Weak Retail Sales Reinforces Expectation of Substantive Monetary Policy Easing
Weak Retail Sales Reinforces Expectation of Substantive Monetary Policy Easing Retail sales fell 0.4% in December after a revised 1.0% increase in November (previously estimated as a 1.2% gain). The October retail sales estimate was also revised down to unchanged from a 0.2% increase. Early Thanksgiving raised November retail sales and held down December purchases. Overall for the quarter, retail sales rose at an annual rate of 4.8% compared with a 3.7% gain in the third quarter. The gain in
Asia Not Impressed By Wall Street Rally
- Several chartists point out that today’s Wall Street rally lacked conviction, despite rumors circulating of an emergency Fed rate cut. For the second time in four trading days, the S&P500 gained over 1% with net breadth (advancers minus decliners) that was under +250. “Since 2003 there have only been six days where the S&P 500 gained 1% or more and breadth was below +250,” says Bespoke Investment Group. “Of those six occurrences, four have occurred since August 2007.” Rumors are
Danes still say yes to EMU but many in doubt
Support for Denmark to participate in the EMU is still in place according to Danske Bank s opinion poll carried out in the first two weeks of December 2007. The poll showed that 42.3% of the Danes asked would definitely say yes to Denmark participating in the EMU. Add to this the 8.3% who lean toward saying yes the maybes and the yes camp has a small majority. On the no side, 40.6% reported they would definitely vote no , while just under 4% said maybe no . This adds up to a
Dollar weakly
Market overview The dollar decline continues, driven by my favoured two currencies, the yen and Swiss franc. Although most attention is focussed on euro strength and the euro dollar rate, it should be noted that both the Swiss franc and yen are stronger still. Dollar swiss has already matched last year’s low, achieved on the 23rd November at 1.0892 and I continue to look for parity over the coming weeks. That said, the resistance high at 1.4968 in euro dollar should break this week and my long
European Market Update
ECONOMIC DATA FR Nov Industrial Production: M/M ?1.5% v ?0.6%e || Y/Y 2.5% v 3.7%e || Prior Y/Y revised from 4.0% to 4.2% FR Nov Manufacturing Production: M/M ?1.3% v ?0.4%e || Prior M/M revised from 1.9% to 2.0% |||| Y/Y 2.3% v 3.7%e || Prior Y/Y revised from 3.7% to 2.9% FR Nov Central Government Balance: -?54.7B v -?52.2B prior SW Nov Industrial Production: M/M 2.3% v 0.3%e || Y/Y 4.2% v 1.3%e SW Nov Industrial Orders: M/M 0.1% v ?4.4% prior || Y/Y 0.3% v 6.2% prior SW Nov Activity Index
EMU: German production disappoints, trade surplus expands
German industrial production unexpectedly fell in November by 0.9% M/M, following a weak, but upwardly revised 0.1% M/M gain in October. The weakness was broadly based including the manufacturing, energy and construction sectors. On a yearly basis, growth slowed to 3.5% from 6.4% previously. The outcome may look surprising after strong orders data in recent months, but is in line with expectations for a sharply slower GDP growth in Q4; October/November average production stands only 0.2% above
EMU: Industrial production falls in November
In the euro zone, industrial production fell 0.5% M/M in November, while the annual growth rate slowed from 4.1% in October to 2.7%, the lowest since June. The fall was led by a decline in durable consumer goods (-1.9% M/M), which provides an additional indication that consumer spending is slowing in the euro zone. A further deterioration of the growth outlook may result in a shift of the ECB focus from inflation to growth, similar to what happened in the US and the UK. Others: UK output
Trading and Time
In last week’s letter , I showed a chart of the XLF which is the ETF for the financial service sector. I showed a demand (support) level and suggested this would be a low risk area to buy the XLF for a bounce, not a long term trade. After receiving many emails on this trading opportunity from people who bought the XLF as planned and from those who didn’t, I thought it would be a good idea to revisit the chart as the questions in the emails were all the same. As you can see below, price in the
Tokyo stocks fell again
Japanese stocks slipped on Friday, renewing a 19-month low, as growing worries about the domestic economy hit retailers and outweighed hopes of large U.S. interest rate cuts to tackle a slowdown in the world’s largest economy. J. Front Retailing Co Ltd, Japan’s top department store operator, fell 10.7 % to 833 yen after it slashed its full-year outlook on weak clothing sales. The Nikkei was down 0.8 % at mid session after a morning of seesaw trade, falling 115.73 points to 14,272.38. It fell
Dollar hits 2 year low versus yen
The dollar hit a 2-1/2-year low against the yen on Wednesday as investors dumped riskier assets after weak retail sales figures and poor bank earnings fuelled fears of a U.S. recession. But the dollar trimmed losses against the yen on market talk that the Federal Reserve was holding an emergency meeting to cut interest rates immediately. A Federal Reserve spokeswoman declined to comment on the rumours. Despite a slight recovery in the dollar from early lows, many investors remained hesitant to
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