Monday, April 18, 2011

So last week we got some interesting data and price action.

Data out...

- UK
... some much lighter inflation numbers in the form of almighty CPI
... some worse than expected Jobless claims report, increasing claims instead of decreasing.
... average weekly earnings lighter than expected
... BUT the Unemployment Rate came in better than expected at 7.8% x 8.0%exp

- Germany
... slightly worse inflation numbers over there at Bierland

- US
... worse NFIB/IBD/TIPP Business Optimism numbers
... Import prices higher than expected
... worse trade balance numbers
... decent retail sales numbers that actually, in real terms, were flat-to-bad
... February's JOLTS Openings and Hires much better than January's... but Separations also came in higher... NFP-like Hires-Separations decreased MoM from 157k to 115k
... Fed's Beige book demonstrating economic improvement all over the place.
... Jobless claims coming in 32k higher than the 380k expected, worse number since first week of March.
... headline PPI came in a tad lighter, @ 70bp x 100bp expected
... core CPI coming in lighter as well @ 10bp x 20bp expected with headline in line @ 50bp
... Empire Manufactuing Index came in better than expected with Prices Paid, Employment and New Orders higher than last month
... UofMichigan Confidence slightly better than expected, but close to the lows of 2010-2011.

- China
... Increasing FX reserves... +64bln USD @ 3.044tri USD
... YoY growth in YUAN loans @ 33.7%, 679bln RMB
... 1Q Real GDP @ 2.1% QoQ / 9.7% YoY, expected was 9.4%
... CPI @ 5.4% YoY x 5.2%exp
... PPI @ 7.3% YoY x 7.2%exp
... Industrial Production higher than expected YoY @ 14.8% x 14.0%exp
... Retail Sales YoY @ 17.4% x 16.5%exp
... FAI, excluding Rural, YoY @ 25.0% x 24.8%exp

Perhaps I am seeing what I want to see, but despite a small dip in risk-markets and Fed officials talking about tigher policy... the USD remains very weak, US and global rates dropped a bit more in the past few days (besides european new-highs in periphery sovereigns) and US 1Q GDP numbers were demolished lower.

So... is the US economic growth as volatile as markets? Why would GDP come in weaker and weaker.. and then rise again despite QE2 ending and fiscal stimulus fading into the rest of the year?

I don't buy this idea of recovery in 2011... so I'll end the week leaving you ladies out there with one exciting link. John Taylor is manager of FX Concepts, an USD 8 billion (or so) hedge fund that bets in currencies. I'd like to make his words mine.

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