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Asia Sees All The Action

Published 09/28/2012, 06:10 AM
Updated 07/09/2023, 06:31 AM
Things that can move the U.S. today:
  • Asia mixed: Japan -1.1%, Shanghai +1.45%, HK +.38%, SoKo +.38%
  • Japan industrial production -4.3% YoY vs -3.4% expected, -0.8% prev
  • Japan housing starts -5.5% YoY vs -7.5% expected, -9.6% previous
  • Europe steady: Eurostoxx +.38%, Dax +.49%, FTSE +.39%, Spain +.6%
  • EC CDS very slightly improved at the end of a volatile week
  • France GDP +0.3% YoY as expected, unchanged on quarter
  • Germany retail sales -.8% vs -.9% expected; prev revised down to -1.6%
  • France producer prices +2.6% YoY vs 2.0% expected, 1.3% previous
  • Italy CPI (EU harmonized) +3.4% YoY vs 2.7% expected, 3.3% previous
In a night that saw the smallest range in S&P futures that I can remember (3.5 points from high to low prints), all the action was in Asia. The Chinese yuan has soared to the strongest valuation since 1993 on stimulus bets, and despite the usual inverse currency relationship with stocks (strong currency = less exports etc) Chinese stocks put in a strong showing as well. China will be closed all next week for National Day and others, and Chinese authorities like to act on the eves of holidays, so speculation is rife that something will be announced soon. Japan on the other hand has reacted poorly to a dismal industrial production report. JPM sees the Japanese economy contracting this quarter--not exactly a controversial call given the numbers we've been seeing.

Meanwhile in Europe markets are mounting a modest rally despite price pressures as shown from France and Italy, both rather surprising given the recessionary conditions. The combination of rising crude, wages, and weak euro seems to be too much to bear without some price adjustments. For now this is probably neither here nor there, but there is not much wiggle room because we're already well above the "just below 2%" target of the ECB. Draghi could care less, but the Bundesbank will not be happy.

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