Germany’s Export Collapse

train germany yellow fast

The grimmest aspect of today’s German PMI report concerned exports:

Companies that reported a decrease in production levels in August generally linked this to lower
volumes of new business and fewer outstanding workloads at their plants. August data highlighted a
sharp fall in new order levels, although the rate of contraction eased slightly from July’s low. The slower pace of decline largely reflected a less marked drop in domestic demand, as new export work fell at the steepest rate since April 2009

Survey respondents commented on a general slowdown in global demand and particular weakness in new business inflows from Southern Europe. Investment and intermediate goods producers recorded the steepest reductions in new export orders. Meanwhile, August data signalled a rapid fall in outstanding business at manufacturing firms, which extended the current period of contraction to 12 months. 

For more details of the week report, see here >

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THIS Is What The S&P 500 Looks Like When Adjusted For Inflation

The other day, investor and writer James Rickards was on Bloomberg TV, and they put up this chart.

image

Spot the problem?

It’s a chart of the S&P priced in gold going back two decades, but it’s titled “This Is Your S&P On Inflation” as if inflation could just be divined by the price of gold.

But inflation and gold just aren’t the same thing.

Going back 20 years, the price of gold has surged WAY beyond the increase in prices as measured by the consumer price index, as you can see here.

image

And if anything, the gold surge over the last few years has suggested that the medal has done its best during periods when there’s deflation risk, and real interest rates have been low.

If you want to see the S&P adjusted for inflation, here’s your chart of the index adjusted for the CPI. It’s not beautiful, but we’re not below where we were 20 years ago, as in the Rickards chart above.

image

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THIS Is What The S&P 500 Looks Like When Adjusted For Inflation

The other day, investor and writer James Rickards was on Bloomberg TV, and they put up this chart.

image

Spot the problem?

It’s a chart of the S&P priced in gold going back two decades, but it’s titled “This Is Your S&P On Inflation” as if inflation could just be divined by the price of gold.

But inflation and gold just aren’t the same thing.

Going back 20 years, the price of gold has surged WAY beyond the increase in prices as measured by the consumer price index, as you can see here.

image

And if anything, the gold surge over the last few years has suggested that the medal has done its best during periods when there’s deflation risk, and real interest rates have been low.

If you want to see the S&P adjusted for inflation, here’s your chart of the index adjusted for the CPI. It’s not beautiful, but we’re not below where we were 20 years ago, as in the Rickards chart above.

image

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Everything You Need To Know About Spain In 2 Charts

The first chart is the yield on the Spanish 2 year bond, via Bloomberg:

image

The next is the yields on the Spanish 10-year bond.

image

See the huge difference? The short-term borrowing costs have fallen and staid (relatively) low, hitting levels since seen since this Spring.

The long-term bond is creeping back up, and getting back close to the highs of the year.

The message: Thanks to expectations of ECB intervention, short-term borrowing costs are falling (The ECB has promised that when it intervenes, its actions will be confined to short-dated bonds. But Spain is still a major wreck. Houses are now being sold at 70% off peak levels. Bank bailouts are still ongoing. So the big, long-term problems aren’t going anywhere.

The short-term is okay thanks to the ECB. But that doesn’t mean many people want to give the Spanish government their money for the long term.

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CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





CITI: ‘This Week Looks Like A Disappointment Already’

AP Fat Lady

Welp, that was fast.

In an FX strategy note, Citi’s Valentin Marinov writes that: ‘This week looks like a disappointment already.’

As you know, this is a huge week that’s going to be filled with economic data, politics, and crucially central bank action at the ECB on Thursday. That’s far-and-away the main event this week, as everyone is waiting for details on Draghi’s plans to stem the Eurozone crisis. There’s a belief that he might announce some kind of cap on spreads between peripheral short-term borrowing costs and core ones.

Anyway, Marinov is already underwhelmed. And this note came out last night.

He writes:

This week looks like a disappointment already. The fact the ECB executive board cancelled their trip to Jackson Hole could mean there are still some difficulties to reach a compromise. I think the negotiations will continue but we already had Asmussen and Coeure last week saying that the ECB will reveal only part of the plan.

Even if we get a plan I think investors won’t like it too much: For example, given that the ECB will likely focus on purchasing short-term debt, the onus of any meaningful reduction of the Spanish and the Italian bond yields should fall on the EFSF and the ESM (when ratified by all Eurozone members). There is no clarity about how swiftly the bailout facilities will be able to intervene on the primary markets given that they have to raise the money needed for the bond purchases. There is also less clarity whether the combined firepower of the two facilities will be sufficient to make the firewall credible. Last but not least, it is worth highlighting that it will take an official request for external assistance from the fiscally weak Eurozone members to activate the firewall. Judging from the latest Eurozone headlines, Spain is in no particular hurry to do that.

Happy start to the week.

For more on why this week is so huge, see here >

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »





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