial production, housing starts, construction orders, the manufacturing purchasing managers index and auto output and exports.

  • Industrial output rose only 0.5%, a fifth as much as expected, and was 15.1% lower than in October 2008.  However, survey evidence points to solid gains of 3.3% in November and 1.0% in December, suggesting an increase of 5% (21.5% annualized) in the final quarter of 2009 following an advance of 7.4% last quarter.
  • Housing starts in October were 27.1% lower than a year earlier.  A bigger on-year drop had been anticipated after declines of 38.3% in August and 37.0% in September.
  • Construction orders tumbled 40.1% between October 2008 and October 2009, much more than the 14% on-year decrease in September.
  • The PMI printed a disappointing 52.3 reading in November after 54.3 the month before.
  • Auto production and exports posted respective on-year declines in October of 19.1% and 34.6%.

Australian private sector credit was unchanged between September and October and posted a 1.1% on-year increase.  Aussie profits rose 8.9% in the year to 3Q.  Inventories fell 3.4% in the year to 3Q09.  The TD-MI inflation gauge had a 2.1% reading in November, edging above the 2% target floor.

New Zealand residential building permits rose 11.7% in October, their fourth straight increase.

British data released today are mostly disappointing.  Consumer confidence fell for the first time in ten months, dropping from minus 13 in October to minus 17 in November.  A rise to minus 11 was expected.  M4 growth slowed further to 10.8% in October from 11.0%.  Underlying M4 contracted, and M4 lending to households hit its weakest point in at least a dozen years.  Net consumer credit slid Gbp 579 million, lowest since at least April 1993.  One brighter spot were mortgage approvals of 57.3K, most since March 2008, and another was a smaller on-year drop of 2.9% in the Hometrack house price index.

Euroland’s retail PMI faltered to a reading of 48.9 in November from 50 in October, as the German component fell 2.8 points to 46.0.

The Conference Board index of leading economic indicators for the euro area rose 0.9% in October, smaller than gains of 1.8% in August and 1.2% in September.

A summit of Chinese and Euroland leaders released a statement that conspicuously made no mention of yuan policy.

The preliminary indication of Euroland’s November CPI showed a higher-than-anticipated 0.6% rate of inflation after minus 0.1% in October.  Such was the first positive reading since last April and was associated with sharply positive energy sector positive effects (oil costs were dropping steeply a year earlier).

French producer prices increased 0.8% in October, trimming the 12-month decline to 6.6% from 8.0%.

Italy’s PPI was unchanged in October and posted a smaller 5.3% on-year decline.

Hungary’s PPI was unchanged in October from a year earlier.

Swedish labor costs rose just 0.7% in the year to September.  Norwegian retail sales volume increased 4.0% in the year to October compared to a 12-month rise of 0.9% in September.  Spanish housing permits tumbled 41.7% in the year to October after a 12-month drop of 45.2% in the prior month.  Spain’s current account deficit in January-September was 48% narrower than a year earlier.

Polish GDP rose 1.7% in the year to 3Q09, as consumption rose 2.2% and investment fell 1.5%.  Net exports accounted for 3 percentage points of net growth.

India’s GDP growth accelerated from 6.1% in the year to 2Q09 to 7.9% in the year to the third quarter.

The Bank of Mexico left its key interest rate steady at 4.5% after last Friday’s policy meeting.  Such was the expected outcome.

Thailand’s factory output posted a smaller 12-month advance of 0.4% in October.  The Thai trade surplus in October was 17.5% less than in September but 75% greater than a year before.  Thailand’s private consumption index increased 0.9% in the year to October.

South Korean retail sales rose 2.9% in October, and the current account surplus that month printed at $4.9 billion.

South African credit was 0.4% lower in October than a year earlier, the first negative on-year change since August 1966.

Canada releases September and third-quarter GDP figures and the latest PPI report today.  The New York and mid-western regional PMIs also arrive on this final day of November.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


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