Thanksgiving Day Special

November 22, 2012

Overseas investors this Thanksgiving Day of 2012 were cheered by China’s preliminary 50.4 reading on the November purchasing managers preliminary survey and have disregarded discouraging Ezone PMI results.  The focus instead has been on hope that European finance ministers will work out an agreement on Greece next week.  Additional optimism surrounds the likelihood of an agreement to soften the blow of the U.S. fiscal cliff.

U.S. markets are closed today.  Many places will stay shut Friday, when Japan will also be closed for Labor Thanksgiving.

The euro climbed as high as $1.2900 for the first time in three weeks and touched a peak versus the yen of 106.61, strongest since last April 27.  The dollar has slipped 0.4% against the euro, 0.3% versus the Swissie, 0.2% relative to the Australian and New Zealand dollars, and 0.1% against the yen.  The yuan has appreciated, too.  However, the dollar has edged 0.1% higher versus the Canadian dollar following softer-than-assumed Canadian retail sales figures and is also up 0.1% against sterling.

South Korea’s deputy finance minister expressed displeasure with the won’s recent strength.

Japan’s Nikkei-225 rose 1.6%.  Equities climbed 1.0% in Australia and Hong Kong, 0.8% in South Korea, 0.7% in New Zealand, 0.4% in Indonesia, and 0.3% in India.  China’s bourse fell 0.8%.  In Europe, share prices have risen 1.0% in Spain, 0.8% in Italy, 0.7% in Germany, 0.6% in Britain, and 0.3% in France.

Ten-year sovereign debt yields are unchanged in the U.K., Germany, and Japan.

Oil and gold prices have edged up 0.1% to $87.43 per barrel and $1730.70 per troy ounce.

A preliminary HSBC purchasing managers report on China was released, indicating an expanding trend in manufacturing for the first time since steepOctober 2011.  The 50.4 score in November was up from sub-50 readings of 49.5 in October and 47.9 in September.  The production component climbed 3.1 points to 51.3.

Consumer confidence in the euro area sank 1.4 points to minus 26.9 in November according to the European Commission’s preliminary estimate.  This is the weakest score so far this year and down from minus 19.3 six months earlier.

Euroland’s composite purchasing managers index edged up 0.1 points to 45.8 in November from 45.7 in October.  These scores nonetheless suggest that the recession intensified pretty significantly this quarter.  GDP fell only 0.1% in the third quarter but likely will post a drop of as much as 0.5% in 4Q.  Not only has contraction become generally steeper, but it has now spread to Germany.  Business sentiment in the private sector of Euroland is the weakest since March 2009, and jobs are being lost at the quickest pace since the start of 2010.  The service sector Ezone PMI reading of 45.7 was the lowest since July 2009.  Manufacturing rebounded 0.8 points to 46.2, an 8-month high.

  • The French composite PMI rose 1.3 points to a three-month high of 44.6.  The scores for manufacturing (44.7) and services (46.1) also constitute three-month highs.  Corporate profits have been squeezed by weak demand and higher input prices that cannot be passed on to customers in this climate.
  • The German services PMI of 48.0 was 0.4 points lower than in October and represented a 41-month low.  Manufacturing rebounded from 46.0 in October to 46.8 but was still below the 50 no-change level for a seventh straight month.  Germany’s composite PMI recovered just 0.2 points to 47.9 after dropping by 1.5 points between September and October.

The CBI monthly survey of British industrial trends produced another very depressed reading of minus 21 in November, which was just two points higher than October’s score.  The average reading in the third quarter had been -11.7.

Danish retail sales fell 0.9% in October, outweighing a 0.5% increase the month before.  This produced a 1.4% on-year decline, not as much as the 2.8% drop between September 2011 and September 2012.

Dutch consumer spending was unchanged from a year earlier in September.  Portugal’s current account deficit of EUR 2.07 billion in September was 19% larger than the August shortfall.

Japanese supermarket sales were 4.0% lower in October than a year earlier, twice the 12-month pace of decline seen in September.  Stock and bond transactions last week generated a JPY 287 billion net capital outflow last week, nearly identical to the prior week’s outflow.

The South African Reserve Bank’s repo rate was left unchanged at 5.0% as expected.  Such has been changed just once in 2012, a cut of 50 basis points done in July.  The repo rate is at a 41-year low.  Prior to December 2008, such stood at 12.0%.  CPI inflation rose to a 5-month high in October and is uncomfortably close now to the central bank’s target ceiling.

Canadian retail sales grew just 0.1% in September, less than analysts were anticipating, which cut the 12-month increase to 1.8% from 2.7% in August.  Non-auto sales were unchanged on month. 

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

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