Equities Depressed by Unsettling Monday News on Several Fronts

August 16, 2021

Afghanistan’s government fell to the Taliban in three days, not three months as the U.S. intelligence community had presumed. Washington’s lame attempt to differentiate the fall of Kabul from that of Saigon 46 years earlier is hardly persuading anyone, even among supporters of the Biden Administration.

Covid developments over the weekend continued to spiral backwards, forcing the re-imposition of restrictions on social gathering and casting doubt on the outlook for economic growth around the world.

Released data failed to assuage the growth concerns.

The reality of climate change, continuing denials notwithstanding, is omnipresent, whether it be record-breaking heat, extensive fires in the U.S. western states, or a succession of ocean hurricanes. And a horrific earthquake in Haiti added to the general chaos in yet another geopolitical tinderbox.

Chinese industrial production, retail sales, and fixed asset investment fell shy of analyst expectations in July.

  • Industrial production was 6.4% greater than a year earlier, down from on-year increases of 8.3% in June and 15.9% in the first half of 2021 and the smallest advance in 11 months.
  • Retail sales grew 8.5%, a 7-month low and down from 12-month advances of 12.1% in June and 23.o% in the first half.
  • Fixed asset investment in January-July was 10.3% above its year-earlier level versus an on-year increase of 12.6% in the first half.
  • China’s jobless rate rose to a 3-month high of 5.1% in July.
  • On-year growth  in Chinese property  prices fell to a 4-month low of 4.6% in July.

Stock markets in the Pacific Rim closed down 1.6% in Japan, 0.8% in Hong Kong, 0.7% in Taiwan, and 0.6% in Australia. Equity markets in Europe have fallen by 1.3% in the U.K., 1.1% in France, and 0.7% in Germany.

Ten-year sovereign debt yields today are down five basis  points in the United States and by a basis point each in Germany and Great Britain.

The price of West Texas Intermediate oil slumped 2.8%, and that of gold rose 0.6%.

The dollar is 0.9% firmer against sterling, 0.4% weaker against the yen and up 0.1% versus the euro and its weighted DXY index.

Although greater growth than anticipated, Japanese quarterly growth after a 3.7% slump in 1Q amounted to just 1.3% at an annualized rate in the second quarter. Compared to the pandemic-cratered level in the spring of 2020, GDP was just 1.5% higher. Net exports, inventory changes, and public investment affected GDP negatively last quarter. The GDP price deflator dropped 0.3% on quarter and 0.7% on year in 2Q.

On a brighter note, the June rise of Japanese industrial production was revised modestly upward to 6.5% from 6.3% reported initially. Output had plunged 6.5% in May. Capacity utilization went up 6.2% on month.

The New York  regional Empire State manufacturing survey of the NY Fed, which had climbed to a record high of 43 in July, fell sharply back to a two-month low of 18.3 this month.

Canadian manufacturing sales and orders rose 2.1% and 11.1%, respectively in June.

GDP grew 0.4% in Thailand last quarter. On-year growth against the pandemic-depressed year-earlier level was 7.5%, most in 34 quarters.

Service sector activity in New Zealand according to the July purchasing managers survey was slower than in June but, with a reading of 57.9, still very buoyant.

Indian wholesale price inflation showed a tad more than anticipated in July to 11.16%, a 2-month low. Prices for food were unchanged from a year earlier.

Due to a VAT increase dropping out of the on-year change, Saudi Arabian CPI inflation dropped abruptly to 0.4% in July from June’s 10-month peak.

Czech producer prices soared 1.6% on month in July, most since the Great Recession and 7.8% on year, most since 2004.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express  permission.


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