Trump Vies with Deluge of Data for Market’s Attention

August 31, 2018

A considerable amount of data gets reported around the end of every month, especially on the final business day. But this time, there’s an equal flood of outrageously provocative quotes from the U.S. president to stir up market activity.

Data first:

Japan had disappointing industrial production news. Output fell 0.1% in July after a 1.8% monthly tumble in June. Industrial shipments and inventories also slid in July, and the inventory ratio swelled further. Motor vehicle production was 4.4% lower than a year earlier. Japanese housing starts and construction orders were 0.7% and 9.3% lower in July than a year earlier. On a more positive note, Tokyo inflation in August, a possible early indication of the nationwide data due in a month, picked up both overall and on all core measures. The jobless rate slipped 0.1 percentage point to 2.5%, and on-year growth in employment was at a decent 1.5%.

The Chinese government-compiled manufacturing and non-manufacturing purchasing managers indices in August each rose marginally to 2-month highs in August. But the manufacturing PMI level (51.3) indicated pretty slow growth.

Thailand’s current account surplus of $6.41 billion in the second quarter was less than half the size of its first-quarter surplus.

South Korean industrial production rose 0.4% on month in July, while retail sales were 0.5% greater than in the month before. Noting subdued CPI inflation and a sluggish labor market, South Korean monetary officials held their latest policy review and agreed to keep its key interest rate at 1.5%.¬† There’s been just one rate increase so far, a 25 basis point move last November. Officials observed that “As it is forecast that inflationary pressures on the demand side will not be high for the time being, while the domestic economy is expected to continue its solid growth, the Board will maintain its accommodative monetary policy stance. ”

German retail sales volume fell twice as much in July (0.4%) as forecast, resulting in a sharply reduced 12-month 0.8% rate of increase.

CPI inflation in the euro area dipped 0.1 percentage point to 2.0% in August. Core inflation of 1.0% was also 0.1 percentage point lower than in July. Euroland unemployment stalled at 8.2% for a third straight month in July after having declined to that level by May from 9.1% in July 2017.

French CPI inflation of 2.3% this month matched the on-year pace in July, which was at its highest point since March of 2012. French PPI inflation accelerated to 3.9% in July from 3.4% in June as recently as 1.7% in April.

A 0.2% quarterly rise in Italian real GDP last quarter was the slowest growth rate since the summer of 2016 and depressed on-year growth to 1.2%, weakest since the final quarter of 2016. Italy posted a 10.4% jobless rate in July, still in double digits but lowest since March 2012. Italian CPI inflation in August rose 0.2 percentage points to 1.7%.

British consumer confidence printed at minus 7 in August, matching this year’s best reading which occurred in both March and May. Britain’s Nationwide house price index fell 0.5% on month, reducing the 12-month rate of increase by half a percentage point to a 2-month low of 2.0%.

Second-quarter on-year GDP growth  accelerated to 0.6% in Denmark and 2.3% in Portugal but slowed to 5.1% in Poland, 2.5% in Finland, and 2.4% in the Czech Republic.

Spain ran a trivial EUR 0.1 billion current account surplus in the first half of 2018, down from a surplus of EUR 5.8 billion a year earlier. Spanish retail sales in July fell 0.4% both on month and on year.

In the year to July, producer prices advanced 2.4% in Cyprus and 8.4% in Hungary. Producer prices are more sensitive to energy market trends than CPI indices.

Canadian PPI inflation accelerated to 6.6% in July from 5.1% in June and 3.4% in May. Excluding energy, the PPI went up 3.6% on year. Raw material prices in July were 22.0% higher than a year earlier, including a 53.2% upsurge in crude energy products.

Australian M3 money and private credit grew 0.4% and 1.9% in the year through July. Consumer confidence in New Zealand fell 0.7% on month in August following declines of 1.3% in July and 0.8% in June.

Among other things, Trump said he’s considering another tax cut on capital gains taxes, which would benefit the rich primarily. He threatened to pull the U.S. out of the World Trade Organization and to raise tariffs on imports from China and the EU. He stood by his handling of the death of John McCain and claimed that an interview of him by NBC last year was faked.

In markets, the dollar is narrowly mixed. Stocks are mostly down around Asia and Europe. 10-year German bund, U.S. Treasury and British gilts each dipped a basis point. The price of gold is 0.4% higher, but that of oil has slipped 0.3%.

U.S. data still to come include the Chicago regional PMI and the U. Michigan/Reuters consumer sentiment index.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.





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